Madhya Pradesh High Court
Indore Education And Services Society ... vs Ministry Of Housing And Environment on 22 March, 2024
Author: Sushrut Arvind Dharmadhikari
Bench: Sushrut Arvind Dharmadhikari, Prakash Chandra Gupta
1
W.P. 3523 of 2017
IN THE HIGH COURT OF MADHYA
PRADESH
AT I N D O R E
BEFORE
HON'BLE SHRI JUSTICE SUSHRUT ARVIND
DHARMADHIKARI
&
HON'BLE SHRI JUSTICE PRAKASH CHANDRA GUPTA
ON THE 22nd MARCH, 2024
WRIT PETITION No. 3523 of 2017
BETWEEN:-
INDORE EDUCATION AND SERVICES SOCIETY THROUGH MR.
PRASHANT JAIN AUTHORISED SIGNATORY SITA BUILDING, 4,
YASHWANT NIWAS ROAD, INDORE (MADHYA PRADESH)
.....PETITIONER
(SHRI VEER KUMAR JAIN SENIOR ADVOCATE WITH MS VAISHALI JAIN
APPEARED FOR PETITIONER)
AND
MINISTRY OF HOUSING AND ENVIRONMENT PRINCIPAL
1.
SECRETARY BHOPAL (MADHYA PRADESH)
CEO INDORE DEVELOPMENT AUTHORITY 7, RACE COURSE ROAD,
2.
INDORE (MADHYA PRADESH)
CHAIRMAN IDA 7, RACE COURSE ROAD, INDORE (MADHYA
3.
PRADESH)
.....RESPONDENTS
(SHRI ANIKET NAIK, DY. ADVOCATE GENERAL FOR THE RESPONDENT
NO.1/STATE)
(SHRI YOGESH KUMAR MITTAL, LEARNED COUNSEL FOR THE
RESPONDENT NO. 2 & 3/IDA)
Reserved on : 09.11.2023
Pronounced on : 22.03.2024
2
W.P. 3523 of 2017
----------------------------------------------------------------------------------------
This petition having been heard and reserved for order coming on for
pronouncement this day, Hon'ble Shri Justice S.A. DHARMADHIKARI
pronounced the following
ORDER
Matter is heard finally with the consent of parties. In this writ petition under Article 226 of the Constitution of India, petitioner has prayed for the following reliefs:
"A. The impugned order Annexure P/16 may kindly be quashed ; and B. The condition put up by the respondent no.1 to see the financial interest of respondent no.2, being wholly unwarranted and illegal, may kindly be quashed. And C. The respondent no.2 may be directed to take appropriate action for allotment of plot no.522 within 30 days as the State Govt. accept the condition to see financial interest, as granted approval for allotment; and D. Exemplary cost be awarded to the petitioner against the respondents jointly and severally; and E. Any other relief which this Hon'ble Court may deem fit may kindly be granted with costs throughout."
2. Brief facts of the case are that the petitioner is a registered Public Trust under the M.P. Trust Act, 1951(hereinafter referred to as the Act of 1951") which was duly registered on 20.04. 1978.
(i) Shri Prashant Jain has been appointed and authorized to file and prosecute the writ petition.3
W.P. 3523 of 2017
(ii) The petitioner Society is engaged in the activities of public welfare in the field of education and health without any profit earning object and just to render services to the Society.
(iii) Respondent no.1 being the State Government is possessed with the power of superintendence u/S 72 and 73 of the M.P. Nagar Tatha Gram Nivesh Adhiniyam, 1973[referred to as "Adhiniyam, 1973" hereinafter]. The respondent no.2 is the development authority constituted under the Adhiniyam, 1973 and is responsible for development and regulations of various lands for different purposes within the planning area. The aforesaid functions performed by the respondent are public functions and statutory in nature, makes them amenable to the writ jurisdiction of this Court.
(iv) On 22.08.2009 (Annexure P-4), NIT was issued inviting tenders for Plot No. 522 admeasuring 1335 sq. mt@ minimum reserved price of Rs. 5,000/- per sq. m. On 16.09.2009, the petitioner submitted the earnest money of Rs. 5,00,000/- through demand draft bearing no. 903012 dated 16.09.2009 in respect of plot no. 522. The petitioner submitted its bid for the aforesaid plot @ Rs. 5,715 per sq.m. Condition no.11 of the NIT, ex- facie shows that plot for educational purposes were offered on the basis of "no profit no loss", much below the circle rates as per Collector Guidelines. Condition No.11 of the NIT is reproduced below for convenience:
'' 11. वविज्ञपप्ति ममें उललल्लेखखित भभूखखख्ंड ककी ननभूनतम दरमें ''न ललाभ न हलापन'' ककी दररों कल्ले आधलार पर पनधलार्धाररत ककी गनयख हह, जवबिक नयोजनला ममें आविलासयन/वनलाविसलापनक भभूखिखख्ंड कल्ले पलए पनवविदलाएख कलल्लेकक्टर दलारला वविततयन विरर्धा कल्ले पलए पनधलार्धाररत गलाइख्ंड ललाइन कल्ले आधलार पर ननभूनतम दर 4 W.P. 3523 of 2017 पनधलार्धाररत करतल्ले हहए आमखवत्रित ककी जलातय हहला इस प्रकलार वविज्ञपप्ति भभूखिखख्ंड ककी ननभूनतम दरमें , गलाइख्ंड ललाइन ककी दररों सल्ले अतनलापधक कम हयोकर भभूखिन ककी पनवविदला दरमें भय तदलानहसलार प्रलापत हयोतय हह , इसपलए भभूखखख्ंड पर पनपमर्धात हयोनल्ले विलालल्ले भविन ममें पनधलार्धाररत उपनयोग अनहसलार जयो गपतवविपधनयख सखचलापलत ककी जलाविमेंगय, उसममें समलाज कल्ले कमजयोर एविख पनमन आन विगर्धा कल्ले पररविलाररों कल्ले पलए ननभूनतम 10 प्रपतशत आरक्षण रखिला जलानला हयोगला, सलाथ हह इस शल्लेणय कल्ले पलए पशक्षण शहलक दलारला गठठित ककी जलानल्ले विलालय सखचलालक सपमपत दलारला ठकनला जलाविल्लेगला ाला इस सखचलालक सपमपत ममें प्रलापधकलारह कल्ले अधनक्ष अथविला अघनक्ष दलारला अपधककृत विररषठि अपधकलारह तयो सथलानय सदसन कल्ले रूप ममें सखममपलत करनला हयोगला और सखचलालक सपमपत ककी बिहठिक प्रपतविरर्धा कम सल्ले कम 2 बिलार आनयोखजत ककी जलानला अपनविलानर्धा हयोगला ाला''
(v) On 13.11.2009, the bid/tender of petitioner was accepted by the respondent no.2/IDA and forwarded to the State Government for approval. On 21.01.2011, the IDA vide its communication sent copy of layout of Scheme No. 114 Part 2 highlighting the plots in question.
Thereafter, no action, whatsoever, was taken by the State Government and the matter was pending. On 26.07.2013, the petitioner sent a reminder to the Government seeking an early action in the matter. In furtherance whereof, the respondent no.2 sent a communication (Annexure P-08) seeking its approval, but in vain. Again on 11.10.2013 and 24.05.2014, reminders were submitted. On 18.09.2014, petitioner sent a cheque of Rs. 38.15 lakhs to the IDA depositing more than 50% of the premium. On 5 W.P. 3523 of 2017 30.09.2014, the IDA returned the said cheque on the ground that no allotment has been done in favour of the petitioner and again the matter was kept in cold storage by the respondent. From the record, it is evident that from the year 2009-2016, the matter kept on shuttling between the IDA and the State Government without any positive decision.
3. Due to delay in granting approval and in allotment, the petitioner filed a writ petition bearing W.P. No. 5667/2015, which was disposed off with a direction to consider and decide the approval within a prescribed time.
4. When direction given in W.P. 5667/2015 not followed, a contempt petition bearing CONC. No. 8/2017 was also filed by the petitioner which was also disposed off.
5. By the effect and order passed in W.P. No. 5667/2015 on 27.12.2016, the petitioner received a communication i.e. an order dated 26.11.2016 passed by the Chief Executive Officer, IDA cancelling the tender process, rejecting the bid of the peitioner and directing for issuance of fresh tender due to escalation of price with the passage of time. According to aforesaid order, the IDA passed a resolution dated 16.07.2015 since the present value of land at that point of time was Rs. 25,000/- per sq. m. and, therefore, the IDA is unable to allot the same at old rates. On 09.11.2015, the IDA forwarded resolution to the State Government.
6. Learned counsel for the petitioner submitted that the action of the respondents in cancelling the tender process is dehors the rules, illegal and misconceived and, therefore liable to be set aside.
7. Learned counsel for the petitioner further submitted that respondent/IDA is catering to the needs of general public for development 6 W.P. 3523 of 2017 of any colony/project/scheme for commercial/residential purpose. It is mandatory to make provisions for common amenities like plots, school, health, community hall, garden etc. Such plots reserved for specific public purposes are having certain legal restrictions such as :
(i) The plots can only be allotted to public bodies/institutions like registered societies or registered public trusts which work in larger public interest and without any motive of earning profits.
(ii) There are statutory restrictions in construction of buildings such as lower coverage area, lower FAR etc.
(iii) The allottee institutions/trusts are neither entitled to make any commercial use of the plot or building constructed thereon nor are entitled to transfer such plot/building and to ensure that the same is used for the purpose for which it has been allotted.
(iv) In the management committee, it is prescribed that there should be one representative of the IDA, provide free education to certain percentage of students and the fee charged is also regulated.
(v) Though such subject plots are allotted by inviting tenders, but are allotted on "no profit no loss" basis. As such amenity and facility is to be statutorily provided and there is no commercial angle therein and also there is no loss to the public exchequer. The plot in question was specifically reserved for education/school and, therefore tender was invited from all eligible institutions.
(vi) Pursuant to NITs, several institutions submitted their tenders.
First of all the eligibility of tenderers were examined and thereafter the process offered by them was considered.
8. It is undisputed that the petitioner was found eligible to participate in the process and offer was found to be highest. Thereafter, the IDA 7 W.P. 3523 of 2017 accepted the bids of the petitioner. Acceptance was recorded and resolution was passed making known to all the parties. The IDA refunded the EMD amount to the unsuccessful bidders while the EMD amount of the petitioner is still lying with IDA. The IDA also reiterated regarding acceptance of bids/tenders in subsequent correspondence between the petitioner and the IDA and thereafter approval from the State Government was sought.
9. Learned counsel further contended that once the bid is accepted, approval is sought, the same cannot be cancelled by the IDA unless the approval is refused for reasons of some illegality or irregularity in the tender process or acceptance of ineligible person/institution. Since the aforesaid plot was allotted on the basis of "no profit no loss" at a concessional rate, hence as per Rule 19-20 of the Adhiniyam, 1973, an approval is necessary from the State Government. As per Adhiniyam, 1973 and Rules of 1975, the IDA is empowered to allot or dispose of its property without any intervention of the State Government. The IDA is vested with the absolute power. There is no provision or procedure for multi layered decision making. In case of concessional allotment , the approval of the State Government is provided just to ensure that such allotment was made to the eligible persons/institutions. The State Government has no role or interference in fixing the rates, particularly, when said plots are provided by open tender and the State has no role in the decision making process.
10. Learned counsel for the petitioner also contended that in all the cases, after acceptance of bids/tenders of petitioners, IDA recommended grant of approval for allotments, forwarded letters to the State Government. Certain inquiries were made by the State Government which 8 W.P. 3523 of 2017 were belatedly replied. However, it is clear that there was no delay or default on the part of the petitioner nor were they responsible It is also stated that IDA itself has admitted that approval from the State Government takes long time of several years. It has also been clarified that after approval, the plots are allotted on the same rates as per accepted tenders. It has also been observed that the allotments cannot be refused on the ground of delay other wise no allotment would be possible. As a matter of undisputed fact that IDA has never refused to allot or to scrap the tender process on the ground of delay in approval or escalation of price of such type of plots. Apart from that, it is also to be considered that when such plots are allotted on 'no profit no loss' basis, the question of escalation/increase in price is redundant. It is also important to note that IDA itself has admitted that price of plots of such specific purpose cannot be compared with the residential or commercial plots and even otherwise because of restrictions the price of such specific purpose plot is always very low.
11. Learned counsel for the petitioner also contended that it is clear from the letter of approval by the State Government that the State Government having examined the process, procedure and eligibility of the petitioner did not find any lapse or irregularity or illegality. It is also clear from the return filed by the State Government wherein it has been stated that the State Government has already taken decision, stating that now IDA can take a decision keeping in view, the financial interest. It does not mean that the State Government has ever directed the IDA either to cancel or scrap the entire process or to allot plot on prevailing market rate comparable with residential or commercial plots. So far as the rates and terms are concerned, State Government has no concern nor was it within 9 W.P. 3523 of 2017 the domain of the State Government. Therefore, the role of the State Government was over.
12. Learned counsel for the petitioner also contended that it is the IDA having reiterated for several years and promising to allot plots at accepted tender rates, which were the highest, as soon as the approval is received. IDA has suddenly taken a u-turn with malafide and for the reasons which are also apparent thereby unilaterally deciding to cancel and scrap the entire tender process and to invite fresh tenders. It is notable that in number of cases where the approvals were received after lapse of several years, the allotments were made on the same rates at the time of acceptance of tenders and it has been the consistent practice of IDA. Except the present case, no other tender process of such type of plots has ever been cancelled on the ground of delay in approval or escalation of price. Thus, malafide, arbitrariness and hostile discrimination are apparent.
13. Learned counsel for the petitioner also contended that State Government vide letter dated 21.12.2015(Annexure R-2/1) directed the IDA to take decision keeping financial interest in view, meaning thereby so far as State Government is concerned, it has thereby granted its approval.
14. Learned counsel for the petitioner also contended that the sole ground of cancelling and scrapping the tender is the so-called escalation in the price due to passage of time and that too after comparing these concessional plots with residential and commercial plots where there is no restrictions on use, higher area of construction, higher FAR, free use without any control and free transferability. He further stated that there is not default on the part of the petitioner. The petitioner always insisted for 10 W.P. 3523 of 2017 early approval and allotment and was always ready to refund the balance amount. There is no reason for allotting the plot to the petitioner. The amount deposited with the IDA is still lying idle without any benefit to the petitioner and due to non-allotment of plot in time, the cost of construction is also increased, which is detrimental to the petitioner. On account of non-allotment, the petitioner was also not able to acquire any other land. Due to delay on the part of the IDA , the public at large is deprived of getting educational facilities at cheaper rates as promised to the public decades ago. Thus, the arbitrary action is contrary to the larger public interest also. Therefore, the impugned resolution dated 16.07.2015 deserves to be quashed with a direction to the respondents/IDA to issue letter of allotment to the petitioner and to proceed further in accordance with law and accept the bids and NITS.
15. Learned counsel for the petitioner has placed reliance on various judgments of Apex Court which are as under:
➢ Legitimate expectation:
Food Corporation of India Vs. M/s Kamdhenu Cattle Feed Industries reported in 1993(1) SCC 71 National Textile Limited Vs. Padmavati Buildtech Anad Farms Pvt. Ltd. reported in 2017 SCC Online Del 7883.[See para 21] Relevant excerpts are reproduced below for ready reference:
21. In Food Corporation of India Vs. M/s. Kamdhenu Cattle Feed Industries reported in 1993 (1) SCC 71, the Supreme Court held that:
8. The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by itself be a distinct 11 W.P. 3523 of 2017 enforceable right, but failure to consider and give due weight to it may render the decision arbitrary, and this is how the requirement of due consideration of legitimate expectation forms part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process. Whether the expectation of the claimant is reasonable or legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations may outweigh what would otherwise have been the legitimate expectation of the claimant. A bonafide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in our legal system in this manner and to this extent.
➢ Judicial Review Tata Cellular Vs. Union of India reported in (1994) 6 SCC 651.[]Relevant excerpts Para 69 & 70 are reproduced below for ready reference:
69. A tender is an offer. It is something which invites and is communicated to notify acceptance. Broadly stated, the following are the requisites of a valid tender :
1. It must be unconditional.
2. Must be made at the proper place.
3. Must conform to the terms of obligation.12
W.P. 3523 of 2017
4. Must be made at the proper time.
5. Must be made in the proper form.
6. The person by whom the tender is made must be able and willing to perform his obligations.
7. There must be reasonable opportunity for inspection.
8. Tender must be made to the proper person.
9. It must be of full amount.
70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favoritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. ➢ Broad Parameters laid down by the Apex Court in tender matters.
Reutech Mining , A Division of Reutech Pty. Ltd. Through m/S K.K. Alliance Inida Private Limited Through power of attorney holder Vs. Union of India & Sujoyti India (P.) Limited Vs. Union of India reported in 2023 SCC Online Bom 36.
13
W.P. 3523 of 2017
Relevant Para 11,11A,11B,11C and 11 D are
reproduced below for ready reference:
11. Before proceeding to consider the prayers as made in the writ petitions it would be necessary to first consider the scope as well as the broad parameters laid down by the Hon'ble Supreme Court in tender matters. Same can be done under the following heads:-
(a) Right of a bidder vis-a-vis right of the principal to accept the best bid :-
The right of a bidder to a fair consideration of his offer coupled with the fact that he is entitled to a fair, equal and non- discriminatory treatment in the matter of evaluation of his bid is well recognized. While a lowest/highest bidder is not entitled to insist for acceptance of his offer he is nevertheless entitled to urge that the offer made by him has to be fairly considered by the principal and that he is entitled not to be discriminated against while his offer is considered alongwith that of all other bidders. At the same time the principal has a discretion not to accept the lowest/highest bid but to undertake a fresh exercise of bidding in a given case. The commercial freedom of the WPs 6566 & 8247-22 16 Common Judgment principal has to be regarded and such freedom is not liable to be interfered with unless it is shown that the same has been exercised in an arbitrary, irrational or a perverse manner or that such decision has been taken to favour a particular bidder. In Maa Binda Express Carrier & Another Versus North-East Frontier Railway & others [(2014) 3 SCC 760] it has been held that award of a contract is essentially a commercial transaction which must be determined on the 14 W.P. 3523 of 2017 basis of considerations that are relevant to such commercial decision.
It would therefore be necessary for the Court in such circumstances to seek to balance the competing rights between a bidder who is entitled to a fair consideration of his offer with the right of the principal to enter into a contract which suits its commercial interest. In a given case when the right of a bidder to fair treatment and consideration of his bid for acceptance is found to be honoured and satisfied, the insistence for issuance of a writ of mandamus against the principal to accept the lowest bid would have to give way to the right of the principal to choose not to accept such offer when such decision is shown to have taken bona fidely, in a transparent manner and not with a view to favour any particular bidder. If such informed decision is taken after considering the offer of the competing bidders and the Court finds that such decision is a possible view taken without it being arbitrary or irrational, the scope to interfere would be narrow.
(b) Decision making process versus correctness of the decision :-
It is well settled and requires no reiteration that in administrative matters and especially matters pertaining to decisions taken by the tender issuing authority, the Court is more concerned with the decision making process rather than the decision itself. The Court would be more concerned with the manner in which the decision under challenge has been taken rather than the aspect whether a correct decision in the facts of the case has been taken. In Sterling Computers Limited Versus M and N Publications 15 W.P. 3523 of 2017 Limited [(1993) 1 SCC 445] it has been held that while exercising the power of judicial review the Court is primarily concerned as to whether there has been any infirmity in the 'decision making process'. If it is found that the decision has been taken after due opportunity to the parties to explain and such decision can be supported by indicating the material considered, the same would satisfy the requirements of the decision making process being fair. In this regard we may refer to the observations of the Hon'ble Supreme Court in Tata Cellular Versus Union of India [(1994) 6 SCC 651] wherein in paragraph 74 it has been observed as under:-
"Judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made but the decision making process itself."
It is no doubt true that in certain circumstances when a decision itself is questioned the same can be examined on the anvil of irrationality. In paragraph 81 of the decision in Tata Cellular (supra) it has been observed as under:-
"81. Two other facets of irrationality may be mentioned.
(1) It is open to the court to review the decision-maker's evaluation of the facts. The court will intervene where the facts taken as a whole could not logically warrant the conclusion of the decision-maker. If the weight of facts pointing to one course of action is overwhelming, then a decision the other way, cannot be upheld. Thus, in Emma Hotels Ltd. v. Secretary of State for Environment, the Secretary of State referred to a number of factors which led him to the conclusion that a non-resident's bar in a hotel 16 W.P. 3523 of 2017 was operated in such a way that the bar was not an incident of the hotel use for planning purposes, but constituted a separate use. The Divisional Court analysed the factors which led the Secretary of State to that conclusion and, having done so, set it aside. Donaldson, L.J. said that he could not see on what basis the Secretary of State had reached his conclusion.
(2) A decision would be regarded as unreasonable if it is impartial and unequal in its operation as between different classes. On this basis in R. v. Barnet London Borough Council, ex p Johnson the condition imposed by a local authority prohibiting participation by those affiliated with political parties at events to be held in the authority's parks was struck down.
c) Reasonableness of an order vis-a-vis sufficiency of grounds in support of the decision:-
In West Bengal Central School Service Commission & Others Versus Abdul Halim & Others [(2019) 18 SCC 39] it has been held that in exercise of jurisdiction under Article 226 of the Constitution of India the High Court does not sit in appeal over an administrative decision. An unreasonable order or a decision so arbitrary and capricious that no reasonable person could ever have arrived at is liable to be struck down by a writ Court. If the decision cannot be rationally supported by the materials on record, it may be regarded as perverse. However, the power of the Court to examine the reasonableness of an order does not enable the Court to look into the sufficiency of the grounds in support of a decision to examine the merits of the decision. The test is not what the Court considers 17 W.P. 3523 of 2017 reasonable or unreasonable but a decision which the Court thinks that no reasonable man could have taken. The writ Court does not interfere because a decision is not perfect. Referring to the aforesaid decision, a three Judge Bench in Municipal Council Neemuch Versus Mahadeo Real Estate [(2019) 10 SCC 738] has reiterated that interference by the High Court would be warranted only when the decision impugned is vitiated by an apparent error of law meaning thereby that the error is apparent on the face of the record and is self evident. Moreover, such decision must have led to manifest injustice.
(d) Duty to record reasons vis-a-vis reasons that persuaded the In this regard it is necessary to note the distinction in cases where there is a statutory duty to record reasons while arriving at a particular conclusion in contra-distinction with an administrative decision wherein application of mind could be indicated on the basis of the material on record to urge that even in the absence of a separate reasoned order, the conclusion as recorded is after considering that material. Reference can be made to a recent decision of the Hon'ble Supreme Court in National Highways Authority of India & Others Versus Madhukar Kumar & Others [2021(11) SCALE 233] wherein the aspect of duty to give reasons has been considered. The earlier decision in Rajeev Suri Versus Delhi Development Authority [2021(1) SCALE 1] was referred to wherein it was held that when the Statute itself provide for an express requirement of a reasoned order it was understandable that absence of reasons would be a violation of such legal 18 W.P. 3523 of 2017 requirement and therefore illegal. However in cases where there is no such express requirement of reasons the ultimate effect of absence of reasons on the final decision cannot be sealed in a straightjacketed manner. Such cases would have to be examined from a proper perspective in the light of overall circumstances. The Court would look at the nature of the decision-making body, nature of rights involved, stakeholders, form and substance of the decision etc. The ultimate enquiry would be of WPs 6566 & 8247-22 21 Common Judgment application of mind and a reasoned order would be merely one element in this enquiry. The Court may decide in the context of overall circumstances of the case and a sole element (of no reasons or lack of elaborate reasons) cannot be enough to make or break the decision as long as the judicial mind is convinced of substantial application of mind from other circumstances.
Thereafter in paragraph 62 of its decision in National Highways Authority of India & Others (supra), it was observed as under:-
"62. It is one thing to say that there should be reasons, which persuaded the Administrator to take a particular decision and a different thing to find that the reasons must be incorporated in a decision. The question, relating to duty to communicate such a decision, would arise to be considered in different situations, having regard to the impact, which it, in law, produces. ........... Even if, there is no duty to record reasons in writing, undoubtedly, it must be followed and it would amount to the violation of the Statute, if it were not followed. Even if, there is no duty to record reasons or support an order with reasons, there 19 W.P. 3523 of 2017 cannot be any doubt that, for every decision, there would be and there must be, a reason. The Constitution does not contemplate any Public Authority, exercising power with caprice or without any rationale. But here again, in the absence of the duty to record reasons, the Court is not to be clothed with power to strike down administrative action for the mere reason that no reasons are to be found recorded. In certain situation, the reason for a particular decision, may be gleaned from the pleadings of the Authority, when the matter is tested in a court. From the materials, including the file noting's, which are made available, the court may conclude that there were reasons and the action was not illegal or arbitrary. From admitted facts, the court may conclude that there was sufficient justification, and the mere absence of reasons, would not be sufficient to WPs 6566 & 8247-22 22 Common Judgment invalidate the action of the Public Authority. Thus, reasons may, in certain situations, have to be recorded in the order. In other contexts, it would suffice that the reasons are to be found in the files. The court may, when there is no duty to record reasons, support an administrative decision, with reference to the pleadings aided by materials."
➢ Undue delay in keeping the process pending for an unreasonable period Madras Aluminium Co. Ltd. Vs. Tamilnadu Electricity Board reported in AIR 2023 SC 3353. Relevant para 30,31,34 and 35 are reproduced below for ready reference:
20W.P. 3523 of 2017
30. The above discussion gives way to the question whether such an action of the application remaining pending for an unreasonable period could in itself be classified as an arbitrary and unreasonable act.
31A Constitution Bench of this Court in Natural Resources Allocation, IN Re, Special Reference No.1 of 20126 speaking through J.S. Khehar, J. (as His Lordship then was) observed in regards to contracts having the State as a party, as hereinunder reproduced:-
"183. The parameters laid down by this Court on the scope of applicability of Article 14 of the Constitution of India, in matters where the State, its instrumentalities, and their functionaries, are engaged in contractual obligations (as they emerge from the judgments extracted in paras 159 to 182, above) are being briefly paraphrased. For an action to be able to withstand the test of Article 14 of the Constitution of India, it has already been expressed in the main opinion that it has to be fair, reasonable, non- discriminatory, transparent, non-capricious, unbiased, without favouritism or nepotism, in pursuit of promotion of healthy competition and equitable treatment. The judgments referred to, endorse all those requirements where the State, its instrumentalities, and their functionaries, are engaged in contractual transactions. Therefore, all "governmental policy" drawn with reference to (2012) 10 SCC 1 contractual matters, it has been held, must conform to the aforesaid parameters. While Article 14 of the Constitution of India permits a reasonable classification having a rational nexus to the object sought to be achieved, it does not permit 21 W.P. 3523 of 2017 the power of pick and choose arbitrarily out of several persons falling in the same category. Therefore, criteria or procedure have to be adopted so that the choice among those falling in the same category is based on reason, fair play and non-arbitrariness. Even if there are only two contenders falling in the zone of consideration, there should be a clear, transparent and objective criteria or procedure to indicate which out of the two is to be preferred. It is this, which would ensure transparency." (emphasis supplied)
34. This case hinges on what would be construed to be 'reasonable time' to consider any application for reduction in maximum demand, by the authorities. A Three-Judge Bench of this Court in Adjudicating Officer, Securities and Exchange Board of India v. Bhavesh Pabari8 has observed that:
"...There are judgments which hold that when the period of limitation is not prescribed, such power must be exercised within a reasonable time. What would be reasonable time, would depend upon the facts and circumstances of the case, nature of the default/statute, prejudice caused, whether the third-party rights had been created, etc...."
35. In Mansaram v. S.P. Pathak and Ors.9 this Court has observed that when a power exists to effectuate a purpose it must be exercised within a reasonable time. It has been observed that this is all too well-settled principle to require buttressing precedent. Nonetheless, the Court refers to State of Gujarat v. Patel Raghav Natha10 wherein the period of one year was found to be too long for the Commissioner to exercise revisional jurisdiction under Section 211 of the 22 W.P. 3523 of 2017 Bombay Land Revenue Code. The principle of reasonable time as mentioned herein was followed recently by a Two- Judge Bench in Securities and Exchange Board of India v. Sunil Krishna Khaitan and Ors.11.
➢ Doctrine of Promissory Estoppel State of Jharkhand and Others Vs. Bhramaputra Metallics Ltd. Ranchi and Another reported in 2020 SCC Online SC 968.
Relevant para 28 is reproduced below for ready reference:
28. Before the High Court, the State of Jharkhand sought to sustain its action on the ground that though the follow-up notification under Section 9 was issued on 8 January 2015, no outer limit for the issuance of a notification was prescribed and there was no vested right on the part of the respondent to get the notification implemented from an earlier date or to obtain the benefit of the policy until it was implemented by a follow-up notification. The decision in Kalyanpur Cement (supra) was sought to be distinguished on the ground that in that case no follow- up notification had been issued at all until the policy lapsed. In sum and substance, the objection was that the writ petitioner - the respondent here - had no vested right to claim that a follow-
up notification should be issued and that the doctrine of promissory estoppel would not, in the facts, apply.
16. Learned counsel for the respondents no.2 and 3 contended that no letter of acceptance of bid was ever issued in favour of the petitioner, therefore no contractual relationship was established, thus no right has 23 W.P. 3523 of 2017 been accrued in favour of the petitioner. As per terms and conditions of the bid document, Clause 15 provided that allotment shall be made after obtaining approval from the State Government and no bidder shall raise dispute on the basis of highest offer made. Clause 41 provides that no reasons shall be assigned for rejection of bid of IDA or State Government.
17. Learned counsel for the respondent no.2 and 3 has placed reliance on the judgment of the Apex Court in the case of Haryana Urban Development Authority & Ors. Vs. Orchid Infrastructure Developers Pvt. Ltd. reported in (2017) 4 SCC 243 [See para 13,14,15, 27 - 30] in which it has been held that even the highest bidder had no vested right to have the auction concluded in his favour and the Government or its authority could validly retain power to accept or reject the highest bidder in the interest of public revenue.
Relevant excerpts are reproduced below:
13. It is a settled law that the highest bidder has no vested right to have the auction concluded in his favour. The Government or its authority could validly retain power to accept or reject the highest bid in the interest of public revenue. We are of the considered opinion that there was no right acquired and no vested right accrued in favour of the plaintiff merely because his bid amount was highest and had deposited 10% of the bid amount. As per Regulation 6(2) of the Regulations of 1978, allotment letter has to be issued on acceptance of the bid by the Chief Administrator and within 30 days thereof, the successful bidder has to deposit another 15% of the bid amount. In the instant case allotment letter has never been issued to the petitioner as per Regulation 6(2) in view of non-acceptance of the bid. Thus there was no 24 W.P. 3523 of 2017 concluded contract. Regulation 6 of the Regulations of 1978 is extracted hereunder :
"6. Sale of lease of land or building by auction.- (1) In the case of sale or lease by auction, the price/premium to be charged shall be such reserve price/premium as may be determined taking into consideration the various factors as indicated in sub-regulation (1) of Regulation 4 or any higher amount determined as a result of bidding in open auction. (2) 10 per cent of the highest bid shall be paid on the spot by the highest bidder in cash or by means of a demand draft in the manner specified in sub-regulation (2) of Regulation 5. The successful bidder shall be issued allotment letter in Form 'CC' or 'C-II' by registered post and another 15 per cent of the bid accepted shall be payable by the successful bidder, in the manner indicated, within thirty days of the date of allotment letter conveying acceptance of the bid by the Chief Administrator; failing which the 10 per cant amount already deposited shall stand forfeited to the Authority and the successful bidder shall have no claim to the land or building auctioned.
(3) The payment of balance of the price/premium, rate of interest chargeable and the recovery of interest shall be in the 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."
14.We are fortified in our view by a decision of this Court in Uttar Pradesh Avas Evam Vikas Parishad & Ors. v. Om 25 W.P. 3523 of 2017 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 this Court in Rajasthan Housing Board case (2007) 1 SCC 477 which reads as under: (SCC p. 483, para 9) "9. This being the settled legal position, the respondent acquired no right to claim that the auction be concluded in its favour and the High Court clearly erred in entertaining the writ petition and in not only issuing a direction for consideration of the representation but also issuing a further direction to the appellant to issue a demand note of the balance amount. The direction relating to issuance of the demand note for balance amount virtually amounted to confirmation of the auction in favour of the respondent which was not the function of the High Court." x x x x x In State of Orissa v. Harinarayan Jaiswal (1972) 2 SCC 36 case, relevant paragraph of which reads as under: (SCC pp. 44-45, 26 W.P. 3523 of 2017 para 13) "13. x x x x x There is no concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids (see Union of India v. Bhim Sen Walaiti Ram (1969) 3 SCC 146). By merely giving bids, the bidders had not acquired any vested rights. ..." (emphasis supplied) x x x x x
31. In view of the law laid down by this Court in the aforesaid decisions, the learned Senior Counsel Mr Rakesh Dwivedi has rightly placed reliance upon the same in support of the case of the first defendant, which would clearly go to show that the plaintiff had not acquired any right and no vested right has been accrued in his favour in respect of the plot in question merely because his bid amount is highest and he had deposited 20% of the highest bid amount along with the earnest money with the Board. In the absence of acceptance of bid offered by the plaintiff to the competent authority of the first defendant, there is no concluded contract in respect of the plot in question, which is evident from letters dated 26-5- 1977 and 8-7-1977 wherein the third defendant had rejected the bid amount deposited by the plaintiff and the same was refunded to him by way of demand draft, which is an undisputed fact and it is also not his case that the then Assistant Housing Commissioner who has conducted the public auction had accepted the bid of the plaintiff."
(emphasis supplied).
15. 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, 27 W.P. 3523 of 2017 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.
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 Government had the right, for good and sufficient reason, we may say, not to accept the highest bid but even to prefer a tenderer other than the highest bidder. The High Court was clearly in error in holding that the Government could not refuse to accept the highest bid except on the ground of inadequacy of the bid. Condition 10 does not so restrict the power of the Government not to accept the bid. There is no reason why the power vested in the Government to refuse to accept the highest bid should be confined to inadequacy of bid only. There may be a variety of good and sufficient reasons, apart from inadequacy of bids, which may impel the Government not to accept the highest bid. In fact, to give an antithetic 28 W.P. 3523 of 2017 illustration, the very enormity of a bid may make it suspect. It may lead the Government to realise that no bona fide bidder could possibly offer such a bid if he meant to do honest business. Again the Government may change or refuse its policy from time to time and we see no reason why change of policy by the Government, subsequent to the auction but before its confirmation, may not be a sufficient justification for the refusal to accept the highest bid. It cannot be disputed that the Government has the right to change its policy from time to time, according to the demands of the time and situation and in the public interest. If the Government has the power to accept or not to accept the highest bid and if the Government has also the power to change its policy from time to time, it must follow that a change or revision of policy subsequent to the provisional acceptance of the bid but before its final acceptance is a sound enough reason for the Government's refusal to accept the highest bid at an auction..."
28. In Laxmikant & Ors. v. Satyawan & Ors. (1996) 4 SCC 208, this Court has laid down that in the absence of completed contract 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 29 W.P. 3523 of 2017 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 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 30 W.P. 3523 of 2017 has been repeatedly pointed out that State or the authority which can be held to be State within the meaning of Article 12 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."
29. In Meerut Development Authority v. Association of Management Studies & Anr. (2009) 6 SCC 171, this Court has laid down that a bidder has no right in the matter of bid except of fair treatment in the matter and cannot insist for further negotiation. The Authority has a right to reject the highest bid. This Court has laid down thus :
"27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the abovestated ground, 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. xxxxxxxxxx
29. The Authority has the right not to accept the highest 31 W.P. 3523 of 2017 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."
18. Learned counsel further relied upon various Apex Court judgments which are as follows:
➢ State of Punjab Vs. Mehar Din reported in
(2022) 5 SCC 648
➢ Rajasthan Housing Board and Anr. Vs. G.S.
Investments and Anr reported in 2007(1) SCC 477. Relevant Para 8 to 11 are reproduced below for ready reference:
8. The auction notice dated 3.2.2002 contained a condition to the effect that the Chairman of the Housing Board shall have the final authority regarding acceptance of the bid. The second auction notice issued on 19.2.2002 mentioned that the conditions of the auction will be same as mentioned in the earlier auction notice. In view of this condition in auction notice it is obvious that a person who had made the highest bid in the auction did not acquire any right to have the auction concluded in his favour until the Chairman of the Housing Board had passed an order to that effect. Of course the Chairman of the Housing Board could not exercise his power in an arbitrary manner but so long as an order regarding final acceptance of the bid had not been passed by the Chairman, the highest bidder acquired no vested right to have the auction concluded in his favour and the auction proceedings could always be cancelled. What are the rights of 32 W.P. 3523 of 2017 an auction bidder has been considered in several decisions of this Court. However, we will refer to only one such decision, viz., Laxmikant vs. Satyawan 1996 (4) SCC 208 which is almost identical on facts as it related to auction of a plot by Nagpur Improvement Trust. The auction notice in this case contained a condition that the acceptance of the highest bid shall depend upon the Board of Trustees and further the person making the highest bid shall have no right to take back his bid and the decision of the Chairman of the Board of Trustees regarding acceptance or rejection of the bid shall be binding on the said person. After taking note of the aforesaid conditions it was held:-
"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, etc. v. State of Orissa (1971) 3 SCC 153, State of Orissa v. Harinarayan Jaiswal (1972) 2 SCC 36, Union of India v. Mis. Bhim Sen Walaiti Ram (1969) 3 SCC 146 and State of Uttar Pradesh and Ors. 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 33 W.P. 3523 of 2017 of Article 12 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."
This being the settled legal position, the respondent acquired no right to claim that the auction be concluded in its favour and the High Court clearly erred in entertaining the writ petition and in not only issuing a direction for consideration of the representation but also issuing a further direction to the appellant to issue a demand note of the balance amount. The direction relating to issuance of the demand note for balance amount virtually amounted to confirmation of the auction in favour of the respondent which was not the function of the High Court.
9. The other question which requires consideration is what are the contours of power which the High Court would exercise in a writ petition filed under Article 226 of the Constitution where the challenge is to cancellation of an auction held by a public body where the prime consideration is fairness and generation of public revenue. This question has been examined by a catena of decisions of this Court. In a recent decision rendered in Master Marine Services (P) Ltd. Vs. Metcalfe and Hodgkinson (P) Ltd. (2005) 6 SCC 138, 34 W.P. 3523 of 2017 where after consideration of several earlier decisions, the Bench to which one of us was a party, summarized the legal principle as under in paragraphs 11 to 15 of the said reports:
-
"11. The principles which have to be applied in judicial review of administrative decisions, especially those relating to acceptance of tender and award of contract, have been considered in great detail by a three Judge Bench in Tata Cellular v. Union of India AIR 1996 SC
11. It was observed that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism. However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. (See para 85 of the reports, SCC para 70)
12. After an exhaustive consideration of a large number of decisions and standard books on Administrative Law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The Court does not 35 W.P. 3523 of 2017 sit as a court of appeal but merely reviews the manner in which the decision was made. The Court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fairplay in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi- administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the reports, SCC para 94.)
13. In Sterling Computers Ltd. v. M/s M.N. Publications Ltd. AIR 1996 SC 51 it was held as under: (SCC p. 458, paras 18-19) "18. While exercising the power of judicial review, in respect of contracts entered into on behalf of the State, the Court is concerned primarily as to whether there has been any infirmity in the "decision making process.".... By way of judicial review the Court cannot examine the details of the terms of the contract which have been entered into by the public bodies or the State.
Court have inherent limitations on the scope of any such enquiry. But at the same time ... the Courts can certainly examine whether "decision making process" was reasonable rational, not arbitrary and violative of Article 14 of the Constitution.36
W.P. 3523 of 2017
19. If the contract has been entered into without ignoring the procedure which can be said to be basic in nature and after an objective consideration of different options available taking into account the interest of the State and the public, then Court cannot act as an appellate authority by substituting its opinion in respect of selection made for entering into such contract."
14. In Raunaq International Ltd. v. I.V.R. Construction Ltd. 1999 (1) SCC 492 it was observed that the award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision, considerations which are of paramount importance are commercial considerations, which would include, inter alia, the price at which the party is willing to work, whether the goods or services offered are of the requisite specifications and whether the person tendering is of ability to deliver the goods or services as per specifications.
The law relating to award of contract by State and public sector corporations was reviewed in Air India Ltd. v. Cochin International Airport Ltd. 2000 (2) SCC 617 and it was held that the award of a contract, whether by a private party or by a State, is essentially a commercial transaction. It can choose its own method to arrive at a decision and it is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It was further held that the State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision making process, the Court must exercise its discretionary powers under Article 226 with great caution 37 W.P. 3523 of 2017 and should exercise it only in furtherance of public interest and not merely on the making out of a legal point. The Court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to a conclusion that overwhelming public interest requires interference, the Court should interfere." The sale of plots by the Rajasthan Housing Board by means of an auction is essentially a commercial transaction. Even if some defect was found in the ultimate decision resulting in cancellation of the auction, the court should exercise its discretionary power under Article 226 of the Constitution with great care and caution and should exercise it only in furtherance of public interest. The court should always keep the larger public interest in mind in order to decide whether it should interfere with the decision of the authority. In the present case there was enough material before the State Government to show that in the past plots in the area had fetched a price of Rs.10,000/- per square meter and the highest bid made by the respondent in the present case was nearly half, i.e., Rs.5750/- per square meter, which clearly indicated that the auction had not been conducted in a fair manner. If in such a case the State Government took a decision to disapprove the auction held and issued a direction for holding of a fresh auction, obviously the said decision was taken in larger public interest. In these circumstances there was absolutely no occasion for the High Court to entertain the writ petition and issue any direction in favour of the contesting respondent. The orders passed by the learned single Judge on 4.8.2004 and the order passed by the Division Bench of the High Court on 23.9.2004 are clearly erroneous 38 W.P. 3523 of 2017 in law and are liable to be set aside.
➢ State of Jharkhand and Ors Vs. Cwe-Soma Consortium reported in 2016(14) SCC 172 .
Relevant para 12,13,19 to 21 are reproduced below for ready reference:
12. In case of a tender, there is no obligation on the part of the person issuing tender notice to accept any of the tenders or even the lowest tender. After a tender is called for and on seeing the rates or the status of the contractors who have given tenders that there is no competition, the person issuing tender may decide not to enter into any contract and thereby cancel the tender. It is well-settled that so long as the bid has not been accepted, the highest bidder acquires no vested right to have the auction concluded in his favour (vide Laxmikant and Ors. v. Satyawan and Ors. (1996) 4 SCC 208; Rajasthan Housing Board and Anr. v. G.S. Investments and Anr. (2007) 1 SCC 477 and Uttar Pradesh Avas Evam Vikash Parishad and Ors. v. Om Prakash Sharma (2013) 5 SCC 182).
13. The appellant-state was well within its rights to reject the bid without assigning any reason thereof. This is apparent from clause 24 of NIT and clause 32.1 of SBD which reads as under:-
"Clause 24 of NIT: "Authority reserves the right to reject any or all of the tender(s) received without assigning any reason thereof." Clause 32.1 of SBD: "...the Employer reserves the right to accept or reject any Bid to cancel the bidding process and reject all bids, at any time prior to award of Contract, without thereby incurring any liability to the affected Bidder or Bidders or any obligation to inform the affected Bidder or 39 W.P. 3523 of 2017 Bidders of the grounds for the Employer's action." In terms of the above clause 24 of NIT and clause 32.1 of SBD, though Government has the right to cancel the tender without assigning any reason, appellant-state did assign a cogent and acceptable reason of lack of adequate competition to cancel the tender and invite a fresh tender. The High Court, in our view, did not keep in view the above clauses and right of the government to cancel the tender.
19. Observing that while exercising power of judicial review, court does not sit as appellate court over the decision of the government but merely reviews the manner in which the decision was made, in Tata Cellular v. Union of India (1994) 6 SCC 651, in para (70) it was held as under:-
"70. It cannot be denied that the principles of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism, However, it must be clearly stated that there are inherent limitations in exercise of that power of judicial review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down."40
W.P. 3523 of 2017
20. The government must have freedom of contract. In Master Marine Services (P) Ltd. v. Metcalfe & Hodgkinson (P) Ltd. and Anr. (2005) 6 SCC 138, in para (12) this Court held as under:-
"12. After an exhaustive consideration of a large number of decisions and standard books on administrative law, the Court enunciated the principle that the modern trend points to judicial restraint in administrative action. The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise, which itself may be fallible. The Government must have freedom of contract. In other words, fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative sphere or quasi-administrative sphere. However, the decision must not only be tested by the application of Wednesbury principles of reasonableness but also must be free from arbitrariness not affected by bias or actuated by mala fides. It was also pointed out that quashing decisions may impose heavy administrative burden on the administration and lead to increased and unbudgeted expenditure. (See para 113 of the Report, SCC para 94.)" The court does not have the expertise to correct the administrative decision as held in Laxmikant and Ors. v. Satyawan and Ors. (1996) 4 SCC 208, the government must have freedom of contract.
21. The right to refuse the lowest or any other tender is always available to the government. In the case in hand, the 41 W.P. 3523 of 2017 respondent has neither pleaded nor established mala fide exercise of power by the appellant. While so, the decision of tender committee ought not to have been interfered with by the High Court. In our considered view, the High Court erred in sitting in appeal over the decision of the appellant to cancel the tender and float a fresh tender. Equally, the High Court was not right in going into the financial implication of a fresh tender.
➢ U.P. Avas Evam Vikas Parishad and Ors. Vs. Om Prakash Sharma reported in 2013(5) SCC 182.
Relevant para 14-20 and 24,27 to 30 are reproduced below for ready reference:
14. Another ground urged by the learned senior counsel on behalf of the defendant is that the High Court has ignored the fact that Housing Commissioner of the Board was the only competent authority to accept or reject the bid of the plaintiff and in fact he had rejected the offer and there was no concluded contract of sale of the plot in favour of the plaintiff as claimed by him. No allotment letter was ever issued in his favour and in the absence of the same, the prayer of the plaintiff that the auction of the property was held in relation to the plot in question under Scheme No.1 at Bareilly in favour of the plaintiff, is final and binding and non-acceptance of the same by the third defendant-Housing Commissioner who has rejected the bid of the plaintiff and communicated the same vide its letters dated 26.5.77 and 8.7.77 by the then Assistant Housing Commissioner in relation to Cinema Hall was illegal and void and the same has no effect on the status of plaintiff as owner/allottee thereof is wholly untenable in law. Another contention urged by the learned senior counsel is that the 42 W.P. 3523 of 2017 third defendant-Housing Commissioner has no power to delegate his authority to another officer in exercise of authority under Section 12(2) of the Act. Section 12(2) provides for a statutory bar upon him from further delegation of the functions and powers which have been delegated upon him by the Board. He has placed reliance on the decisions of this Court in Sahni Silk Mills (P) Ltd. vs. ESI Corpn.[2], Director General, ESI vs. T. Abdul Razak[3] and The Barium Chemicals Ltd. vs. The Company Law Board & Ors.[4].
15. Further, the learned senior counsel placed reliance upon the judgment of this Court in State of Orissa vs. Commissioner of Land Records and Settlement[5], in support of the proposition of law that a principal does not lose his powers merely because those powers have been delegated to another body.
Also, placing reliance upon the aforesaid proposition of law laid down by this Court in the decision referred to above, it is urged by the learned senior counsel that nothing prevents the third defendant from reviewing the order passed by the delegatee, that is, the then Assistant Housing Commissioner which becomes evident from bare reading of Section 12(2) of the Act. Further, he has placed reliance upon Section 11 of the Act which provides that Housing Commissioner shall exercise supervision and control over all officers and servants of the Board.
16. The power of supervision and control has been interpreted by this Court to include power of supervision, management or authority to direct, restrict or regulate. Learned senior counsel placed reliance on the judgments of 43 W.P. 3523 of 2017 this Court in support of the above legal submissions in CESC vs. Subhash Chandra Bose[6] and Hassan Co-operative Milk Producers's Union Ltd. vs. ESI[7].
17. Further, the learned senior counsel placed strong reliance on the judgments of this Court in Meerut Development Authority vs. Association of Management Studies[8], and State of U.P. vs. Vijay Bahadur Singh[9], regarding rights of the bidder in participating in auction process and contended that though the bidders can participate in the tender process, they will not have any other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda.
18. Further, the learned senior counsel placed reliance on the law laid down by this Court in Rajasthan Housing Board vs. G.S. Investments & Anr[10] in support of his submissions that bidder has no vested interest in relation to the auctioned property unless the bid is accepted, even though the auction is concluded in his favour and the auction proceedings can always be cancelled by the competent authority of the first defendant.
19. Further the learned senior counsel placed reliance upon the judgment of this Court in Laxmikant vs. Satyawan[11] in support of his legal contention that this Court has repeatedly pointed out that 'State' or the authority which can be held to be 'State' within the meaning of Article 12 of the Constitution is not bound to accept the highest tender or bid and the Government authority could validly retain its power either to accept or reject the highest bid in the 44 W.P. 3523 of 2017 interest of public revenue. In support of this legal contention, learned senior counsel placed reliance upon another decision of this Court in State of Orissa v. Harinarayan Jaiswal[12] and submitted that the High Court could have noticed that the trial court has proceeded under impression that the then Assistant Housing Commissioner had been authorized to supervise and conduct the auction in relation to the plot in question and that power automatically carried with him the authority to accept the highest bid to conclude the contract. In this regard the learned senior counsel referred to the decision of this Court in Pradyat Kumar vs. Chief Justice, Calcutta, wherein this Court has observed that no delegation is involved where the statutory authority requires another person exercising ministerial function to retain the decision and responsibility of it in its hands.
20. Further, learned senior counsel contended that the High Court while remanding the case in the earlier first appeal proceedings vide its judgment dated 20th May, 1987 to the trial court after setting aside the impugned judgment of the trial court, it had given specific directions to it for deciding the case afresh in the light of certain observations. The following observations were made with reference to Section 11, which reads as under:
"The Housing Commissioner is thus an overall controlling authority over all officers and servants of the Board. In the provisions referred to earlier, the officers of the Board including the authority and functions. The officers of the Board (which include the Assistant Commissioner) are required under the Act to discharge such functions as are delegated to them."45
W.P. 3523 of 2017
24. With reference to the aforesaid rival factual and legal contentions urged on behalf of the parties, the following points would arise for consideration of this Court:
a. What are the rights of the plaintiff/bidder participating in the auction process in relation to the plot in question? b. 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?
c. Whether the plaintiff could have maintained the suit in the absence of a concluded contract?
d. Whether the plaintiff proves that the Assistant Housing Commissioner had the authority to accept the bid in relation to the plot in question which was put to auction and was empowered to allot the plot in favour of the plaintiff being the highest bidder?
e. Whether the trial court is right in holding that non- issuance of notice to the first defendant as provided under Section 88(2) of the Act for institution of the suit and not taking the plea in this regard by the defendant in the initial stage rather taking the plea subsequently amounts to a waiver of the defence of the defendants?
f. Whether the suit for declaratory relief on the basis of the cause of action as pleaded by the plaintiff, in the absence of allotment letter issued by the competent authority in relation to the plot in question as provided under Section 12(1) of the 46 W.P. 3523 of 2017 Act, is maintainable?
g. Whether the substantial questions of law framed by the High Court in the second appeal would arise for its consideration and whether the findings in the second appeal are erroneous in law?
27. This Court in the case of Meerut Development Authority case (supra) has laid down the legal principle that the bidder who has participated in tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to the notice inviting tenders in a transparent manner and free from hidden agenda. The relevant paragraphs are extracted hereunder:
"27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the abovestated ground, 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. ..........................................
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 47 W.P. 3523 of 2017 doubt that the Authority's action in accepting or refusing the bid must be free from arbitrariness or favouritism."
28. In support of the said proposition, learned senior counsel for the defendant, Mr. Rakesh Dwivedi has also placed reliance upon another decision of this Court in State of U.P vs. Vijay Bahadur Singh (supra). The learned senior counsel has rightly placed reliance upon the judgment of this Court in Rajasthan Housing Board case (supra) which reads as under:
"9. This being the settled legal position, the respondent acquired no right to claim that the auction be concluded in its favour and the High Court clearly erred in entertaining the writ petition and in not only issuing a direction for consideration of the representation but also issuing a further direction to the appellant to issue a demand note of the balance amount. The direction relating to issuance of the demand note for balance amount virtually amounted to confirmation of the auction in favour of the respondent which was not the function of the High Court." The law laid down by this Court in the aforesaid paragraph in support of the proposition of law that so long as an order regarding final acceptance of the bid had not been passed by the Chairman of the Housing Board, the highest bidder acquire no vested right to have the auction concluded in his favour and the auction proceedings could always be cancelled. Further, he has placed reliance on another decision of this Court in the case of Laxmikant referred to supra . In support of the proposition of law this Court has rightly pointed out that the 'State' or the Authority, which can be held to be a 'State' within the meaning of Article 12 of the Constitution, is not bound to 48 W.P. 3523 of 2017 accept the highest tender/offer or bid and the Government could validly retain its power to accept or reject the highest bid in the interest of public revenue. In support of this contention, he has placed reliance on the State of Orissa vs. Harinarayan Jaiswal case (supra), relevant paragraph of which reads as under:
"13. Even apart from the power conferred on the Government under Sections 22 and 29, we fail to see how the power retained by the Government under clause (6) of its order, dated January 6, 1971, can be considered as unconstitutional. As held by this Court in Cooverjee B. Bharucha case, one of the important purpose of selling the exclusive right to sell liquor in wholesale or retail is to raise revenue. Excise revenue forms an important part of every State's revenue. The Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. Hence quite naturally, the Legislature has empowered the Government to see that there is no leakage in its revenue. It is for the Government to decide whether the price offered in an auction sale is adequate. While accepting or rejecting a bid, it is merely performing an executive function. The correctness of its conclusion is not open to judicial review. We fail to see how the plea of contravention of Article 19(1)(g) or Article 14 can arise in these cases. The Government's power to sell the exclusive privileges set out in Section 22 was not denied. It was also not disputed that those privileges could be sold by public auction. Public auctions are held to get the best possible price.
Once these aspects are recognised, there appears to be no 49 W.P. 3523 of 2017 basis for contending that the owner of the privileges in question who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate. There is no concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids -- see Union of India v. Bhimsen Walaiti Ram[13]. By merely giving bids, the bidders had not acquired any vested rights. The fact that the Government was the seller does not change the legal position once its exclusive right to deal with those privileges is conceded. If the Government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to the Government--nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights. The High Court was wholly wrong in thinking that purpose of Sections 22 and 29 of the Act was not to raise revenue. Raising revenue as held by this Court in Cooverjee B. Bharucha vs.The Excise Commissioner and the Chief Commissioner, Ajmer & Ors' case was one of the important purposes of such provisions. The fact that the price fetched by the sale of country liquor is an excise revenue does not change the nature of the right. The sale in question is but a mode of raising revenue. Assuming that the question of arbitrary or unguided power can arise in a case of this nature, it should not be forgotten that the power to accept or reject the highest bid is given to the highest authority in the State i.e. the Government which is expected to safeguard the finances of the State. Such a power cannot be considered as 50 W.P. 3523 of 2017 an arbitrary power. If that power is exercised for any collateral purposes, the exercise of the power will be struck down. It may also be remembered that herein we are not dealing with a delegated power but with a power conferred by the Legislature.
The High Court erroneously thought that the Government was bound to satisfy the Court that there was collusion between the bidders. The High Court was not sitting on appeal against the order made by the Government. The inference of the Government that there was a collusion among the bidders may be right or wrong. But that was not open to judicial review so long as it is not proved that it was a make-believe one. The real opinion formed by the Government was that the price fetched was not adequate. That conclusion is taken on the basis of Government expectations. The conclusion reached by the Government does not affect any one's rights. Hence, in our opinion, the High Court misapplied the ratio of the decision of this Court in Barium Chemicals Ltd. & Anr. v. Company Law Board and Rohtas Industries Ltd. v. S.T. Agarwal." (emphasis supplied)
29. In view of the law laid down by this Court in the aforesaid decisions, learned senior counsel Mr. Rakesh Dwivedi has rightly placed reliance upon the same in support of the case of the first defendant, which would clearly go to show that the plaintiff had not acquired any right and no vested right has been accrued in his favour in respect of the plot in question merely because his bid amount is highest and he had deposited 20% of the highest bid amount along with earnest money with the Board. In the absence of acceptance of bid offered by the plaintiff to the competent authority of the first 51 W.P. 3523 of 2017 defendant, there is no concluded contract in respect of the plot in question, which is evident from letters dated 26.5.1977 and 8.7.1977 wherein the third defendant had rejected the bid amount deposited by the plaintiff and the same was refunded to him by way of demand draft, which is an undisputed fact and it is also not his case that the then Assistant Housing Commissioner who has conducted the public auction had accepted the bid of the plaintiff.
30. Therefore, points (a) to (d) are answered in favour of the defendants. In fact, these aspects have not been dealt with either by the trial court or by the second appellate court in the impugned judgments. Answer to Point No. (e)
19. Learned counsel for the respondent no.2 and 3 further contended that judicial review in commercial and tender matter is untenable . In support of his contentions, he has relied upon the judgment of Apex Court which are mentioned below:
➢ Afcon Infrastructure Ltd. Vs. Nagpur Metrol Rail Corporation Ltd. reported in (2016) 16 SCC 818.
➢ Reliance Telecom Ltd. And Ors. Vs Union of India (UOI) and Ors reported in (2017) 4 SCC 269. ➢ Tata Cellular Vs. Union of India reported in (1994) 6 SCC 651.
➢ Raunaq International Ltd. Vs. I.V.R. Construction Ltd. And Ors. reported in (1999) 1 SCC
492.
➢ Monarch Infrastructure (P) Ltd. Vs. Ulhasnagar Municipal Corpn. and Ors. reported in (2000) 5 SCC 287.52
W.P. 3523 of 2017 ➢ Cellular operators Association of India and Ors. Vs. Union of India and Ors. reported in (2003) 3 SCC 186.
➢ Union of India Vs. International Trading Co. and Anr. reported in (2003) 5 SCC 437.
➢ Directorate of Education Vs. Educomp Datamatics Ltd. And Ors. reported in (2004) 4 SCC
19.
➢ Bannari Amman Sugars Ltd. Vs. Commercial Tax Officer and Ors. reported in (2005) 1 SCC 625.
➢ Global Energy Ltd. And Anr. Vs. Adani Exports Ltd. and Ors reported in (2005) 4 SCC 435. ➢ Master Marine Services (P) Ltd. Vs. Metcalfe & Hodgkinson (P) Ltd. and Anr reported in (2005) 6 SCC 138.
➢ Michigan Rubber (India) Limited. Vs. State of Karnataka and Ors. reported in (2012) 8 SCC 216.
➢ Census Commissioner and Ors. Vs. R. Krishnamurthy reported in (2015) 2 SCC 796.
20. Lastly, learned counsel for the respondent no. 2 and 3 submitted that the Courts do not have expertise to correct the administrative decisions as has been held by the Apex Court in the case of Laxmikant and Ors Vs. Satyawan and Ors. reported in (1996) 4 SCC 208, the government must have freedom to enter into a contract.
21. He further contended that in the present case, neither there is any communication with respect to acceptance of bid of the petitioner, nor the respondents have completed its internal process for selection of bidders, 53 W.P. 3523 of 2017 therefore, no right of any kind is accrued in favour of the petitioner. Thus, petition is liable to be dismissed in the absence of any right having been accrued to the petitioner.
22. On the other hand, learned counsel for the respondent no.1/State has made three fold submission:
(i) It is contended that 'legitimate expectation' only furnishes cause of action to invoke judicial review and legitimate expectation is not enforceable as a substantive right of 'proprio - vigore' rather can be overridden by larger public interest. In this regard, reliance has been placed on the Apex Court in the case of Union of India Vs. Hindustan Development Corporation reported in (1993) 3 SCC 499. Relevant para 19, 23,33 and 35 are reproduced below for ready reference:
19. In Food Corporation of India v. M/s Kamdhenu Cattle Feed Industries JT (1992) 6 S.C. 259 Justice J.S. Verma Speaking for the Bench observed as under:
"In contractual sphere as in all other State actions, the State and all its instrumentalities have to conform to Article 14 of the Constitution of which non-arbitrari- ness is a significant facet. There is no unfettered discretion in public law. A public authority possesses powers only to use them for public good. This imposes the duty to act fairly and to adopt a procedure which is fairplay in action'. Due observance of this obligation as a part of good administration raises a reasonable or legitimate expectation in every citizen to be treated fairly in his interaction with the state and its instrumentalities, with this element forming a necessary component of the decision making process in all State actions. To satisfy this requirement of non- arbitrariness in a State action, it is therefore, necessary to consider and give due weight to the reasonable or legitimate 54 W.P. 3523 of 2017 expectations of the persons likely to be affected by the decision or else that unfairness in the exercise of the power may amount to an abuse or excess of power apart from affecting the bonafides of the decision in a given case. The decision so made would be exposed to challenge on the ground of arbitrariness. Rule of law does not completely eliminate discretion in the exercise of power, as it is unrealistic, but provides for control of its exercise by judicial review.
The mere reasonable or legitimate expectation of a citizen, in such a situation, may not by it self be a distinct enforceable right; but failure to consider and give due weight to it may render the decision arbitrary and this is how the requirement of due consideration of a legitimate expectation forms part of the principle of non-arbitrariness, a necessary concomitant of the rule of law. Every legitimate expectation is a relevant factor requiring due consideration in a fair decision making process. Whether the expectation of the claimant is reasonable or Legitimate in the context is a question of fact in each case. Whenever the question arises, it is to be determined not according to the claimant's perception but in larger public interest wherein other more important considerations, may outweigh what would otherwise have been the legitimate expectation of the claimant. A bonafide decision of the public authority reached in this manner would satisfy the requirement of non-arbitrariness and withstand judicial scrutiny. The doctrine of legitimate expectation gets assimilated in the rule of law and operates in. our legal system in this manner and to this extent."
(emphasis supplied) In Navjoti coo-Group Housing Society etc. v. Union of India & Others (1992) 2 SCALE 548,justice G.N. 55 W.P. 3523 of 2017 Ray speaking for the Bench observed as under:
"In the aforesaid facts, the Group Housing Societies were entitled to legitimate expectation of following consistent past practice in the matter of allotment, even though they may not have any legal right in private law to receive such treatment. The existence of legitimate expectation' may have a number of different consequences and one of such consequences is that the authority ought not to act to defeat the 'legitimate expectation without some overriding reason of public policy to justify its doing so. In a case of 'legitimate expectation' if the authority proposes to defeat a person's 'legitimate expectation' it should afford him an opportunity to make representations in the matter. In this connection reference may be made to the discussions on 'legitimate expectation' it page 151 of volume 1(1) of Halsbury's Laws of England Fourth Edition (Re- issue). We may also refer to a decision of the House of Lords in Council of civil Service Union and others versus Minister for- Civil Service reported in [1985] 3 All England Reporter page 935. It has been held in the said decision that an aggrieved person was entitled to judicial review if he could show that a decision of the public authority affected him of some benefit or advantage which in the past he had been permitted to enjoy and which he legitimately expected to be permitted to continue to enjoy either until he was given reasons for withdrawal and the opportunity to comment on such reasons.
It may be indicated here that the doctrine of 'legitimate expectation imposes in essence a dun, on-public authority to act fairly, by taking into consideration all relevant factors relating to such 'legitimate expectation'. Within the 56 W.P. 3523 of 2017 conspectus of fair dealing in case of 'legitimate expectation', the reasonable opportunities to make representation by the parties likely to be affected by any change of consistent passed policy, come in. We have not been shown any compelling reasons taken into consideration by the Central Government to make a departure from the existing policy of allotment with reference to seniority in Registration by introducing a new guideline." (emphasis supplied) Relying on these decisions, it was contended that the decision of the Railways in fixing the price and in allotment of the quantities is arbitrary and unreasonable affecting the right to such legitimate expectation. To appreciate these contentions, it becomes necessary to refer to some of the rules governing these contracts and followed by the Railways, before we examine the impact of the doctrine of 'legitimate expectation'. The Rules prescribed by the Minister for Railways for entering into contracts lay down certain norms and contains guidelines.
23. In Halsbury's Laws of England, Fourth Edition, Volume 1(1) 151 a passage explaining the scope of "legitimate expectations" runs thus:
"81. Legitimate expectations. A person may have a legitimate expectation of being treated in a certain way by an administrative authority even though he has no legal right in private law to receive such treatment. The expectation may arise either from a representation or promise made by the authority, including an implied representation, or from consistent past prac- tice. The existence of a legitimate expectation may have a number of different consequences'; it may give locus 57 W.P. 3523 of 2017 standi to seek leave to apply for `judicial review; it may mean that the authority ought not to act so as to defeat the expectation without some overriding reason of public policy to justify its doing so; or it may mean that, if the authority proposes to defeat a person's legitimate expectations, it must afford him an opportunity to make representation on the matter. The courts also distinguish, for example in licensing cases, between original applications, to renew and revocations; a party who has been granted a licence may have legitimate expectation that it will be renewed unless there is some good reason not to do so, and may therefore be entitled to greater procedural protection than a mere applicant for a grant."
33. On examination of some of these important decisions it is generally agreed that legitimate expectation gives the applicant sufficient locus standi for judicial review and that the doctrine of legitimate expectation is to be confined mostly to right of a fair hearing before a decision which results in negativing a promise or withdrawing an undertaking is taken. The doctrine does not give scope to claim relief straightaway from the administrative authorities as no crystallised right as such is involved. The protection of such legitimate expectation does not require the fulfillment of the expectation where an overriding public interest requires otherwise. In other words where a person's legitimate expectation is not fulfilled by taking a particular then decision-maker should justify the denial of such expectation by showing some overriding public interest. Therefore even if substantive protection of such expectation is contemplated that does not 58 W.P. 3523 of 2017 grant an absolute right to a particular person. It simply ensures the circumstances in which that expectation may be denied or restricted. A case of legitimate expectation would arise when a body by representation or by past practice aroused expectation which it would be within its powers to fulfill. The protection is limited to that extent and a judicial review can be within those limits. But as discussed above a person who bases his claim on the doctrine of legitimate expectation, in the first instance, must satisfy that there is a foundation and thus has locus standi to make such a claim. In considering the same several factors which give rise to such legitimate expectation must be present. The decision taken by the authority must be found to be arbitrary, unreasonable and not taken in public interest. If it is a question of policy, even by way of change of old policy, the courts cannot interfere with a decision. In a given case whether there are such facts and circumstances giving rise to a legitimate expectation, it would primarily be a question of fact. If these tests are satisfied and if the court is satisfied that a case of legitimate expectation is made out then the next question Would be whether failure to give an opportunity of hearing before the decision affect such legitimate expectation is taken has resulted in failure of' justice and whether on that ground the decision should he quashed. If that be so then what should be the relief is again a matter which depends on several factors.
35. Legitimate expectations may come in various forms and owe their existence to different kind of circumstances and it is not possible to give an exhaustive list in the context of vast and fast expansion of the governmental activities. They shift and change so 59 W.P. 3523 of 2017 fast that the start of our list would be obsolete before we reached the middle. By and large they arise in cases of promotions which are in normal course expected, though not guaranteed by way of a statutory right, in cases of contracts, distribution of largest by the Government and in somewhat similar situations. For instance in cases of discretionary grant of licences, permits or the like, carries with it a reasonable expectation, though not a legal right to renewal or non- revocation, but to summarily disappoint that expectation may be seen as unfair without the expectant person being heard. But there again the court has to see whether it was done as a policy or in the public interest either by way of G.O., rule or by way of a legislation. If that be so. a decision denying a legitimate expectation based on such (,rounds does not qualify for interference unless in a given case, the decision or action taken amounts to an abuse of power. Therefore the limitation is extremely confined and if the according of natural justice does not condition the exercise of the power, the concept of legitimate expectation can have no role to play and the court must not usurp the discretion of the public authority which is empowered to take the decisions under law and the court is expected to apply and objective standard which leaves to the decising authority the full range of choice which the legislature is presumed to have intended.
60W.P. 3523 of 2017 Even in a case where the decision is left entirely to the discretion of the deciding authority without any such legal bounds and if the decision is taken fairly and objectively, the court will not interfere on the ground of procedural fairness to a person whose interest based on legitimate expectation might be affected. For instance if an authority who has full discretion to grant a licence and if he prefers an existing licence holder to a new applicant, the decision can not be interfered with on the ground of legitimate expectation entertained by the new applicant applying the principles of natural justice. It can therefore be seen that legitimate expectation can at the most be one of the grounds which may give rise to judicial review but the granting of relief is very much limited. It would thus appear that there are stronger reasons as to why the legitimate expectation should not be substantively protected than the reasons as to why it should be protected. In other words such a legal obligation exists whenever the case supporting the same in terms of legal principles of different sorts, is stronger than the case against it. As observed in Attornry General for New South Wales' case "To strike down the exercise of administrative power solely on the ground of avoiding the disappointment of the legitimate expectations of an individual would be to set the courts adrift on a featureless sea of pragmatism. Moreover, the notion of a legitimate expectation (falling short of a legal right) is too nebulous to form a basis for invalidating the exercise of power when its exercise otherwise accords with law." If a denial of legitimate expectation in a given case amounts to denial of right guaranteed or is arbitrary, discriminatory unfair or based, 61 W.P. 3523 of 2017 gross abuse of power or violation of principles of natural justice, the same can be questioned on the well-known grounds attracting Article 14 but a claim biased on mere legitimate expectation without anything more cannot ipso facto give a right to invoke these principles. It can be one of the ground to consider but the court must lift the veil and see whether the decision is violative of these principles warranting interference. It depends very much on the facts and the recognised general principles of administrative law applicable to such facts and the concept of legitimate expectation which is the latest recruit to a long list of concepts fashioned by the courts for the review of administrative action, must be restricted to the general legal limitations applicable and binding the manner of the future exercise of administrative power in a particular case. It follows that the concept of legitimate expectation is "not the key which unlocks the treasury of natural justice and it ought not to unlock the gates which shuts the court out of review on the merits," particularly when the element of speculation and uncertainty is inherent in that very concept. As cautioned in Attorney General for New South Wales' case the courts should restrain themselves and restrict such claims duty to the legal limitations. It is a well-meant caution. Otherwise a resourceful litigant having vested interests in contracts. licences etc,. can successfully indulge in getting welfare activities mandated by directive principles thwarted to further his own interests. The caution, particularly in the changing scenario, becomes all the more important.
(ii) It is further contended that the highest bidder does not have a vested right and in the judicial review, the Court can only examine the decision 62 W.P. 3523 of 2017 making process and not the decision itself. He further placed reliance on the judgment passed in the case of Rajasthan Housing Board Vs. G.S. Investments reported in 2007(1) SCC 477 [relevant para are reproduced above in para 18].
(iii) Third submission of learned counsel for the respondent no.1 is that in the peculiar facts and circumstances of the case, whether a decision is to be taken in multilayered levels of the Government, even malice in law cannot be inferred. In support of his contention, learned counsel for the respondent no.1 has placed reliance on the judgment rendered in the case of Ratnagiri Gas Vs. R.D.S Projects reported in 2013(1) SCC 477 [See para 32 and 38].
32. To the same effect is the recent decision of this Court in Ravi Yashwant Bhoir v. District Collector, Raigad and Ors (2012) 2 SCC 407 where this Court observed:
"MALICE IN LAW:
37. This Court has consistently held that the State is under an obligation to act fairly without ill will or malice- in fact or in law. Where malice is attributed to the State, it can never be a case of personal ill-will or spite on the part of the State.
"Legal malice" or "malice in law" means something done without lawful excuse. It is a deliberate act in disregard to the rights of others. It is an act which is taken with an oblique or indirect object. It is an act done wrongfully and willfully without reasonable or probable cause, and not necessarily an act done from ill feeling and spite. Mala fide exercise of power does not imply any moral turpitude. It means exercise of statutory power for "purposes foreign to those for which it is in law intended." It means conscious violation of the law to the prejudice of another, a depraved inclination on the part of 63 W.P. 3523 of 2017 the authority to disregard the rights of others, where intent is manifested by its injurious acts.
Passing an order for unauthorized purpose constitutes malice in law. (See: Addl. Distt. Magistrate, Jabalpur v. Shivkant Shukla, AIR 1976 SC 1207; Union of India thr. Govt. of Pondicherry and Anr. v. V. Ramakrishnan and Ors.,2005) 8 SCC 394; and Kalabharati Advertising v. Hemant Vimalnath Narichania and Ors., AIR 2010 SC 3745)."
38. Assailing the above finding of the High Court Mr. Nariman, learned Solicitor General, argued that if the annulment of the tender process pursuant to the first tender notice was held to be valid and beyond challenge at the instance of RDS, the conditions on which fresh tenders are invited including the conditions of eligibility stipulated in the tender notice was not open to challenge by a prospective tenderer. Relying upon the decision of this Court in Air India Ltd. v. Cochin International Airport Ltd. and Ors. (2000) 2 SCC 617, Mr. Nariman argued that the High Court went wrong in declaring the provisions of Clause 8.1.1.1 of the second tender notice to be legally bad. The following passage from the above decision is apposite:
"7. ..... The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms of invitation to tender and that is not open to judicial scrutiny...."
23. Heard, learned counsel for the parties and perused the record.
24. The moot questions which crop up for consideration in the present 64 W.P. 3523 of 2017 writ petition are :
" 1. Whether passage of time can be attributed to the petitioner?
2. Whether as per terms and conditions of the tender, these plots were meant for education purposes and not for commercial use?
3. Whether the IDA can make profit out of sale of such plots for commercial purposes when the same have been reserved for educational purposes?
4. Whether the allotment of plot to similarly situated trust namely Gangotri Educational Society 0 based on NIT dated 29.06.2006, allotment could have been made on 17.02.2010 when the tenderhas been cancelled on the ground of escalation of price?
5. Whether, the doctrine of promissory estoppel would come into play or not?"
25. Following are the answers to the moot questions:
Ans. 1. On perusal of the record, it can be seen that the NIT inviting tenders was issued on 28.02.2009 for Plot No. 522 admeasuring 1335 sq. m. @ Rs. 5,000/- situated in Scheme No. 114 . The petitioner deposited earnest money and all other conditions were fulfilled as per the terms and conditions of the NIT. However, the contract was not concluded. There is no reason for delay on the part of the petitioner at any point of time. In fact, the petitioner had been reminding the authorities time and again to complete the process of awarding contract. A failure and huge delay on the part of the respondents cannot be attributable to the petitioner and he 65 W.P. 3523 of 2017 cannot be made to suffer.
Ans. 2. As per NIT terms and conditions, the aforesaid plot has been specifically earmarked for education and amenities as per the complete scheme, therefore under no circumstances, the plot meant to educational purposes can be used for commercial purposes.
Ans. 3. On perusal of the terms and conditions of NIT, it is clear that purpose for allotment of the plot in question is to provide amenities and facilities including provision of school space in the scheme floated by the IDA. Such plots are to be allotted on 'no profit no loss' basis, therefore as per the scheme rules and regulations, the prices of plots meant for specific purpose cannot be compared with the prices of residential or commercial plots and also not with the intent to make profit. Therefore, such plots in any event have to be allotted on 'no profit no loss' basis.
Ans. 4 The respondents have met out discriminatory attitude towards the petitioner in as much as certain educational societies have been allotted the plots on concessional rates in accordance with the terms and conditions of the NIT whereas, the petitioner has been discriminated on the basis of escalation of the price. Therefore, the resolution impugned ought not to have been passed.
Ans. 5 For the reasons stated and the judgment of the Apex Court in the case of State of Jharkhand and Others Vs. Bhramaputra Metallics Ltd. Ranchi and Another (supra) , the doctrine of promissory estoppel would come into play.
26. On a careful perusal of the record and the submissions of learned counsel for the parties, this Court has no hesitation in coming to the conclusion that the petitioner is not at fault for the delay. The entire delay as pointed out herein above is due to the respondents. Even if one of the 66 W.P. 3523 of 2017 Clauses of the tender provides for cancellation of tender without assigning any reason, the test of reasonableness has to be applied. In the instant case, the petitioner was very vigilant through out since beginning. However, only on the ground of price escalation, the respondent scrapped out and cancelled the tender. The inaction on the part of the respondent is arbitrary, unjust and illegal. The respondent erred in cancelling the entire bid process. Accordingly, the impugned resolution dated 16.07.2015 is hereby quashed.
27. The respondents are directed to complete the tender process in accordance with law and issue letter of allotment to the petitioner in respect of Plot No. 522 admeasuring 1335 sq. mt situated in Scheme No. 114 forthwith, as expeditiously as possible, preferably within a period of two months from the date of receipt of certified copy of the order and complete all necessary formalities within the aforesaid period itself.
28. The petitioner is also directed to strictly make use of the plot for which it is meant as per the scheme of the Indore Development Authority.
29. With the aforesaid, writ petition stands allowed. No order as to cost.
(S.A. Dharmadhikari) (Prakash Chandra Gupta)
Judge Judge
sh/-
SEHAR
HASEEN
Digitally signed by SEHAR HASEEN
DN: c=IN, o=HIGH COURT OF MADHYA PRADESH
BENCH INDORE, ou=BENCH AT INDORE,
2.5.4.20=900ec6fc757798eaeb3df7a32860bd3298415a4 d1c2d91436213f2568c8f27da, postalCode=452001, st=Madhya Pradesh, serialNumber=E7DBBA955B262C04B8413251CE7FB6F0 B7DBA610C57F1559C08BF6C6F5DD40D4, cn=SEHAR HASEEN Date: 2024.03.22 13:52:58 +05'30'