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2005 DIGILAW 81 (DEL)

PREM RANI v. DELHI DEVELOPMENT AUTHORITY

2005-01-24

S.RAVINDRA BHAT

body2005
S. RAVINDRA BHAT, J. ( 1 ) IN these proceedings under Article 226 of the Constitution, a communication dated 26. 6. 2003 issued by the respondent (hereinafter called "the DDA", cancelling the bid made by the petitioners for a plot has been questioned. ( 2 ) AN auction was held by DDA on 7. 3. 2003 in which, inter alia, plot No. B-1/1/3, at Janak puri. New Delhi (hereinafter called "the plot") was offered. The petitioners bid was for rs. 44. 00 Lacs. They were the highest bidders. In accordance with the terms and conditions of the auction an initial deposit of Rs. 12. 00 lacs was made immediately. ( 3 ) ON 12. 3. 2003 the second petitioner, who is the husband of the first respondent, wrote to the DDA stating that the bid/offer was in reality on behalf of his daughter, one Ms. Kavita Vohra. The Itter stated that the bid was made and that a plot ought to be in the said Ms. Vohra s name since her birth day fell on 7. 3. 2003; the DDA was also informed that by mistake the bid was made in the name of the petitioners by their Manager, and that as soon as the second petitioner (who was out of town returned), he was seeking correction in respect of the offer/bid. The letter also recorded that the request ought not to be regarded as change in the name of the intending purchaser. The petitioners also followed up with another letter dated 8. 4. 2003 enclosing their affidavits and certain Indemnity Bonds which were admittedly received by the respondent. ( 4 ) THIS appears to have been in response to a demand letter dated 21. 3. 2003 requiring deposit of the balance 75% amount payable pursuant to the bid. ( 5 ) THE petitioners once again followed up the matter with the DDA on 26. 5. 2003 and requested for a decision. ( 6 ) ON 27. 5. 2003 the DDA declined to accede to the request. The second petitioner made one more representation reiterating the request for transfer of name. All this eventually culminated in the impugned order dated 26. 5. 2003 by which the competent authority cancelled the bid and forfeited the earnest money deposited. It may be mentioned that as per the terms of auction, the earnest money is Rs. 1. 00 Lac. The second petitioner made one more representation reiterating the request for transfer of name. All this eventually culminated in the impugned order dated 26. 5. 2003 by which the competent authority cancelled the bid and forfeited the earnest money deposited. It may be mentioned that as per the terms of auction, the earnest money is Rs. 1. 00 Lac. The action of the DDA assailed on the ground of non-application of mind and that the request for transfer of name in the offer, being innocuous and a result of mistake, did not warrant the action of forfeiture and cancellation of the bid. The DDA in return has relied upon condition No. 4 of the brochure which governs the sale by auction of residential plots. It has also been averred that the impugned action was necessitated in view of the fact that the first petitioner owned another plot; therefore, she could not have been a party to the bid which had been cancelled. ( 7 ) MR. Ravinder Sethi, learned senior counsel appearing for the petitioner submits that the impugned action of cancellation of the bid and forefeiture of the earnest money is arbitrary and vitiated by complete non-application of mind. He has relied upon the contents of the letters written by petitioner no. 2; he has also placed reliance upon a copy of the passport of the said Ms. Vohra which discloses her date of birth to be 7. 3. 1971. In addition, the affidavit of the said Ms. Kavita vohra as well as that of Mr. Santosh Kumar dated 1. 9. 2003 filed in these proceedings have been relied upon. The said Manager, mr. Santosh Kumar affirmed in his affidavit that the plot was to be given in gift to Ms. Kavita Vohra and that he was responsible for the mistake of bidding on behalf of the first two petitioners. ( 8 ) MR. Anil Sapra, learned counsel appearing for the respondents has made two-fold submissions. Firstly, he submits that in terms of Clauses 4,8,10 and 12 the bid had to be cancelled in the circumstances of the case. The second submission is that in terms of the nazul Lands Rules as well as the Conditions of auction, if any bidder owned a property; no bidder owning a property was entitled to participate in the auction. Firstly, he submits that in terms of Clauses 4,8,10 and 12 the bid had to be cancelled in the circumstances of the case. The second submission is that in terms of the nazul Lands Rules as well as the Conditions of auction, if any bidder owned a property; no bidder owning a property was entitled to participate in the auction. There being a violation of such condition, the bid of the petitioners had to be cancelled. It is also submitted by learned counsel on behalf of dda that neither the rules nor the conditions of the auction leave the authorities with any discretion in waiving any term or requirement. Such being a case, the present petition does not warrant interference under Article 226 of the Constitution. ( 9 ) I have carefully considered the submissions of parties. The relevant clauses which govern the conditions of auction are extracted below :- "4. A change in the name of the intending purchaser shall not be allowed under any circumstances. 8. The demand-cum-allotment letter would be sent to the successful bidder immediately after the bid is accepted by the Competent Authority. The highest bidder is required to make payment of balance 75% bid amount, as demanded vide said demand letter referred to above, within 90 days from the date of issue of the demand letter by Bank Draft/pay Order only in the branches of Central Bank of India/state bank of India, Vikas Sadan INA, New delhi. The competent Authority may, in his absolute discretion extend the last date of payment up to the maximum period of 180 days, beyond the last date for payment, with reference to the date of issue of demand letter, subject to payment of interest on the balance amount @ 18% p. a. , where the delay does not exceed 30 days and @ 25% where the delay exceeds 30 days. 10. In case the highest bidder fails to make the balance 75% amount within the stipulated period, as mentioned in the demand letter or within such extended period, if any, granted by the Competent Authority on his written application, the bid shall automatically stand cancelled and the Earnest Money shall stand forfeited. In that eventuality the competent authority shall be competent to re-auction the residential plot 12. In that eventuality the competent authority shall be competent to re-auction the residential plot 12. In case of default, breach or non-compliance of any of the terms and conditions of the auction or any fraud, misrepresentation or concealment of facts or non-payment of balance premium within the due date by the bidder/intending purchaser, the Earnest money shall stand forfeited. " ( 10 ) A reading of the above clauses and all the terms governing the auction show that condition of eligibility for participating in any auction is with the bidder, his/her spouse or children or a dependent children or dependent parents or dependent minors/sisters/brothers do not own in full or in part, on leasehold or freehold basis any residential plot or flat or house or have been allotted any such plot/ flat etc. Condition No. 4 is categorical; it stipulates that a change in the name of the intending purchaser would not be allowed under any circumstances. Condition No. 8 stipulates the time frame. 75% of the bid amount had to be deposited and the consequences for non-compliance. The total time which is permitted for the deposit of this amount is 180 days subject to payment of interest at 18% per annum wherever the delay does not exceed 30 days and 25% where the delay exceed 30 days. Clause 10 deals with the consequence of failure to make the payment - it results in automatic cancellation and forefeiture of the earnest money. The competent authority is also left free to re-auction the plot. Clause 12 stipulates, among others, that breach or non-compliance of any Conditions of Auction, would result in forfeiture of earnest money. The position in law with regard to formation of contract is clear. Section 1 of the Contract stipulates that in order for a proposal to crystalise into a promise or a binding contract there must be a absolute and unqualified acceptance of the proposal. It is settled law that a tender is merely a proposal or an offer, no more no less. In order that a binding contract for that result to in a binding contract, there has to be unqualified and absolute contract by the promisee. The promisee in this case would be the DDA. Admittedly there has been no acceptance. It is settled law that a tender is merely a proposal or an offer, no more no less. In order that a binding contract for that result to in a binding contract, there has to be unqualified and absolute contract by the promisee. The promisee in this case would be the DDA. Admittedly there has been no acceptance. Hence, the present case arising for consideration, therefore, is whether the refusal of the DDA to transfer/ substitute the name of the offerer/bidder, is arbitrary and requires interference under articles 226 of the Constitution. ( 11 ) THE Conditions governing the terms of auction are categorical; although they have no statutory force; they bind the participants as well as the DDA (the latter more so, in view of the fact that it is a State agency required to adhere to its own names ). It is well-settled that non-statutory policies, guidelines and conditions evolved for the functioning of State agencies bind such agencies; they can ignore such conditions only at the peril of violation of Article 14 (c) Raman Dayaraman Shetty vs. Union of India; West Bengal State electricity Board Vs. Patel Engineering; and Netai Bag Vs. State of West Bengal;. The DDA was, therefore, bind to give effect to the terms and conditions governing the auction. ( 12 ) IN at least two judgments of the Supreme court it has been held that in the absence of any authority to waive conditions of an auction to the terms governing an auction, where such conditions have not been complied with or have been violated, there is no valid or sanction of tenders the matter can be looked at from another perspective. The terms and conditions of auction as indeed no rule, empower DDA to waive the criteria and the stipulations that governing the auctions. In such a case if the DDA were to in fact waive any condition, such action would be open to attack on the ground of arbitrariness. ( 13 ) LIKEWISE, the mere fact that the respondent-DDA is a State agency would not enlarge the rights of the parties. ( 14 ) IN relation to proceedings under Articles 226 numerous judgments have ruled that the scope of judicial review does not encompass an Appellate power. Decisions of the Supreme Court and of this Court, from tata Cellular Vs. ( 14 ) IN relation to proceedings under Articles 226 numerous judgments have ruled that the scope of judicial review does not encompass an Appellate power. Decisions of the Supreme Court and of this Court, from tata Cellular Vs. Union of India; onwards have constantly ruled that under Article 226, the Court is more concerned with the decision making process rather than decision itself. The parameters of judicial review are not so intrusive so as to impinge upon the day-today functioning of the decision maker unless it is demonstrative that the order or decision is so unreasonable or perverse would have arrived at and that no respectable person situated in such circumstances would have come to such conclusion. ( 15 ) IT cannot be said that the decision of the dda not to change the name of the bidder was either so arbitrary or so unreasonable as to warrant interference under Article 226 merely because the Court would take a different view. Hence, I see no reason to interfere with the decision of the DDA so for as it declined the request of the petitioner nos. 1 and 2 to change the name in the bid. ( 16 ) IN so for as the decision of forfeiture of the earnest money is concerned, it is true that two clauses in the terms and conditions leave no manner of choice to the DDA in regard to forfeiture in such circumstances, however, even in a earnest money would fall within the realm of prayer containing a clause for liquidated damages, all that the person entitled to damages can secure its reasonable damages not exceeding the amount indicated (Section 74 of the Contract Act ). In the present case the constant stand of the petitioners at least from 12. 3. 2003 was that the name in the bid was a mistake. The DDA, however, took no action and raised a demand letter on 21. 3. 2003. The petitioners reiterated their position; the DDA declined their request on 27. 5. 2003 and eventually passed the impugned order by which it also directed forfeiture. In view of the peculiar conspitous of fact I feel that it would not be appropriate to permit DDA to retain the entire earnest money. In my opinion, ends of justice would be would be served if the DDA is directed to return half the earnest money. 2003 and eventually passed the impugned order by which it also directed forfeiture. In view of the peculiar conspitous of fact I feel that it would not be appropriate to permit DDA to retain the entire earnest money. In my opinion, ends of justice would be would be served if the DDA is directed to return half the earnest money. In the circumstances, it is held : I)THAT the position contained in the impugned letter dated 26. 6. 2003 and in so for as it declines the request of the petitioners for a transfer of the name in the name of the bid, is not arbitrary; II)THE decision in the impugned order so for as it relate to the forfeiture of the entire earnest money deposit is quashed/set aside to the extent that the petitioner is entitled to a refund of half amount namely Rs. 50,000/- III)IN the circumstances, the DDA is directed to refund the amount of rs. 50,000/- to the petitioners within six weeks. The writ petition is disposed of in terms of the above directions with no order as to costs. .