Research › Search › Judgment

Rajasthan High Court · body

2014 DIGILAW 1582 (RAJ)

DEEPAK KUMAR MATHUR v. STATE (URBAN DEVELOPMENT)

2014-09-24

AJAY RASTOGI, J.K.RANKA

body2014
Judgment : Instant bunch of appeals arises out of self same judgment of learned Single Judge impugned dt.21.03.2014. Since the lawyers abstained from work and have not provided assistance to their respective clients for almost two months, the litigants appeared in person and made joint request that the appeals may be heard on merits and with consent of the parties, the appeals have been heard & are decided by the present order. The facts are noticed from D.B. Civil Special Appeal (Writ) No.742/2014 (Dr. Deepak Kumar Mathur Vs. State of Rajasthan & Ors.). The appellants approached to this Court by filing their respective writ petitions before the learned Single Judge of this Court u/Art. 226 of the Constitution for non-acceptance of their bid despite being highest bidders as alleged without assigning any reason. The question emerges for our consideration in the instant bunch of appeals are regarding rights of the appellants bidders on account of their participation in the auction process & whether there is any vested right conferred upon the appellants bidder or it amounts to a concluded contract, merely being the highest bidder & depositing 15% of the bid amount in absence of approval by the competent authority ? The advertisement came to be published in daily newspaper Dainik Bhaskar on 07.03.2012 regarding auction of commercial/residential plots/shops on certain terms & conditions indicating minimum sale price (“MSP”), reserved sale price and the earnest money to be deposited for participating in the bidding process and as evident from clause-13 of conditions of auction, the highest bid in auction shall be subject to approval of Chairman, Rajasthan Housing Board who reserves the right to accept or reject any bid without assigning reason. Indisputably the present appellants submitted their sealed tenders in reference to the auction of commercial/residential plots/shops under the terms & conditions indicated in the auction notice within the period indicated from 12.04.2012- 18.04.2012 and deposited the required earnest money to participate in the auction process and being the highest bidder on acceptance deposited 15% of bid and the matter was processed for seeking final approval of the competent authority i.e. the Chairman, Rajasthan Housing Board who after examining the material on record did not accept the auction bid and in light of the terms & conditions of the auction notice the amount deposited by the respective bidder was returned back and accordingly information was sent to each of the bidder for return of 15% of the bid amount deposited by each of them and communication of decision of the Board regarding non-acceptance of their bid was the subject matter of challenge by the appellants bidders by filing their respective writ petitions before the learned Single Judge u/Art.226 of the Constitution and taking note of the objections, the learned Single Judge under its order impugned observed that in absence of there being any concluded contract between the parties no right can be said to be conferred in favour of the appellants and further observed that on examining the original records placed for perusal it reveals that the matter was considered by the higher authorities and the MSP was determined without proper consideration. However the rate was inadequate and there was no discrimination and the entire auction was cancelled and not selectively and the reason which came on record for non acceptance of the bid was that they failed to fetch adequate price of plot/shop on being compared to the price fetched by plots in nearby areas in few cases and in some cases determination of MSP was found to be faulty and in some cases the price was even double the price quoted at earlier auctions and taking note of the material which came on record the learned Single Judge was not inclined to accept the contentions advanced by the appellants and their bunch of petitions came to be dismissed vide judgment impugned herein dt.21.03.2014. The appellants present in person jointly submits that indisputably they were the highest bidders and it was over & above the MSP which was indicated, in the auction notice and after depositing 15% of the bid amount it was recommended by the subordinate authority to seek approval/acceptance from the competent authority but despite being highest bidder it was rejected without assigning reason by a non-speaking order and in the absence of opportunity of hearing being afforded which is the sin qua nnfor non-acceptance of their bid the action of the orespondents is in violation of principles of natural justice and being an arbitrary decision it is violative of Article 14 of the Constitution as well and in support of submission placed reliance upon judgment of the Apex Court in Kalu Ram Ahuja and another Vs. Delhi Development Authority & another, (2008) 10 SCC 696 and further submits that once their bid indisputably was highest and much higher than the MSP indicated in the auction notice and was over & above the last approved sale price it was ordinarily to be accepted by the competent authority but without assigning reason it came to be rejected and such action of the respondents being capricious & arbitrary deserves to be quashed & set aside. The appellants further submit that the Chairman, Rajasthan Housing Board is subjective in its decision making process while rejecting the highest bid & that being not in conformity with law has not been considered by the learned Single Judge under order impugned, requires interference. The appellants further submits that what was noticed and transpired & taken note of by the learned Single Judge could not be made to be the basis in absence of adequate opportunity being afforded to the appellants to controvert before upholding action of the respondents under order impugned and that requires interference by this Court. The appellants further submits that what was noticed and transpired & taken note of by the learned Single Judge could not be made to be the basis in absence of adequate opportunity being afforded to the appellants to controvert before upholding action of the respondents under order impugned and that requires interference by this Court. Their further submission is that the present bidding process adopted by the respondent if compared with other bidding process initiated by a separate auction notice by the respondent, the procedure/standard adopted in two separate bidding process being arbitrary and there was no strict guidelines to be followed by the authority and merely it is not acceptable to the competent authority that itself cannot be considered to be a ground in isolation in holding that bidding process if not accepted & approved by the competent authority no right could be said to be conferred but if there is an apparent error in the decision making process that can always be looked into by this Court in its equitable jurisdiction u/Art. 226 of the Constitution. The appellants further submit that the learned Single Judge has not accepted their contention whereas in similar facts & circumstances the matter came up for consideration before the main seat at Jodhpur and while examining the self same question the learned Single Judge at Jodhpur accepted their contention and finally directed the Board to accept their part of the bid money and subject to such payments the Rajasthan Housing Board shall proceed further to finalize the allotment of plot in favour of the concerned writ petitioners and to execute necessary lease deed or conveyance deed as the case may be in favour of each of them and that judgment is reported in 2014(1) WLC(Raj.) 543 and submits that at least in the light of principle decided by the learned Single Judge at main seat, Jodhpur in the judgment, referred to supra, instant bunch of appeals certainly requires consideration by this Court . The Officers appearing for Raj. The Officers appearing for Raj. Housing Board jointly submits that so far the judgment pronounced by the learned Single Judge before the main seat at Jodhpur reported in 2014(1) WLC 543 is concerned, that has been assailed by the respondents by filing D.B. Civil Special Appeal (Writ) No.328/2014 in which initially by interim order the judgment of learned Single Judge was stayed by the Division Bench at Jodhpur vide order dt.17.02.2014 & lateron made absolute till disposal of appeal vide order dt.18.07.2014 and as regards merits of the matter is concerned, the officer submits that there was no pleading before the learned Single Judge as regards the question of discrimination is concerned, in absence whereof what is being contended in considering the process adopted by the respondent Board in reference to auction notice impugned in the instant proceedings and even before the Division Bench of this Court there is no pleading or tangible evidence on record in regard to discrimination if any adopted by the Board in its decision making process and the plea of discrimination was neither raised nor considered and in absence of any material on record that is not available for consideration by this Court. As regards the other submission is concerned, the officer submits that the appellants have participated under the terms & conditions indicated in the auction notice and it provides that highest bid shall always be subject to approval of the competent authority who in the instant case is the Chairman, Rajasthan Housing Board and as per conditions of auction notice, highest bid could be accepted or rejected without assigning any reason and the terms & conditions of the auction notice further envisage that the bidder who had participated in the process pursuant to auction notice has read over the terms & conditions of the auction notice and understood the same and also agreed to abide and submits that unless the bid is finally approved & accepted by the competent authority no right otherwise could be said to be conferred and in absence of any concluded contract being executed between the parties and unless any right being accrued even the writ petition seeking mandamus against the respondents was not maintainable and in support of submission placed reliance upon judgment of the Supreme Court in Laxmikant & Ors. Vs. Satyawan & Ors., AIR 1996 Supreme Court 2052, Rajasthan Housing Board & Anr. Vs. Vs. Satyawan & Ors., AIR 1996 Supreme Court 2052, Rajasthan Housing Board & Anr. Vs. G.S. Investments & Anr., (2007) 1 SCC 477 and recent judgment in Uttar Pradesh Avas Evam Vikas Parishad & Ors. Vs. Om Prakash Sharma, (2013) 5 SCC 182 and on the strength of the judgments submits that the writ of mandamus can be issued only when there exists a legal right and also the corresponding legal duty on the part of the authority of the State or its instrumentality, in absence whereof the writ petition itself was not maintainable. The officer further submits that indisputably the bid offered by the appellant was not accepted by the competent authority being inadequate and the auction was not finalized in their favour and in absence of any letter of allotment/ possession being issued in favour of the bidder or accepted by the competent authority no legal right could be said to be conferred to claim right over the subject plot in question being the highest bidder and further submits that it is not the case of the appellants that the process adopted by the Board inviting sealed tenders through auction notice that was not in conformity with the provisions of Act or Regulations of the Board framed in exercising the statutory power for disposal of the property and further submits that it is also not the case of the respondents that action of the respondent was either affected of ulterior reasons or allegation of selectivity in its decision making process and the learned Single Judge after having perused the original record didn't find any error in the decision making process adopted by the respondent in taking its decision of not accepting the highest bid offered by the appellants and detailed reasons are forthcoming in the order of the learned Single Judge and that does not require interference by this Court. We have considered the submissions made by the parties present in person and with their assistance examined the material made available for our consideration. We have considered the submissions made by the parties present in person and with their assistance examined the material made available for our consideration. Before we may proceed to examine the questions raised for our consideration it will be appropriate to quote the terms & conditions of the auction notice published by the Board inviting bids in the sealed envelope by the individual bidder, which reads as under :- ^^1- uhykeh ekSds ij mifLFkr vf/kdkfj;ksa dks vfHk’kU”kk djus dk vf/kdkj gksxk dh cksyh dks Lohdkj djsa ;k vLohdkj djsaA 2- uhykeh esa izkIr mPpre cksyh l{ke vf/kdkjh dh Lohd`fr feyus ij gh Lohd`r ekuh tk;sxhA ;fn cksyh vLohd`r gks tkrh gS rks tek jkf’k fcuk C;kt ds ykSVk nh tk;sxhA 3- mPpre cksyh Lohd`r gksus dh fLFkfr esa foØ; ewY; dh ‘ks”k 85 izfr’kr jkf’k vkcaVu i= tkjh gksus ds ,d ekg ¼rhl fnol½ es e; vU; ns; jkf’k ¼yht ,oa ,-,l-lh-½ tek djkuh gksxhA^^ The terms & conditions of the auction notice pursuant to which the bids were invited by the Board clearly indicate that the bids submitted by the bidders are subject to approval by the Chairman, Rajasthan Housing Board who reserves its right to approve/reject any of the bid without assigning reason and even if one being the highest bidder in question but if bid is not confirmed & approved by the competent authority no right is conferred and in case of rejection the deposited amount will be refunded without any interest within stipulated time and the bidder has read over & understood and agrees to abide. In the instant bunch of appeals indisputably the appellants are the highest bidders for their respective residential/ commercial plots/shops in question but the Chairman, Rajasthan Housing Board has not accepted their bid in terms & conditions of the auction notice and after non-acceptance of bid the money deposited of 15% of the bid amount was returned back to all the bidders after adopting the due process as contemplated under the terms & conditions and regulations of the Board and in view of the conditions of auction notice, referred to supra, it is clear that the person who has made highest bid in the auction does not acquire any right to have the auction concluded in his favour until the Chairman, Rajasthan Housing Board grants approval. Of course the Chairman of the Board could not exercise its power in an arbitrary & capricious manner but so long as the order regarding final acceptance not being granted by the Chairman of the Board the highest bidder acquired no vested right to have the auction concluded in his favour and the auction proceedings under the terms & conditions of the auction notice could always be cancelled. One of the right of the auction bidder has been considered by the Apex Court in Laxmi Kant Vs. Satyawan, (1996)4 SCC 208 it was almost in identical facts as it related to auction of the plot by Nagpur Improvement Trust and the auction notice contained that the acceptance of the highest bid shall depend upon 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 and after taking note of the aforesaid it was held as under :- "From a bare reference to the aforesaid conditions, it is apparent and explicit that even if the public auction had been completed and the respondent was the highest bidder, no right had accrued to him till the confirmation letter had been issued to him. The conditions of the auction clearly conceived and contemplated that the acceptance of the highest bid by the Board of Trustees was a must and the Trust reserved the right to itself to reject the highest or any bid. This Court has examined the right of the highest bidder at public auctions in the cases of Trilochan Mishra, etc. vs. State of Orissa 1971 (3) SCC 153 : ( AIR 1971 SC 733 ); State of Orissa vs. Harinarayan Jaiswal, (1972) 2 SCC 36 : ( AIR 1972 SC 1816 ), Union of India vs. M/s. Bhim Sen Walaiti Ram (sic) AIR 1971 SC 2295 and State of U.P. vs. Vijay Bahadur Singh (1982) 2 SCC 365 . It has been repeatedly pointed out that State or the authority which can be held to be State within the meaning of Article 12 of the Constitution is not bound to accept the highest tender or bid. It 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 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." Broadly there are two kinds of auctions, the first is an auction which is not subject to approval by any authority. Such an auction is complete on the fall of hammer. The other kind of auction is where it is subject to approval by some authority. In the second kind of auction, it is settled that the auction is not complete unless approval is granted by the said authority and no right is created in favour of any bidder (even to the highest bidder) unless such approval is granted and unless right is conferred opportunity of hearing has no application and it is one of the settled principle of law that writ of mandamus can be issued only when there exists a legal right and a corresponding legal duty on the part of the State or other authority within the meaning of Art.12 of the Constitution or when action on the part of the State is either unfair or arbitrary or favouritism or nepotism and that can always be considered by the Court under its realm of jurisdiction u/Artl.226 of the Constitution. In Meerut Development Authority vs. Association of Management Studies, 2009 (6) SCC 171 , the Apex Court while examining rights of the bidder who had participated in the tender process, observed that the person who has participated in tender process has no other right except the right of equality & 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 and the relevant extract thereof reads ad infra :- “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 above stated 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. 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 doubt that the Authority's action in accepting or refusing the bid must be free from arbitrariness or favouritism.” The judgment of Apex Court in Rajasthan Housing Board vs. G.S. Investments & Anr., 2007(1) SCC 477 on which the officer of Raj. Housing Board placed reliance, relevant extract thereof reads as under :- “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.” It is always for the authority to decide whether the price offered in an auction is adequate and accepting or rejecting a bid it is merely performing an executive function. The correctness of its conclusion is not open to judicial review unless the decision making process is unfair or the action of the State or its instrumentality is contrary to public good, public interest, unjust or unreasonable or violative of Article 14 of the Constitution which the appellants have not been able to justify from the material on record in the instant bunch of appeals. In the instant case as well the appellants had not acquired any right in their favour and merely because they are the highest bidders and deposited 15% of the bid with the Board and that being subject to acceptance of the competent authority and there is no concluded contract till the bid is accepted and that apart the learned Single Judge also perused & examined the records and observed that in few cases MSP was determined without proper consideration or the rate was inadequate and it was not the case of the appellants that different standards have been adopted or there was any element of selectivity in decision making process of the competent authority for non-acceptance of the bid offered by the highest bidder and the primary reason as observed was that the bid of the appellants could not fetch price of the plot after it being due compared with the price fetched of the plot in the nearby areas in few cases and in some of the cases MSP was found to be faulty and in totality the Chairman, Rajasthan Housing Board was not satisfied with the bid which was offered by the so called alleged highest bidder and accordingly it was proposed to initiate the auction after due determination of MSP afresh and in our considered view there is sufficient material on record which could justify the decision making process adopted by the respondent in taking its final decision for non-acceptance of the bid offered by the highest bidder. As regards the submission made by the appellants regarding auction being discriminatory and different standards were adopted by the Board we do not find any pleadings on record and initial burden was upon the appellants to establish but that was not the case ever pleaded or set up before the learned Single Judge or before this Court. As regards the submission made regarding reason not being assigned by the competent authority in passing of the order impugned in our considered view is without substance for the reason that there is no requirement under the law to indicate reasons by the competent authority for acceptance or rejection of the bid offered by the highest bidder and this being the executive function of the competent authority no reason is supposed to be assigned while taking impugned decision and the correctness of its conclusion is ordinarily not open to judicial review unless the right conferred being infringed by action of the authority which is not the case of the appellants pleaded before the Court. The State or the other authority within the meaning of Article 12 of the Constitution is not bound to accept the highest tender/offer or bid and the competent authority could validly retain its power to accept or reject the highest bid obviously in the interest of public revenue and in absence of there being any concluded contract the conclusion reached by the authority does not infringe rights of the highest bidder and we do not find any error being committed by the learned Single Judge in passing of order impugned which may call for our interference. As regards the judgment on which the appellants placed reliance reported in (2008) 10 696 is concerned, may not be of any assistance for the reason that it was a case where neither record was placed for perusal and the decision of the authority was not based on rational & tangible reasons and was in public interest, whereas in the instant case the respondents are able to justify their action in decision making process and taking final decision in not accepting the bid offered by the highest bidder and in absence of any right being accrued in favour of the appellants and without there being any concluded contract between the parties in respect of the subject plot in question no right could be said to be infringed which may require interference u/Art. 226 of the Constitution. So far the judgment of the learned Single Judge reported in 2014(1) WLC (Raj.) 543 on which the appellants placed reliance is concerned, the appeal against the judgment is pending before the Division Bench and it is open for the parties to address but at the same time what has been laid down by the learned Single Judge in para-13 of the judgment in 2014(1) WLC (Raj.) 543 holding that on depositing 15% amount by the highest bidder a concluded contract came into existence, apart being stayed and pending consideration before the Division Bench in our considered view what is being expressed by the Ld. Single Judge is not in conformity with law for which we have already discussed in detail, referred to supra, and we are of the considered view that the competent authority was not supposed to assign reasons while accepting/rejecting the recommendations of the subordinate authority and in the light of what has been discussed no reasons are required to be assigned while the decision being taken by the competent authority regarding non-acceptance of the highest bid offered by the bidder and in absence of any right being conferred or infringed no opportunity of hearing was required to be afforded to the bidder. Consequently, we do not find any substance in the special appeals and the same are accordingly dismissed. We make it clear that 15% of the bid amount, if not refunded or accepted by the appellants, the same shall be refunded to each of them within a period of four weeks. No cost.