Delhi High Court
Vinood Chadha vs Delhi Development Authority on 1 August, 1997
Equivalent citations: 1997VAD(DELHI)13, 68(1997)DLT174, 1997(42)DRJ499
Author: K.S. Gupta
Bench: K.S. Gupta
JUDGMENT Devinder Gupta, J.
1. Petitioner has sought quashing of letter (annexure P-3) dated 13.1.1992 rejecting petitioner's highest bid for shop No.148, Rajendra Bhawan, Rajendra Place, New Delhi.
2. Respondent invited prospective buyers in the auction of 16 shops at Rajendra Place, New Delhi located on plots 4 & 5. Date of auction was fixed as 14.8.1991. In the auction only three highest bids were accepted by the Officer conducting the auction with respect to shop Nos. 128, 144 and 148. There were no bids received for the remaining 13 shops. Petitioner being the highest bidder for shop No. 148 at Rs. 2,42,000/-, whose bid was provisionally accepted by the Officer conducting the auction, was asked to deposit 25% of the bid money, as per the terms and conditions of the auction, which the petitioner deposited. It is the petitioner's case that he visited the office of the respondent on 16.8.1991 and met the concerned official but was not issued any demand letter for the balance bid money. Repeated visits thereafter re-suited no fruits. Ultimately he was surprised to receive a letter dated 13.1.1992 from the respondent intimating that his highest bid had not been accepted by the Vice Chairman, DDA, therefore, the amount of earnest money deposited by the petitioner was being refunded in the form of cheque for a sum of Rs. 61,000/- dated 30.12.1991. The petitioner has made a grievance in the writ petition that the shop adjacent to the shops for which highest bid had been offered by the petitioner were also put to auction on the same date in the same auction hall and that the petitioner was given to understand that all bids had been accepted by the respondents. But in the case of petitioner alone, his highest bid, which was above the reserve price had not been accepted. It was the grievance made by the petitioner that neither he was assigned any reason for the basis of Vice Chairman to take a decision in rejecting the bid, nor the action of the respondent in rejecting the highest bid is in consonance with law. The same being arbitrary is liable to be quashed and set aside.
3. An application for interim relief was also filed along with the writ petition. Notice to show cause was issued on 27.5.1992 and on 15.6.1992 re- auction of the shop, which was to take on 16.6.1992 was stayed on the petitioner's request. After respondent filed its reply justifying its action in rejecting the bid on the ground that reserve price for shop No. 148 was fixed at Rs. 2,34,000/-, which was substantially low as compared to the original reserve price of the shop at the time when it was first put to auction. The same was reduced specifically for the purpose of auction, which was to take place on 14.8.1991. Though the petitioner was the highest bidder at Rs. 2,42,000/- but his bid was rejected by the Vice Chairman, after it was noticed by him that the same was far below the original reserve price of the shop, as on the day when the shop became available for being auctioned. It is also stated that all bids with respect to the auction, which took place on 14.8.1991 were rejected. Reasons for rejecting the bids were duly recorded in the record of the DDA but the same were not communicated.
There was also no requirement with the competent authority to assign the reasons of rejection to the petitioner since the terms and conditions of the auction very clearly pointed out that the acceptance of the highest bid by the officer conducting the auction was subject to confirmation of the bid by the competent authority.
4. On 25.5.1993, on the petitioner's request respondents were directed to produce the record relating to the bid in question containing reasons for not accepting the same and also the records for the bids of other sites in the near vicinity, close to the auction in dispute, which might have been accepted by the respondent.
5. On 12.8.1994 when record was produced, it was noticed that the same was not complete since the record produced related only to fixation of reserve price for commercial sites. Court directed the record pertaining to shop No.147 to be produced for the next date of hearing. On 20.10.1994 the following order was passed:
"We have been told that on 14th August, 1991, about 16 shops in the same area were auctioned and the bids of all the said shops were rejected. Mr. Jayant Bhushan to ascertain as to when the remaining 15 shops were reauctioned and what were the highest bids which were accepted by the DDA. The DDA shall also inform the Court as to on what basis, reserve price of Rs. 2,15,000/- of Shop No. 147 was fixed which is stated to have auctioned on 17th February, 1993, when highest bid was for Rs. 2,17,00/- was accepted by the DDA. Mr. Jayant Bhushan prays for time to get the instructions on these aspects. A copy of this order be given dasti to counsel for the DDA."
6. Next order, which was referred to by the learned counsel for the petitioner having relevance is the one passed on 9.11.1995, which reads:
"Pursuant to the order dated 20.10.1994, counsel for the respondent has handed over a few documents, copies thereof have been made available to the counsel for the petitioner. Counsel for the petitioner states that he would like to file an affidavit so as to set out his case in reply to the documents made available to the DDA today. A week's time is allowed. To be listed on 17.4.1996."
7. Respondent made available the original record with respect to the auctions, which took place on 14th August, 1991, 16th August, 1991, 27th August, 1991 and 28th August, 1991.
8. Contention of the learned counsel for the petitioner has been that as per decision of the Supreme Court in M/s Star Enterprises etc. etc. v. The City & Industrial Development Corporation of Maharashtra Ltd. & Others, , respondents were bound to convey to the petitioner the reasons for rejection of his highest bid and since it has not been done, the impugned order is liable to be quashed and set aside. It was also argued that the adjoining shop in the same building, namely, shop No.147 was put to auction in 1992. Bid money was lower than the reserve price, which had been fixed and in that case bid was accepted whereas the petitioner's bid made on 14.8.1991 though highest at Rs. 2,42,000/- against reserve price of Rs. 2,34,925/- was not accepted and as such the action of the respondent is arbitrary.
9. There is no dispute that against the reserve price of shop No.148 at Rs. 2,34,925/- the bid of Rs. 2,42,000/- was offered by the petitioner. However, the record produced before us suggests that the original reserve price of this shop at the time when the shop became available for disposal was not Rs. 2,34,925/- but it was Rs. 3,27,984/- and as per the record as on 14.8.1991 its book value was Rs. 3,33,954/-. We have gone through the original nothings in the file in which it was noticed that as per the fixation of reserve price for commercial plots there has been an earlier decision to reduce the reserve price by 10% of the average auction rate obtained in the last years' auction and if the bids are higher than the reserve price quoted, the same be accepted. This point was discussed in the meeting, which took place on 19.9.1991 under the chairmanship of Vice Chairman, DDA and after considerable deliberations, it was decided that the reserve price of the built up properties, as reduced, may be announced but bids for such properties be riot accepted unless the same are above the reserve price declared by the Finance Department. Guiding principles, which were adopted for acceptance of the auction were as follows:
"(a) a bid lower than the original reserve price, fixed at the time when shop became available for disposal may not be accepted; and
(b) wherever pooling seems to have taken place, those bids may not be accepted."
10. In the light of these guidelines, which were formulated after lot of deliberations, we do not find any irrationality or illegality in the Vice Chairman taking a decision in rejecting the petitioner's bid since the original reserve price of the shop in question, at the time when the shop became available for disposal was far in excess of the bid offered by the petitioner. Original reserve price was Rs. 3,27,984/- whereas bid offered by the petitioner was Rs. 2,42,000/-.
11. Much emphasis was laid by the learned counsel for the petitioner on the point of arbitrariness that with respect to the auction of shop No.147 that the same was put to auction later on. Reserve price of shop No.147 was Rs. 2,15,000/-. Bid money received was Rs. 2,17,000/-, which was accepted. In the instant case question of acceptance or rejection of bid of shop No.147 is not the subject matter for which auction took place in the year 1992. The question before us is about the legality of the decision of the Vice Chairman, which was taken with respect of auction, which took place on 14.8.1991. Considering the official noting and the reasons for the decisions, which are duly recorded, we find no irrationality therein. In exercise of power of judicial review the Court is not concerned with the merits of the decision but only with the decision making process. In the instant case with the decision making process there is irrationality. Decision taken by the Vice Chairman on 14.10.1991 in rejecting the petitioner's bid cannot be judged with reference to the subsequent events, which took place in 1992. Under what circumstances shop No.147 was put to auction is not the subject matter of the instant writ petition.
12. As regards communication of the reasons, in M/s Star Enterprises's case (supra) the Supreme Court held that where highest offers of the shop in question were rejected, reasons sufficient to indicate the stand of the appropriate authority should be made available and ordinarily the same should be communicated to the concerned parties unless there be any specific justification not to do so. In the instant case reasons were not assigned to the petitioner. It is not imperative in law that decision must be communicated. The requirement of law is that there must be reason recorded on the file for which reference may be made to a decision of Constitution Bench in S.N. Mukherjee v. Union of India, , in which it was held that "exception cases where requirement has been dispensed with expressly or by necessary implication an administrative authority exercising judicial or quasi judicial functions is required to record the reasons for its decision. In this case decision has been duly recorded in the file, which the respondent notified to the petitioner in its counter and for that we do not find any illegality therein that for not communicating the reasons, decision is vitiated."
13. It has been the constant view of this court that it is open for the Vice Chairman not to accept even the highest bid if such an acceptance is not in the interest of justice of revenue. Reference may be made to the decision in Mamta Tancja v. DDA & others, CW 2457/90 decided on 18.3.1991, which decision was rendered placing reliance upon the decision in State of Orissa and others v. Harinarayan Jaiswal and others, and Ramana Dayaram Shetty v. The International Airport Authority of India, . In two other decisions in Arun Gandotra v. DDA, CW 1556/92 decided on 23.3.1995 and M/s Divya Exports v. DDA, CW 2332/94 decided on 31.3.1995, rejection of similar highest bids, which though more than the reserve price as notified but less than the original reserve price, when shop became available for being auctioned was upheld.
14. In view of the above, we do not find any ground to interfere in this writ petition, which is hereby dismissed.