Delhi High Court
Ghanshyam Das Aggarwal vs Delhi Development Authority on 29 February, 1996
Equivalent citations: 1996IAD(DELHI)1103, 1996(37)DRJ485
Author: R.C. Lahoti
Bench: R.C. Lahoti, Lokeshwar Prasad
JUDGMENT R.C. Lahoti, J.
(1) This common order shall govern the disposal of Cwp No. 4785/95, 4814/95 and 2984/95. The three petitions are filed by three highest bidders in respect of three industrial plots in an auction held by Delhi Development Authority on 22.6.1995 and they are aggrieved by the rejection of their bids by the Vice Chairman, DDA.
(2) The facts, not in controversy, lie in a narrow compass in so far as relevant for the purpose of these petitions. The respondent Delhi Development Authority advertised auction by public sale of the industrial plots situated in Mangolpuri, Phase I Scheme. In the table below arc set out plot numbers, area in square meters, reserved price, the highest bid and whether the bid was accepted or rejected.
S. No. Plot No. Area (Sq. Reserved Highest Bid Accepted/Rejected Mts.) Price (Auction held on 21-6-1995) 1. T-5/229 200 11,20,000.00 16,80,000.00 Accepted 2. T-5/230 200 11,20,000.00 15,63,000.00 Accepted 3. T-5/243 269 14,60,670.00 20,75,000.00 ** 4. T-5/244 269 14,60,670.00 19,60,000.00 Accepted 5. T-5/245 . 269 16,06,737.00 22,51,000.00 Accepted 6. T-5/246 400 21,72,000.00 26,50,000.00 Accepted 7. T-5/247 400 21,72,000.00 25,91,000.00 Accepted 8. T-5/248 400 21,72,000.00 26,01,000.00 Accepted 9. T-5/249 400 21,72,000.00 25,61,000.00 Accepted 10. T-5/250 400 21,72,000.00 25,25,000.00 Accepted 11. T-5/251 400 21,72,000.00 25,00,000.00 Accepted (AUCTION Held On 22-6-1995) 12. T-5/252 400 21,72,000.00 22,13,000.00 Rejected 13. T-5/253 400 21,72,000.00 22,29,000.00 Rejected 14 T-5/254 400 21,72,000.00 22,35,000.00 Rejected 15 T-5/255 400 21,72,000.00 22,48,000.00 Rejected 16 T-5/256 400 21,72,000.00 22,85,000.00 Rejected 17 T-5/257 400 21,72,000.00 22,86,000.00 Rejected 18 T-5/258 400 21,72,000.00 22,95,000.00 Rejected 19 T-5/259 400 21,72,000.00 22,80,000.00 Rejected 20 T-5/260 400 21,72,000.00 28,03,000.00 Accepted 21 T-5/261 181 10,13,600.00 15,19,000.00 Accepted 22 T-5/262 181 10,13,600.00 16,05,000.00 Accepted **Earnest money not deposited.
(3) The three petitioners namely Ghanshyam Dass (CW 4785/95), Din Dayal (CWP 4814/95) and M/S Asclepius Pharmaceuticals Pvt. Ltd ( Cwp 2984/95) are respectively the highest bidders of plot No.T-5/257, T-253 and T- 5/258 respectively. Each of them was the highest bidder in respect of the plot bid by it. The officer conducting the sale had declared each of them the respective highest bidder and knocked down the respective sale in its favour. The bids were placed before the Vice Chairman Dda who has in exercise of his discretion refused to accept each of the three bids. There arc in all eight bids which have been rejected.
(4) According to the petitioners rejection of the bids by the Vice Chairman, Dda has been unreasonable and arbitrary. It is submitted that when the bids were made in an open auction and they were above the reserve price, there is no reason why the bids should not have been accepted.
(5) Notice to show cause why rule nisi be not issued was directed to be issued and served on the respondent DDA. The respondent has made appearance. The plea taken by the respondent is that para 2.5 of the terms and conditions of the auction which were also signed by the intending auction-purchasers (including the petitioners) provides that for any reasons to be recorded in writing the Vice Chairman may reject any bid including the highest bid. Eight bids including the three under challenge were rejected because their bid amounts were roughly ten per cent less than the bids received on 21.6.95.
(6) Para 2.5 of the terms and conditions of the auction provides as under : "The officer conducting the auction may, for reasons to be recorded in writing and submitted to the Vice Chairman Dda reject any bid including the highest bid"
(7) The existence of the above said term and the factum of the petitioners being bound by the above said term is not disputed by the petitioners. However, their plea is that in spite of the existence of the said term, the Dda and its officer being 'State' within the meaning of Art. 12 of the Constitution cannot afford to behave unreasonably and arbitrarily and so the rejection by them is vitiated.
(8) We have called for the original record of the auction proceedings. The facts revealed therefrom may briefly be noticed. There were in all 22 plots put to auction. Auction of Ii plots was held on 21.6.95. Remaining Ii plots were put to auction on 22.6.95 as advertised.
8.1.In respect of the plots put to auction on 21.6.95 the auction of plot at Si No.3 was cancelled because the highest bidder failed to deposit the earnest money. The bids in respect of other ten plots were accepted as they were "very competitive" and "above the reserved price".
8.2.When the proceedings of the auction conducted on 22.6.95 were put up before the Vice-Chairman Dda by the Officer conducting the sale, he had available with him the data of prices fetched at the auction held on 21.6.95. He found that in the auction held on 21.6.95 the highest bid received for a plot of 400 sq yards was 26.5 lakhs and the lowest was 25 lakhs, whereas in the auction held on 22.5.95 the highest bid received was only Rs. 22.95 lakhs excepted for plot No. T-5/260 ( Si No. 10) which was Rs. .28.03 lakhs. He proposed that the amounts of bids were roughly ten per cent less than those fetched on 21.6.95 and therefore only, the following three bids deserved to be accepted while all other bids deserved to be rejected.
Bids Recommended To Be Accepted Plot No. Area Reserved price Bid Amount T-5/260 400 21,72,000.00 28,03,000.00 T-5/261 181 10,13,600.00 15,19,000.00 T-5/262 181 10,13,600.00 16,05,000.00 8.3.The recommendation of the officer conducting the sale was processed through the Finance Member of Dda and ultimately the Vice Chairman DDA- the authority competent -agreed with the recommendations of the officer conducting the sale and rejected the eight bids, as was proposed.
(9) We have to see whether the action of the Vice-Chairman Dda was so unreasonable and arbitrary as would be liable to be struck down in exercise of judicial review jurisdiction of High Court.
(10) Straightaway, we may proceed to offer two Division Bench Decisions of Delhi High Court, recently delivered.
10.1.In Dr. Hot chandani & Ors. VS. Delhi Development Authority, Cwp 250/95 decided on 17.10.95, we have held :-
"The law is well settled that while exercising our writ jurisdiction, we arc not to sit as an appellate authority over the decision of the authority like the Vice Chairman of Delhi Development Authority. We have only to examine whether the decision taken by the Vice Chairman, Dda is a reasonable decision, a decision which a reasonable man guided by relevant consideration could have taken in the circumstances of the case. It is pertinent to note that there is no allegation of mala fides made against the Vice Chairman-DDA.
If the Vice Chairman was of the opinion having taken into consideration the relevant data placed before him, that the bids which were below a certain figure, did not reflect the mark trend of prices of land and the Dda was likely to gain on the plots being offered for sale by public auction once again, there is nothing wrong in it. The Vice Chairman has acted in the interest of the DDA. He has tried to save the Dda from the huge financial loss which was likely to result to the Dda in the event of all the bids being accepted. He was, therefore, justified in rejecting the bids relating to five plots including the one made by the petitioner. The terms and conditions of the auction also gave such an authority to the Vice Chairman. It is true that reasons must exist for rejecting a bid including the highest bid. The reasons do exist though they were not conveyed to the petitioners. It is enough if the reasons exist though not communicated (Kumari Shrilekha Vidhyarthi Etc. Vs. State of U.P., ."
10.2.In Kusum Lata Khajanchi & Ors. VS. Delhi Development Authority & Ors., 1995(35) Dm 480, the price offered by the petitioners had exceeded the reserve price but the bid was not accepted by the Vice Chairman-DDA. The rejection on bid was impugned in the writ petition. Reiterating the view taken in Dr. Hotchandani's case (supra) and having made the review of the relevant legal provisions and a decided cases, it has been held :-
"In view of the provisions contained in the Rules and the notified terms and conditions of the auction, it is clear that there is a discretion conferred on the Vice Chairman-DDA to accept or not to accept a bid inspite of the same having been accepted as the highest bid by the officer conducting the sale. In the case at hand, we are of the opinion that the discretionary decision taken by the Vice Chairman is not open to question. There are no malafides alleged. There is no arbitrariness as the decision is well reasoned."
"As per the statutory rules and as was notified in the terms and conditions of the public auction, the acceptance of the bid is clearly stated to be subject to the discretion of the Competent Authority which is none else than the Vice Chairman-DDA. He has exercised his discretion against the petitioners by not accepting their bid. Reasons have been assigned for the view so taken by the Vice Chairman. The exercise of discretion is neither arbitrary nor unreasonable and cannot be found fault with."
(11) In the case at hand also, there are no malafides alleged. Out of the 11 plots put to auction on 22.6.95, 8 bids have been rejected and 3 accepted. It is not the case of the petitioners nor is it borne out from the record that the petitioners or any of them has been met with hostile discrimination or has been singled out for the- purpose of being excluded from allotment of plots. The decision taken by the Competent Authority is an objective one based on a criterion devised on the material available on record. The authority has been guided by the consideration of protecting the financial interest of the Dda so as to earn more revenue for it. The decision cannot be said to be arbitrary or unreasonable. Merely because some one else sitting in the place of the Vice Chairman, Dda could have arrived at a different decision and might have been inclined to accept the bids would not be a ground for interfering in exercise of judicial review jurisdiction of the High Court with the discretionary decision taken by the authority. The scope of judicial review is well settled by a catena of decisions (See Pepsico Restaurants International (1) (P) Ltd. VS. Municipal Corporation of Delhi & Ors., for the Supreme Court Cases referred to therein) Inviting attention of the Court to a Division Bench decision in Arun K. Saraf&Anr. VS. Lt. Governor of Delhi, , it was submitted by the learned counsel for the petitioners that the Court may adjourn the hearing in these petitions and in the meantime permit the Dda to advertise the plots afresh for sale by public auction so as to find out if the plots fetch any bids higher than those offered by the petitioners and if that be so, the petitions would either be withdrawn by the petitioners or be dismissed by the court. However, we find ourselves not persuaded to accept this plea.
(12) We have gone through the decision in Arun K. Saraf (supra). The facts were peculiar. A site for 5 star hotel was advertised for sale by inviting tenders. Only two tenders were submitted: one of them was by the petitioner, the other than was found to be not in order and hence rejected. The Vice Chairman-DDA .was inclined to accept the tender. However, the Minister of State (MOS), Ministry of Urban Development in the Central Government, was of the opinion that in such a big deal a single tender did not deserve to be accepted, for an allotment based on a single tender was highly prone to public criticism and hence fresh tenders be invited. During the pendency of the petition, advertisement for reauction was issued, but not a single party came forward to make a bid. The Court opined that it was a peculiar case wherein DDA- the competent authority to take decision regarding sale of plot of a land - had taken a decision. The decision was taken by the Lt. Governor as well as by the Vice Chairman of Dda and when the decision was in the process of being conveyed to the petitioner, the Central Government intervened without giving any opportunity of hearing to the Central Government. In such circumstances, intervention of the successful bidder and the direction issued by it to the Dda were set aside upholding the decision of the Lt.Governor and the Vice Chairman of the DDA.
12.1It is obvious that the decision does not lay down any principle much less a law contemplating a procedure of a public auction being advertised and held during the pendency of petition wherein rejection of a bid is impugned.
12.2After all a public auction during the pendency of a petition held under the orders of the Court for the purpose of finding out the value of the plot would be a mock auction merely. The bidders would know that the property was subjudice. They would also know that the object of the auction was merely to finding out quantum of the highest bid likely to be offered. Why would anybody participate in such an auction and take the trouble of depositing earnest money and 25% of the bid amount. Bids at such a public auction would either be not offered and if offered, would be take and certainly not genuine ones. In any case holding of such a mock auction is not going to serve any useful purpose. We do not deem it proper to follow that course.
(13) It was submitted by learned counsel for the petitioners that the reasons for rejection of the highest bid should have been communicated to the petitioner. Reliance is placed on M/s. Star Enterprises Etc. VS. The City & Industrial Development Corporation of Maharashtra Ltd. & Ors., . In para 10 of the judgment, the following passage occurs :- "The submission of Mr.Dwivedi, therefore, commends itself to our acceptance, namely, that when highest offers of the type in question are rejected reasons sufficient to indicate the stand of the appropriate authority should be made available ordinarily the same should be communicated to the concerned parties unless there be any specific justification not to do so."
(14) In spite of the above said observation in the ultimate result, the dismissal of the petition has been upheld by the Supreme Court.
(15) The observation made by the Supreme Court is binding on us, but we do not think it is going to make any difference in the case at hand. Firstly, the Rules and the Terms and Conditions of the Public Auction did not contemplate reasons for rejection of highest bid being communicated to the concerned bidders. There is a distinction between existence of reasons and assigning of reasons ( see Shrilekha Vidyarthi ). The former is a requirement of natural justice, the later is a dictate of law. Reasons need not be assigned in the sense of being communicated to a party unless required to be so done by any Rule having force of law. Secondly, the reasons could have been made available if asked for. Thirdly, the reasons for rejection though not communicated and though not asked for by the petitioners before filing the petitions have been made available in the Court in response to the show cause notice issued and it would serve no useful purpose if we may dispose of the petitions merely by directing the respondents-DDA to communicate the reasons to the petitioner. The reasons now having been made known to the petitioners, they have been heard thereon. Whatever they had to say on such reasons they have said and we have also tested the validity of the reasons and have found nothing unreasonable therewith. That is an end of the matter.
(16) For all the foregoing reasons, the petitions are held liable to be dismissed and are dismissed accordingly. No order as to the costs