S.L. Sachdev and Another vs Union of India (UOI) and Another

Veena Birbal, J.—By way of the present petition, petitioners have prayed for issuance of writ of mandamus directing respondent No. 2-DDA to accept the highest bid of the petitioner and to issue a Demand-cum-Allotment letter in respect of plot No. 2, LSC, Sector B, Pocket 7, Vasant Kunj, New Delhi. Petitioners have also prayed that the records pertaining to the auction of the aforesaid plot be also called and the rejection letter dated 11th June, 1993 be quashed by issuing appropriate directions.

Briefly stated the facts relevant for filing the present petition are as under:

Petitioner No. 1 is the sole proprietor of a recognized export house namely M/s. Allied India International. Petitioner No. 2 is the wife of petitioner No. 2. In the month of May/June, 1993, respondent No. 2 i.e. DDA advertised for holding an auction for the sale of various plots in different localities of Delhi on 9.6.1993. The petitioners participated in the auction process relating to plot No. 2, LSC, Sector B, Pocket 7, Vasant Kunj, New Delhi measuring 135 sq. m. Before the auction, officers of respondent No. 2 announced the reserved price of the said plot being Rs. 44.30 lacs. Various persons participated in the auction and gave different bids for the said plot. It is alleged that petitioners gave a bid of Rs. 45.5 lacs which was the highest bid. As per the terms and conditions of the auction, the petitioners deposited 25% of the bid amount i.e. Rs. 12 lakhs and signed the bid form which was accepted by the official conducting the bid. On 10th June, 1993, the petitioners approached the Deputy Director (CL), DDA and requested him to issue the demand letter for the remaining amount. However, the said demand letter was not issued to the petitioners. Thereafter on various dates, the petitioners approached respondent No. 2/DDA for collecting the demand letter and also submitted the request in writing for issuance of allotment letter. However, no response was given. In the last week of June, 1993, petitioners received a letter dated 11th June, 1993 whereby petitioners were intimated that their bid for the aforesaid plot had been rejected by the Vice Chairman, DDA. The petitioners immediately approached respondent No. 2-DDA for knowing the reasons of rejection. However, no reason was given.

On 3rd July, 1993, petitioners approached the Ministry of Urban Development, being the controlling authority of respondent No. 2/DDA as per provisions of Section 41(3) of the DDA Act, 1957 stating their grievances and also pointed out that the bid of the petitioners was much above the pre determined commercial rate fixed by the Government of India for Vasant Kunj area for the applicable FAR. Petitioners requested that the order of rejection of the highest bid be cancelled and that the respondent No. 2-DDA be directed to accept the highest bid of the petitioners and to maintain status quo regarding the plot in question. On 12th July, 1993, petitioners received a response from the Government of India, Ministry of Urban Development wherein the petitioners were intimated that the record from respondent No. 2/DDA had been summoned and their application would be processed in accordance with law. It is alleged that despite the fact that matter was under consideration of the Government of India, respondent No. 2/DDA again advertised the auction of the plot in question for 30th December, 1994. By way of present petition, the petitioners have prayed that since there was no reason to reject the highest bid of the petitioners, the action of respondent No. 2-DDA in rejecting the bid of the petitioners is liable to be quashed.

Respondent No. 2-DDA has opposed the writ by filing a counter affidavit. The stand of respondent No. 2/DDA is that the bid of petitioners was merely an offer and the same was not accepted by the Vice Chairman, DDA. It is alleged that Rules 29 and 30 of the Nazul Rules, 1981 clearly stipulate that the bid is subject to confirmation by the Vice Chairman, DDA and any bid including the highest bid can be rejected by the said Authority without assigning any reason and it is not incumbent to communicate the reasons for rejection of the highest bid. It is further stated that the reserved price of plot in question was inadvertently announced as Rs. 44.35 lacs instead of Rs. 94.35 lacs on account of some bonafide clerical mistake and the same plot had been put to auction earlier on 23.3.1993 at a reserve price of Rs. 94.35 lacs. It is stated that the bid was not confirmed as the reserved price erroneously announced at the time of auction was much below the actual reserved price and accordingly the Competent Authority by exercising the powers under Rule 29 and 30 of the Nazul Rules, 1981 rejected the bid of the petitioners. The further stand of DDA is that even under the terms and conditions of auction, the Vice Chairman is not under an obligation to accept even the highest bid and the same can be rejected by him without assigning any reasons and the said provision has been made in order to protect government revenue in public interest. It is further stated that the plot in question was a nursing home plot and the same cannot be compared with other commercial activities. It is further stated that a cheque No. 214398 dated 9.7.1993 of Rs. 12 lacs towards the refund of the earnest money was sent to the petitioners vide letter dated 13.7.1993. The petitioners avoided to receive the delivery of said letter. Thereupon, respondent No. 2/DDA also issued a public notice in the leading local newspapers calling upon the petitioners to collect the cheque but they did not collect the same. It is further stated that the rejection of the bid was in the best interest of Government because the bid price was much less than the actual reserve price. It is prayed that petitioners are not entitled for any relief and the writ petition may be dismissed with costs.

Respondent No. 1-UOI have also filed counter affidavit wherein they have supported the stand of respondent No. 2/DDA.

By the orders of this Court dated 19th January, 2009, the petitioners were permitted to file an additional affidavit wherein they have contended that there is a clear nexus between the builders'' lobby and respondent No. 2 /DDA in holding of auctions for the commercial plots and even the highest bid of a bonafide bidder would get rejected without assigning any reasons, if the highest bidder in an auction of a commercial plot does not belong to builder lobby.

The first contention of the petitioner is that respondent No. 2/DDA could not have rejected the bid of the petitioners without assigning any reason for the same. Reliance was placed on M/s. Star Enterprises Etc. v. The City and Industrial Corporation of Maharashtra JT 199 (2) (SC) 401. On merits, it is contended that in any event, respondent No. 2/DDA could not have rejected the bid of the petitioners since the bid was above the reserve price.

On the other hand, counsel for the respondent No. 2/DDA has submitted that as per the terms and conditions of auction, the bid has to be confirmed by the Competent Authority. As in the present case, as there was a clerical mistake, the Competent Authority did not confirm the acceptance of bid. Respondent No. 2/DDA has placed reliance on Rules 29 and 30 of the DDA (Disposal of Developed Nazul Land) Rules, 1981.

This Bench has recently decided a similar case vide judgment dated 08.01.2010 in W.P.(C) No. 7529/2009 entitled Infra Engineering Limited v. Delhi Development Authority Limited wherein it is held as under:

Applying the above principles, it is obvious that the petitioner cannot claim any enforceable right to be awarded the contract merely because it happens to be the lowest bidder. Normally, the lowest bidder or the highest bidder, as the case may be, ought to be awarded the contract. But this is not an absolute rule and the governmental authority can deviate from this and award the contract to someone other than the lowest or highest bidder, as the case may be. But, there must be good and valid reasons for this departure. The government body or authority may decide not to award the contract to the lowest bidder/highest bidder or to anyone else and may decide to scrap the tender and/or call for fresh tenders. However, once again, there must be good reasons for doing so. In the present case, the petitioner''s lowest bid has been rejected and the tender has been recalled. The DDA has acted well within its power having done provided there exist reasons, which are clearly discernible from the record, justifying the DDA''s decision to reject the petitioner''s bid and to call for fresh bids. It is not necessary that the reasons must be communicated to the petitioner at the outset, but it is sufficient if the reasons exist. It is also clear that if the reasons are palpable and are not so outrageous in the ''Wednesbury'' sense, there would be no scope for judicial interference.

The case of respondent No. 2/DDA in its counter affidavit is that there was a bonafide clerical mistake, as a result, the reserve price of plot in question fixed at Rs. 94.35 lacs was wrongly announced as Rs. 44.35 lacs. This mistake is further evident from the fact that this very plot had been put to auction earlier on 23.3.1993 at a reserve price of Rs. 94.35 lacs. It is the case of respondent No. 2/DDA that the Competent Authority taking into account the facts and circumstances of the case, rightly rejected the bid of petitioner. It is further stated in the counter affidavit that on 11th June, 1993, the respondent sent letter of rejection of highest bid of the petitioners by Regd. A.D. as well as through special messenger and also informed that the earnest money was being refunded to the petitioners separately. Further the stand of respondent No. 2/DDA is that the bid given by the petitioners was merely an offer and the same was not accepted by the Competent Authority i.e. the Vice Chairman of DDA, as such no enforceable contract had come into existence.

We have called for original records relating to the auction. The records substantiate the case of respondent No. 2/DDA. Perusal of the file shows that the reserved price for the plot in issue had been earlier approved by the Member (Finance) of respondent No. 2/DDA as Rs. 94,34,880 arrived at by taking Rs. 17472/ - per sq. m. for 100 FAR (Floor Area Ratio) for Vasant Kunj area. Since the total permissible FAR of the plot in issue was 540 sq. m., the reserved price was calculated as Rs. 17472 x 540 = Rs. 94,34,880/ -. It would also be seen that this reserved price was used when this plot was earlier put for auction on 23rd March, 1993 though no bid was received at that time. The notings in the file further shows that the same price was intended to be used when the plot in issue was again put for auction on 9.6.1993. We do not find any conscious decision by respondent No. 2/DDA which reduced the reserved price of plot to Rs. 44,94,880. It is evident that the mistake occurred as the figure Rs. 94'' in a hand written note was read as 4 while declaring the reserve price of the plot in issue.

The terms and conditions of the allotment by auction also show that bid was subject to acceptance by Competent Authority. In view of the above, we are unable to accept the contention of the petitioner that the action of respondent No. 2/DDA in not accepting the bid of the petitioner was arbitrary. We are also unable to accept the contention of petitioners that once respondent No. 2/DDA announced the reserve price, may be mistakenly, it could not have rejected the same as their bid was above the reserve price. A mistake on the part of respondent No. 2/DDA could not have crystallized any right in favour of the petitioners.

After the arguments were concluded, the petitioners filed an affidavit in which it is contended that the auction of respondent No. 2/DDA is motivated and has been taken to help, what the petitioners term as the builders lobby. The allegations are totally bereft of particulars. No cognizance can be taken of these allegations. Even otherwise no such ground was taken in the writ petition.

In view of above, it cannot be said that the decision of DDA was arbitrary. The writ petition is accordingly dismissed.

The respondent No. 2/DDA does not dispute its obligation to return the amount which was paid to it at the time of submission of the bid. Perusal of the record shows that the respondent No. 2/DDA had made efforts to refund the said amount on various dates but the petitioner avoided to take it. This amount be paid to the petitioners within four weeks from the date of this judgment.

No order as to costs.