JUDGMENT : A.P. Misra, J. The petitioners seek quashing of an order/letter dated 18th September. 1986 (Annexure 3 to the writ petition) whereby the bid of the Petitioners for plot No. 2A-6 in Raj Nagar District Centre, Ghaziabad has been rejected, and further directing the Respondent to act upon the bid of the Petitioner No. I and to execute the lease deed in respect of the said plot and accept the installments of the remaining 75% of the amount of premium from the Petitioners. 2. The Petitioner No. 1 is a company registered under the Companies Act and Petitioner No. 2 is the Director in the said company. The Petitioners deal in the sale and purchase of the real state and also construct buildings for sale. The Respondent Ghaziabad Development Authority published an advertisement in the first week of August, 1986 offering the plots of land for commercial multistoried buildings etc. The said advertisement announced auction to be held on 21st August. 1986, of premium plots at the Ambedkar Marg District Centre and Raj Nagar District Centre. As scheduled the auction of the plots at Raj Nagar District Centre was held. The Petitioners offered a bid of Rs. 15,04,800.00 which was the highest bid. Toe officer conducting the auction accepted the bid of the Petitioner No. 1 and the Petitioner immediately thereafter deposited a sum of Rs. 3,76,200/- through bank draft. Under Condition No. 22(v) of the terms and conditions of the auction the officer conducting the auction is to normally accept the highest bid offered at the fall of the hammer, subject to confirmation by the Vice-Chairman of the Respondent Condition No. 2(vi) lays down that the officer conducting the auction may, for reasons to be recorded in writing and submitted to the Vice-Chairman of the Respondent, reject any bid including the highest bid. Further, the Vice-Chairman may reject any bid including the highest bid without assigning any reason. According to the Petitioner, the Petitioner No. 2 was informed that the intimation containing the acceptance of the bid by the Vice-Chairman shall be sent to the Petitioner No. 1 within a fortnight. The Petitioner was, however, surprised to receive a letter dated 18th September, 1986, which is the impugned order, from the Respondent informing that its bid was not accepted. The said letter was accompanied by a cheque of the amount deposited by the Petitioner No. 1. The Petitioner was, however, surprised to receive a letter dated 18th September, 1986, which is the impugned order, from the Respondent informing that its bid was not accepted. The said letter was accompanied by a cheque of the amount deposited by the Petitioner No. 1. However, according to the Petitioner, though he received the said cheque for Rs. 3,76,200/- yet he did not encase it. The Petitioner’s case further is that the Respondent in rejecting the highest bid of the Petitioner has actually abused the exercise of the power vested in it 3. On behalf of the Respondent in the counter affidavit the stand taken is that since the offer of the Petitioner was not finally approved by the Vice-Chairman of Ghaziabad Development Authority under the rules, the Petitioners grievance is unsustainable as the said order was passed in accordance with the rule and in terms of the power vested in the Vice-Chairman under it Further, though the bid of the Petitioner was the highest, the same was found inadequate and much less than the then market rate of commercial land in that area. Since the existing rates fixed in the year 1983 were considered to be too low in view of fast changing prices of the land. A Sub-Committee was constituted and the rates were considered for revision. This sub-committee revised the rate and fixed at Rs. 1,000/- per sq metre on 18th October, 1985 from Rs. 750/- per sq metre which was in the year 1983 In view of this the bid of the Petitioner was found to be too low and hence the Vice-Chairman did not approve the same. Petitioner in rebuttal in paragraph 11 of the rejoinder affidavit, it is averred that the total area of the disputed plot being 952 sq. metres and the Petitioner’s bid being for Rs. 15,04,800/-, the rate came to Rs. 1580 67 p per sq, metre which is higher than the revised rate of Rs. 1000/- per sq metre. Since this later part of the averment appeared in the rejoinder affidavit we permitted the Respondent to file supplementary counter affidavit in rebuttal if they so desire, which they did. In spite of this supplementary counter affidavit, since certain vagueness still persisted, we directed the Respondents to produce the records of this case. 4. 1000/- per sq metre. Since this later part of the averment appeared in the rejoinder affidavit we permitted the Respondent to file supplementary counter affidavit in rebuttal if they so desire, which they did. In spite of this supplementary counter affidavit, since certain vagueness still persisted, we directed the Respondents to produce the records of this case. 4. Initially, the dispute centered round between the parties whether the rate quoted by the Petitioner at the auction and the revised rate by the Respondent is a rate for an open place of land or on the basis for constructed area permissible to be constructed by the prospective lessees. According to the Petitioner, the revised rate was for open place of land while the Respondent contends it was for covered area. If the rate on the principle of the covered area to be taken then admittedly the Petitioner’s rate comes to Rs. 627/- per sq. metre which is lower than Rs. 1000/- per sq. metre. On the other hand, if the revised rate is only for the open piece of-land then the rate offered by the Petitioner comes to Rs. 1580.67 p. per sq. metre, which is higher than Rs. 1000/- per sq. metre. 5. The Respondent placed its record before us. Neither we could find nor learned Counsel for the Respondent could point out to show that the revised rates made in the year 1985 fixing Rs. 1,000/- per sq. metre was for the covered area. Apart, there was nothing to show from record even any suggestion made before the revision committee that the policy is being changed by fixing rates from open area per sq. metre to covered area per sq metre, Thus, at the best the rate fixed at Rs. 1,000/- per sq. metre could be said to be for an open area. On the 5th of May, 1992, when the record was placed before us further request was made for placing another set of file to show higher auction bid made earlier for the same area. In order to do justice we further granted this opportunity though in the past on number of dates we gave this opportunity to the Respondent. We fixed 8th May for the same on which date the referred file was placed before us. This file relates to an auction dated 16th August, 1985 which was held one year earlier than the impugned auction. We fixed 8th May for the same on which date the referred file was placed before us. This file relates to an auction dated 16th August, 1985 which was held one year earlier than the impugned auction. This earlier auction was also subject matter of challenge in the Writ Petition No. 26900 of 1986 (D.S. Agarwal & Co Ghaziabad v. Ghaziabad Development Authority. This Court by means of its judgment dated December 21, 1988 dismissed the writ petition and upheld the decision of the Respondent-authority of rejection of the highest bid in the said auction. We would be referring the said judgment herein under. This auction admittedly is of the Raj Nagar area to which the present writ petition pertains and the maximum rate quoted therein as per record was Rs. 790/- per sq. metre for the plot No. A-I and the rate of plot No. 2A-6 to which the present writ petition pertains, the highest bid was for Rs. 350/- per sq. metre. Even in this file the rate quoted in the previous auction was on the principle of open area and the learned Counsel for the Respondent-Ghaziabad Development Authority has fairly conceded that there is nothing to show that the auction and the rate quoted therein was on the principle of covered area. According to the Petitioner, at the time of auction it was announced that the bid had to be made keeping in view of the reserved price at Rs. 450/- per sq. metre of covered area. It would be equivalent to Rs. 1080/- per square metre on open area basis. However, the Respondent denied that any reserved price was announced Even if no reserved price was announced the question is whether the impugned order rejecting the highest bid of the Petitioner for the reason given is sustainable or not in the eye of law. So far as the exercise of power of the Vice-Chairman of the Ghaziabad Development Authority in rejecting any bid including the highest bid cannot be said to be an arbitrary power. Similarly, not accepting any bid on the ground of it having too low and inadequate would be well within the competence of the authority empowered. In D.S. Agarwal & Co. (supra) to which learned Counsel for the Respondent strongly relied, the Petitioner assailed the validity of Vice-Chairman order on two grounds. Similarly, not accepting any bid on the ground of it having too low and inadequate would be well within the competence of the authority empowered. In D.S. Agarwal & Co. (supra) to which learned Counsel for the Respondent strongly relied, the Petitioner assailed the validity of Vice-Chairman order on two grounds. Firstly, his decision was founded on extraneous considerations and was otherwise too manifestly arbitrary and, secondly, Respondent Ghaziabad Development Authority discriminated the Petitioners with Sri Randhir Chopra. This Court held it was not based on any extraneous consideration or was otherwise arbitrary. It held: The exercise of power by the Vice-Chairman could not it the face of this material be regarded as either arbitrary or founded on extraneous consideration. If the power to reject the highest bid is there the authority while exercising that power has not to exercise that power arbitrarily, whimsically, capriciously, on extraneous considerations. If any material reasoning is recorded while rejecting any bid that reason most find support either explicitly or Implicitly from the records. It is one of the settled principle of law that whenever the State exercises any power under a statute, rules or under the Constitution or in any dealings with its subject it must act fairly in any sphere of its activity. In no case the State could be conceived to act arbitrarily and if acts as such the Court would not hesitate to strike it down. Whether an authority has acted arbitrarily or not will depend on the fact of each case. In D.S. Agrawal (supra) this Court upheld the orders of the Respondent-authority when the bids offered in that auction were round about Rs. 750/- per sq. metre, while revised rate on 18th October, 1985, was Rs. 1.000/- per sq. metre. The auction in that case was held on 16th August 1985, about two months earlier than the revision of rate. The Court further recorded that the very plot when re auctioned on 14th June, 1988, (that is to say, about two years subsequent to the present impugned auction) attracted a bid of Rs. 1250/- per sq. metre. 6. Coming to the facts in the present case, the rejection of the highest bid was made on the basis of recommendation of the auctioning, authority, who recorded that the bids offered were quite low to the previous bids of the earlier auctions. 1250/- per sq. metre. 6. Coming to the facts in the present case, the rejection of the highest bid was made on the basis of recommendation of the auctioning, authority, who recorded that the bids offered were quite low to the previous bids of the earlier auctions. The exact words are reproduced below in Roman: Uprokt Sabhi ploton ki boli purva men Hue Nilam me aayee hue boliyon se kafi kam hai. 7. This reasoning as disclosed if exists on record is a good reason to reject the bid. But if the facts recorded in this reason does not exist then it cannot be sustained. This would then be arbitrary or capricious exercise of power. To ascertain this we permitted the Respondent to place the relevant files pertaining to the earlier auction bid. According to the Respondent earlier auction was the auction dated 16th August, 1985, one year earlier to the impugned auction. From the perusal of the file the highest bid for plot No. A-6 to which Petitioner Is concerned was only Rs. 350/- per sq. metre, and even for other plots of Raj Nagar area the highest bid was Rs. 790/- per sq. metre. Admittedly, the Revision Committee revised the rate from Rs. 750/- per sq. metre fixed in the year 1983 to Rs. 1,000/- per sq. metre in October. 1985 For upholding reasons as aforesaid for rejecting the bid the auction bid offered at this earlier auction has to be quite higher than offered now and even for holding bid offered was inadequate there has to be some material to prove the inadequacy. From the perusal of the file there exists nothing to show that in the earlier auction the bids offered were higher to make the offer of the Petitioner to be too low, On the contrary, there does not exist on the record any bid which is higher than the Petitioners so far as the Petitioner plot is concerned. Thus, the recommendations on the basis of which the Vice-Chairman finally rejected the highest bid of the Petitioner so far as Petitioner plot No. A-6 is concerned It cannot be said that it is based on any material on record. The fact is that the highest bid of the Petitioner for 952 sq. metre of the plot No. A-6 is for Rs. 15,04,800. The rate comes to Rs. 1580.67 p. per sq. The fact is that the highest bid of the Petitioner for 952 sq. metre of the plot No. A-6 is for Rs. 15,04,800. The rate comes to Rs. 1580.67 p. per sq. metre on open plot area basis and Rs. 627/- per sq. metre on covered area basis. Even in the earlier judgment of D.S. Agrawal (supra) it was recorded that when the said plots were subject matter of challenge in the said writ petition was not approved and when it was re-auctioned on 14th June, 1988 (about two years later than the present auction) the offer made was Rs. 1250/- per sq. metre. Thus, the highest offer of the Petitioner two years earlier than this date at the rate of Rs. 1580.67 p. could not be treated by any stretch of imagination specially in the absence of any material on the record that the offer of this highest bid was too low in consideration to the earlier auction bid made. In view of this, the rejection of the highest bid of the Petitioner by the Vice-Chairman on the basis of the aforesaid recommendation by the auctioning authority is unsustainable as the same is on the basis of no evidence on the record so far as the Petitioner’s case is concerned. We make it clear, we are deciding this case solely on the basis of special facts of this case relating to the Petitioner. 8. Accordingly, the order/letter of the Respondent dated 18th September, 1986 (Annexure 3 to the petition) whereby the bid of the Petitioner No. 1 for plot No. 2A-6 in Rajnagar area was rejected is hereby quashed. There is nothing on the record on the basis of which the Respondent authority could reject the highest bid of the Petitioner. We accordingly direct the Respondent authority to proceed to execute the lease deed with the Petitioner in accordance with law after due compliance with all the formalities as is necessary under the rules and the advertisement made for the said auction. 9. In the result, the writ petition is allowed with costs.