Punjab-Haryana High Court
Amrit Lal Mahajan vs State Of Punjab & Others on 4 November, 2008
Equivalent citations: AIR 2009 (NOC) 1518 (P. & H.), 2009 (4) ABR (NOC) 780 (P. & H.) 2009 (4) AKAR (NOC) 626 (P. & H.), 2009 (4) AKAR (NOC) 626 (P. & H.), 2009 (4) AKAR (NOC) 626 (P. & H.) 2009 (4) ABR (NOC) 780 (P. & H.), 2009 (4) ABR (NOC) 780 (P. & H.)
Author: Jora Singh
Bench: Jora Singh
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
C.W.P No.2480 of 2007
Decided on : 04.11.2008
Amrit Lal Mahajan
....Petitioner
VERSUS
State of Punjab & others
....Respondents
CORAM:- HON'BLE MR. JUSTICE M. M. KUMAR
HON'BLE MR. JUSTICE JORA SINGH
Present:- Mr. Shailendra Jain, Advocate
for the petitioner.
Mr. B. S. Dhillon, AAG, Punjab.
Mr. C. M. Sharma, Advocate
for respondent No.3.
1. Whether Reporters of local papers may be allowed to see the judgment? yes
2. To be referred to the Reporters or not? yes
3. Whether the judgment should be reported in the Digest? yes
M. M. KUMAR J.
1. In this bunch of three petitions (details of which have been
given in the footnote*) a short question of law has been raised as to whether
the Improvement Trust, respondent No.3 refused to confirm the auction of
the site in question, on the ground that the price fetched by it is diminutive.
C.W.P No. 2480 of 2007 -2-
It is appropriate to mention at the outset that when the matter came up for
consideration, the Division Bench has confined issuance of notice of motion
to prayer 'B' made in the writ petition. According to prayer 'B' quashing of
resolution No.43 dated 31.05.2006 (Annexure P-5) as also letters dated
28.09.2006 and 28.12.2006 (Annexures P-6 and P-7) have been sought.
The Improvement Trust, respondent No.3 has refused to accord approval to
Shop-cum-Flats site No.3, 4 and 5 on the ground that the price of these sites
at Rajiv Gandhi Nagar, Bathinda is diminutive.
2. Brief facts of the case necessary for disposal of the instant
petition are that Improvement Trust, Bathinda, respondent No.3 (herein after
to be referred as 'Trust') issued advertisement on 10.05.2006 for the sale of
Shop-cum-Flats (SCFs) and booths by way of auction in the Rajiv Gandhi
Nagar Scheme and Transport Nagar Scheme framed by the Trust. In Rajiv
Gandhi Nagar Scheme, three SCFs site Nos.3 to 5 measuring 120 sq. yards
were advertised to be sold by way of auction at a reserve price of
Rs.5,40,000/- each. Likewise, five booths (site No.11 to 15), each
measuring 22.41 sq. yards were also advertised to be sold by an open
auction at the reserve price of Rs.1,01,000/- each. According to clause (iii)
of the advertisement, it was expressly provided that the highest bid was to
be subject to approval to be accorded by the Trust. The petitioner deposited
Rs.60,000/- as earnest money on 10.05.2006 to enable him to participate in
the auction of SCF No.3 vide receipt dated 10.05.2006 (Annexure P-3). The
petitioner being the highest bidder at Rs.6.5 lacs had deposited a sum of
Rs.1,62,500/- representing 25% of the total auction price was deposited by
him on 11.05.2006 (Annexure P-4). It is appropriate to mention that the
C.W.P No. 2480 of 2007 -3-
SCF Site No.4 & 5 were auctioned for Rs.7 lacs each. On 31.05.2006, the
Trust passed a resolution No.43 (Annexure P-5) rejecting the auction in
respect of SCF Site Nos.3 to 5 of Rajiv Gandhi Nagar on the ground that the
price fetched was too less in comparison to the price fetched in the earlier
auction.
3. The petitioner has claimed that no auction of SCF had taken
place on 09.11.2005, and therefore, it is erroneous on the part of the Trust to
rely upon the auction held on 09.11.2005. However, it has been averred that
the sale price of SCFs site fetched in the auction held on 03.08.2005 is
totally erroneous and misplaced. The petitioner has pleaded with the help of
auctions held on 03.08.2005, 09.11.2005, 10.05.2006 and 08.09.2006 that
there was boom in the prices of property as would be evident from the
auction held on 03.08.2005. In respect of auction held on 03.08.2005,
following table has been prepared which reads thus:-
"RAJIV GANDHI NAGAR GURUKUL ROAD BATHINDA
AUCTION HELD ON 3.8.2005
Site No. Reserve Price Maximum Bid
Booth Site No.1 Rs.1,01,000/- Rs.4,50,000/-
Booth Site No.2 Rs.1,01,000/- Rs. 4,65,000/-
Booth Site No.3 Rs.1,01,000/- Rs.4,30,000/-
Booth Site No.4 Rs.1,01,000/- Rs.4,20,000/-
Booth Site No.5 Rs.1,01,000/- Rs.4,00,000/-
SCF Site No.1 Rs.5,40,000/- Rs.16,75,000/-
SCF Site No.2 Rs.5,40,000/- Rs.16,00,000/-
C.W.P No. 2480 of 2007 -4-
TRANSPORT NAGAR, BATHINDA
Site No. Reserve Price Maximum Bid
Shop Site No.31 Rs.1600/- per sq. Rs.14,000/- per
yard sq. yd.
Shop Site No.32 Rs.1600/- per sq. Rs.14,000/- per
yard sq. yd.
Shop Site No.33 Rs.1600/- per sq. Rs.13,900/- per
yard sq. yd.
Shop Site No.34 Rs.1600/- per sq. Rs.14,000/- per
yard sq. yd."
4. The petitioner has made an attempt to show that SCF Site No.1
in Rajiv Gandhi Nagar, Gurukul Road, Bathinda had fetched over 16 lacs as
against the reserve price of Rs.5,40,000/-. Likewise, in respect of booth
sites, the prices were quite high and it fetched Rs.4 lacs as against the
reserve price of 1,01,000/-.
5. The petitioner has further pleaded that there were lower trend in
the price and the booth sites in the Rajiv Gandhi Nagar were sold
approximate for Rs.2 lacs as is evident from the following table:-
"RAJIV GANDHI NAGAR GURUKUL ROAD BATHINDA
AUCTION HELD ON 9.11.2005
Site No. Reserve Price Maximum Bid
Booth Site No.5 Rs.1,01,000/- Rs.2,36,000/-
Booth Site No.7 Rs.1,01,000/- Rs.2,15,000/-
Booth Site No.8 Rs.1,01,000/- Rs.2,12,000/-
Booth Site No.9 Rs.1,01,000/- Rs.1,96,000/-
Booth Site No.10 Rs.1,01,000/- Rs.1,81,000/-
No SCF auctioned on 9.11.2005.
C.W.P No. 2480 of 2007 -5-
TRANSPORT NAGAR, BATHINDA
Site No. Reserve Price Maximum Bid
Shop Site Rs.1600/- per sq. Rs.71,00/- per sq.
No.11 yard yd.
Shop Site Rs.1600/- per sq. Rs.56,00/- per sq.
No.12 yard yd.
Shop Site Rs.1600/- per sq. Rs.58,00/- per sq.
No.13 yard yd.
Shop Site Rs.1600/- per sq. Rs.59,00/- per sq.
No.14 yard yd.
Shop Site Rs.1600/- per sq. Rs.55,00/- per sq.
No.15 yard yd."
6. The petitioner has thus pleaded that in the auction held on
10.05.2006 there were lower trend in price and the same booth sites fetched
approximately for Rs. 2 lacs and the Shop-cum-Flats site fetched
approximately for Rs.7 lacs. The petitioner has sought to prove the
aforementioned facts by the following table which reads thus:-
"RAJIV GANDHI NAGAR GURUKUL ROAD BATHINDA
AUCTION HELD ON 10.05.2006
Site No. Reserve Price Maximum Bid
Booth Site No.11 Rs.1,01,000/- Rs.1,86,000/-
Booth Site No.12 Rs.1,01,000/- Rs.1,92,000/-
Booth Site No.13 Rs.1,01,000/- Rs.2,01,000/-
Booth Site No.14 Rs.1,01,000/- Rs.2,08,000/-
Booth Site No.15 Rs.1,01,000/- Rs.2,12,000/-
SCF Site No.3 Rs.5,40,000/- Rs.6,50,000/-
SCF Site No.4 Rs.5,40,000/- Rs.7,00,000/-
SCF Site No.5 Rs.5,40,000/- Rs.7,00,000/-
C.W.P No. 2480 of 2007 -6-
TRANSPORT NAGAR, BATHINDA
Site No. Reserve Price Maximum Bid
Shop Site No.16 Rs.1600/- per sq. Rs.6200/- per sq. yd.
yard
Shop Site No.17 Rs.1600/- per sq. Rs.6100/- per sq. yd.
yard
Shop Site No.18 Rs.1600/- per sq. Rs.6200/- per sq. yd.
yard
Shop Site No.19 Rs.1600/- per sq. Rs.6300/- per sq. yd."
yard
Shop Site No.20 Rs.1600/- per sq. Rs.6400/- per sq. yd."
yard
Shop Site No.41 Rs.1600/- per sq. Rs.9500/- per sq. yd.
yard
Shop Site No.42 Rs.1600/- per sq. Rs.9650/- per sq. yd.
yard
Shop Site No.43 Rs.1600/- per sq. Rs.9900/- per sq. yd.
yard
Shop Site No.44 Rs.1600/- per sq. Rs.9900/- per sq. yd.
yard
Shop Site No.45 Rs.1600/- per sq. Rs.11400/- per sq. yd.
yard
Shop Site No.46 Rs.1600/- per sq. Rs.12200/- per sq. yd.
yard
Similar trend sought to be highlighted by the auction held on
08.09.2006.
7. In the written statement filed on behalf of the respondent, it has
been pleaded that the petitioner was well aware of the terms and conditions
of auction and he participated with his eyes and ears open. The respondents
have heavily relied upon condition No.3. The highest bid was to be subject
to the approval to be granted by the Trust. They have also claimed that the
Shop-cum-Flats had fetched lesser price, and therefore, it has always been
the prerogative of the seller i.e. respondent No.3 to cancel the auction of the
C.W.P No. 2480 of 2007 -7-
property in accordance with the terms and conditions No.3.
8. Mr. Shailendra Jain, learned counsel for the petitioner has argued
that it is wholly arbitrary for respondent No.3 to accept and amend approval
to all the booth sites although the booth sites have also fetched less price
than the price fetched in the auction held on 03.08.2005. According to the
learned counsel, once the diminutive price in respect of booth sites has been
approved and accepted, there was no reason for respondent No.3 to reject
the highest bid in respect of Shop-cum-Flat sites. According to the learned
counsel, against the reserve price of Rs.1,01,000/- of booth sites, the
erroneous bid has been approximately Rs.4,50,000/- on 3.8.2005 whereas
the maximum bid on 10.05.2006 in respect of similar booth sites is
Rs.1,86,000/- He has maintained that the prices have crashed and same
trend was available in respect of Shop-cum-Flat sites. Learned counsel has
pointed out that in respect of the SCF sites against reserve price of
Rs.5,40,000/-, the bid price on 03.08.2005 was over Rs.16,00,000/- whereas
in respect of the auction held on 10.05.2006 it was about 7 lacs. He has
insisted if the price fetched in respect of booth was low then position was
the same in regard to Shop-cum-Flats. Granting approval to one and not
according approval to Shop-cum-Flats on the ground of diminutive price is
arbitrary and suffer from the vice of Article 14 of the Constitution, and,
therefore, the resolution dated 31.05.2006 (Annexure P-5) and
consequential letters dated 28.12.2006 and 28.09.2006 (Annexures P-6 and
P-7) are liable to be set aside.
9. Mr. C.M. Sharma, learned counsel for respondent No.3 has,
however, contended that even if the price had shown lower trend, the Trust
C.W.P No. 2480 of 2007 -8-
has not committed any illegality by cancelling the auction in respect of
Shop-cum-Flats. According to the learned counsel, the approval accorded
to the highest bid in respect of booth is entirely at a different pedestal than
the price of the Shop-cum-Flats. Learned counsel has maintained that both
the sites can not be treated alike.
10. Having heard the learned counsel, we are of the considered view
that there is no merit in these petitions and the same are liable to be
dismissed. By mere participation in the auction and depositing of 25% of
the bid amount by the petitioners does not vest any right in them to claim
that they being the highest bidder must get the site in question. The terms
and conditions of the advertisement published by respondent No.3 on
10.05.2006, it has been clarified that the Chairman is fully entitled to cancel
the auction. Clause (iii) of the terms and conditions put the matter beyond
any doubt which reads thus:-
"The highest bid will be subject to the approval of the
Trust/Government. Under the instructions of the Government,
4% taxes shall be charged on the highest amount of bid........"
11. In pursuance to the afore-mentioned clause, the Trust has passed
resolution on 31.05.2006. After referring to the name of the bidder, the kind
of property, the reserve price and highest bid in respect of Transport Nagar
and Rajiv Gandhi Nagar, the Trust had approved all the booth sites except
SCFs site under the Rajiv Gandhi Nagar Scheme and the resolution reads as
under:-
"Resolution No.43:- On careful comparative perusal of the
auctions of the properties held on 3.8.2005 and 9.11.2005, the
C.W.P No. 2480 of 2007 -9-
auctions of the properties of the Transport Nagar Scheme and
Shri Rajiv Gandhi Nagar Scheme are approved and the auction
of the Site Nos.3, 4 and 5 of Rajiv Gandhi Nagar is rejected
because the price of these sites has been found to be too less
than the sites auctioned earlier."
12. A perusal of the aforementioned resolution shows that the basic
reason for rejecting the auction in respect of Site No.3 to 5 of Rajiv Gandhi
Nagar is that the price has been found to be too less than the sites auctioned
earlier.
13. It may be true that in respect of booth also respondent No.3 has
fetched lesser price but it does not mean that in respect of SCF, it is
debarred from adopting the policy according to market trends. The
petitioner does not get any right by depositing 25% of the amount before the
approval is accorded by the Trust in pursuance to clause (iii) which in fact
stands rejected. Moreover, the resolution dated 31.05.2006 has been duly
approved by the Chairman on 28.09.2006 (Annexure P-7) and accordingly
intimation has been sent to the petitioner by respondent No.3 on 28.12.2006
(Annexure P-6).
14. The question whether the highest bid could be rejected by the
competent authority has been repeatedly considered by Hon'ble the
Supreme Court. The petitioner cannot seek a direction to the respondent
Trust compelling it to accept the highest bid given by him. The rights of
auction purchaser were considered and determined by Hon'ble the Supreme
Court in the case of Laxmikant v. Satyawan, (1996) 4 SCC 208. The facts
of that case are akin to the facts of the present case. There the dispute had
C.W.P No. 2480 of 2007 -10-
arisen out of auction of a plot by Nagpur Improvement Trust. The auction
notice, like the case in hand, contained a condition that acceptance of the
highest bid was to depend upon the approval of the Board of Trustees and
its decision regarding acceptance or rejection of the highest bid was to be
binding on the bidder. Before concluding, in para 4, their Lordships' placed
reliance on the earlier judgments rendered by Hon'ble the Supreme Court in
Trilochan Mishra v. State of Orissa, (1971) 3 SCC 153; State of Orissa
v. Harinarayan Jaiswal, (1972) 2 SCC 36; Union of India v. Bhim Sen
Walaiti Ram, (1969) 3 SCC 146; and State of U.P. v. Vijay Bahadur
Singh, (1982) 2 SCC 365; and observed as under:-
" 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 that the acceptance of the highest bid by the
Board of Trustees was a must and the Trust reserved the right
to itself to reject the highest or any bid. This Court has
examined the right of the highest bidder at public auctions in
the cases of Trilochan Mishra v. State of Orissa, (1971) 3 SCC
153; State of Orissa v. Harinarayan Jaiswal, (1972) 2 SCC 36;
Union of India v. Bhim Sen Walaiti Ram, (1969) 3 SCC 146;
and State of U.P. v. Vijay Bahadur Singh, (1982) 2 SCC 365. It
has been repeatedly pointed out that State or the authority
which can be held to be State within the meaning of Article 12
C.W.P No. 2480 of 2007 -11-
of the Constitution is not bound to accept the highest tender or
bid. The acceptance of the highest bid is subject to the
conditions of holding the public auction and the right of the
highest bidder has to be examined in context with the different
conditions under which such auction has been held. In the
present case no right had accrued to the respondent either on
the basis of the statutory provision under Rule 4 (3) or under
the conditions of the sale which had been notified before the
public auction was held."
15. The aforementioned view was followed by Hon'ble the Supreme
Court in the case of Rajasthan Housing Board v. G.S. Investments,
(2007) 1 SCC 477. Dealing with the rights of highest bidder and after
referring to the aforementioned judgments of Hon'ble the Supreme Court, it
was observed that the petitioner merely because it is a highest bidder could
acquire no right to claim that the auction be concluded in his favour.
Hon'ble the Supreme Court further held that the High Court would not
enjoy jurisdiction under Article 226 of the Constitution to entertain
challenge to the cancellation of an auction held by a public body where the
prime consideration is fairness and generation of public revenue. In that
regard reliance was placed on the judgment of Hon'ble the Supreme in the
case of Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd.,
(2005) 6 SCC 138, and their Lordships' held that the judicial review would
apply to the exercise of contractual power by governmental bodies only in
order to prevent arbitrariness and favouritism and the power is tampered
with inherent limitation. The Government being the guardian of the
C.W.P No. 2480 of 2007 -12-
finances of the State is expected to protect its financial interests, which
include the right to refuse the lowest tender although the principles laid
down in Article 14 of the Constitution have to be complied with. It was
further held that if the power has been exercised for any collateral purposes
then such an order may have to be struck down and to that extent judicial
restraint in administrative action is imperative because Court does not sit as
a Court of appeal and it is only to review the manner in which the decision
was made. The Court does not also have any expertise to correct the
administrative decision. Therefore, we are of the considered view that the
instant petition is liable to be dismissed.
16. For the reasons aforementioned, these petitions fails and the same
are dismissed.
(M. M. KUMAR)
JUDGE
(JORA SINGH)
JUDGE
November 04, 2008
Ashish/Pkapoor
_________________
*
1. CWP No.2480 of 2007 (Amrit Lal Mahajan v. The State of Punjab & others)
2. CWP No.2494 of 2007 (Dinesh Kumar Goyal v. The State of Punjab & others)
3. CWP No.2514 of 2007 (Vinod Kumar v. The State of Punjab & others)