Bombay High Court
B.D. Bansal And Co vs Brihan Mumbai Electric Supply And ... on 11 April, 2017
Bench: Shantanu S. Kemkar
906.wpl.815.17..doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO. 815 OF 2017
B. D. Bansal and Co
A proprietorship Firm, through
Shri Goldie Sud ..Petitioner
Vs.
Brihan Mumbai Electric Supply
and Transport Undertaking
Fort, Mumbai and Others ..Respondents
WITH
CHAMBER SUMMONS (L) NO.126 OF 2017
IN
WRIT PETITION (L) NO.815 OF 2017
Ashwin Wadhwa Proprietor of
M/s Meenakshi Trading Corporation ..Applicant/Intervener
IN THE MATTER OF
B. D. Bansal and Co ..Petitioner
Vs.
Brihan Mumbai Electric Supply
and Transport Undertaking and Others ..Respondents
WITH
NOTICE OF MOTION (L) NO.210 OF 2017
B. D. Bansal and Co through
Goldie Sud ..Applicant
IN THE MATTER BETWEEN
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B. D. Bansal and Co
A Proprietorship Firm through
Shri Goldie Sud ..Petitioner
Vs
Brihan Mumbai Electric Supply
and Transport Undertaking
and Others ..Respondents
....................................
Mr. Goldie Sud, the Petitioner in-person.
Mr. Assem Naphade a/w Ms. Kavita Anchan i/b M. V. Kini and Co,
for Respondent Nos.1 to 3.
Ms. Deepa Paheja i/b J Law Associates, for Intervener in Chamber
Summons.
......................................
CORAM :- SHANTANU S. KEMKAR &
B.P.COLABAWALLA, JJ.
DATE :- APRIL 11, 2017.
ORAL JUDGEMENT: [ B. P. COLABAWALLA J. ]
1. Though the Writ Petition and the Notice of Motion was
on our production Board today, since the Petitioner is appearing
in-person, we have allowed him to address us and by consent of all
parties, we have heard the Petition for admission.
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2. We must also mention that the above Chamber
Summons was filed by one Ashwin Wadhwa seeking to intervene
in the Writ Petition and be added as a party Respondent. The said
Ashwin Wadhwa supports the stand taken by the Petitioner. It is
in these circumstances that we are disposing of all these matters
by this common judgment.
3. By this Writ Petition filed under Article 226 of the
Constitution of India, the Petitioner seeks an appropriate writ,
order or direction calling for the record and proceedings in respect
of an E-auction dated 2nd February, 2017 and an extended E-
auction of even date conducted by Respondent No.4 for and on
behalf of Respondent No.1
4. The additional prayer that is sought is to quash the
Communication dated 8th February, 2017 addressed by the
Deputy Materials Manager (Sales), Oshiwara, Scrapyad and to
direct Respondent Nos.1 to 4 to award / allot the material at Sr
No.10 in Section-V of the E-auction dated 2nd February, 2017, to
the Petitioner. In a nutshell, by the present Petition, the
Petitioner seeks to question the action on the part of Respondent
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No.1 (BEST) in adopting the process for sale of its property. The
only grievance that the Petitioner (being the party in-person) has
projected before us is that the tender process is vitiated on the
ground that there was no fixation of reserve price that was
communicated to any of the bidders. On this ground, according to
the Petitioner, the entire tender process is vitiated, and therefore,
ought to be set aside.
5. The brief facts giving rise to the present controversy
are that, the Petitioner is a Proprietor of a firm called B. D. Bansal
and Company which deals in sale and purchase of scrap materials.
Respondent No.1 is the BEST, an undertaking of the Mumbai
Municipal Corporation (the MMC). Respondent No.1 mainly
caters to the needs of residents of Mumbai in relation to
transportation and electrical supply. Respondent No.2 is the
Manager of Respondent No.1 and Respondent No.3 is the Deputy
Materials Manager (Sales) of Respondent No.1-Corporation who
deals with sale of scrap materials that belong to the BEST
undertaking. Respondent No.4 is a private auctioneer appointed
by Respondent No.1 for conducting auctions of scrap material of
Respondent No.1.
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6. Respondent No.1 vide its E-auction dated 2nd February,
2017 invited bidders for purchase of different scrap materials of
Respondent No.1 - undertaking. For the purposes of conducting
this auction, Respondent No.4 was appointed as an auctioneer.
The said auction was to be conducted on-line and on various terms
and conditions as mentioned in the special conditions of sale.
These special conditions have been annexed by the Petitioner at
Exhibit-A page 27 of the paper book. According to the Petitioner,
under this E-auction, the EMD payment was to be made by 6th
February, 2017 and the last date for payment of balance sale
value was to be 10th February, 2017. The scrap to be sold under
this E-auction was section-wise i.e. Section-I, Section-II etc.
7. The Petitioner being interested in participating in the
E-auction, registered for the same upon payment of the necessary
CMD charges. It is the case of the Petitioner that he was
interested for the scrap at Item No.10 of Section-V, namely,
"scrapping of JCBL Cerita AC Buses in running condition". Lot
Number allotted for the same was Lot No.10 and the quantity of
Buses was also 10 (ten). It appears that the Petitioner for this lot
was the only bidder and placed his highest bid of Rs.12,50,000/- .
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Though it is stated in the Petition that his bid was the highest and
was therefore accepted by Respondent No.1, we find no such
acceptance on record. In fact, when we asked the Petitioner to
show us an acceptance of his bid, he was unable to do so. Contrary
to this, it is the case of the BEST that the tender for the sale of
these 10 AC Buses (under Lot No.10) was cancelled in view of the
fact that they had only one bidder and that too at a ridiculously
low price. It was in these circumstances that the Petitioner was
informed on 2nd February, 2017 by Respondent No.4 that its bid of
Rs.12,50,000/- was rejected. This Communication can be found at
page 48 (Exhibit-F) of the paper book. It is in continuation of this
Communication that on 9th February, 2017 the Petitioner was
informed to collect his CMD of Rs.5,00,000/- from the office of
Respondent No.4. It is aggrieved by these actions of the
Respondents that the Petitioner is before us in our writ
jurisdiction under Article 226 of the Constitution of India.
8. Though several grounds have been raised in the
Petition, Mr. Sud (Petitioner in-person) fairly canvassed only one
point before us. That can be found in paragraph 5 of the Petition
which is the summary of challenge. The Petitioner in-person
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argued that his bid was wrongly rejected, though being the highest
bid, on the specious plea that it does not match the reserve price.
He submitted that in fact when questioned, the reserve price was
not even disclosed to the Petitioner on the ground that the same
was confidential. The Petitioner in-person therefore submitted
that such conduct of the Respondents of not disclosing of the
reserve price smacks of malafides and is contrary to law and
therefore requires our interference under Article 226 of the
constitution of India.
9. On the other hand, Mr. Naphade, learned counsel
appearing on behalf of Respondent Nos.1 to 3, submitted that as
far as Lot No.10 is concerned, (sale of 10 AC Buses), the BEST
decided to scrap the sale of the said Lot since the Petitioner was
the only bidder and the bid given by him of Rs.12,50,000/- for 10
AC buses (in running condition) was far too low to accept. It was
in these circumstances that his bid was rejected. It is not as if the
said Lot No.10 was sold to some other bidder at a price lesser than
what was offered by the Petitioner. He submitted that the entire
tender process was done in a fair and transparent manner. In any
event, he submitted that if Respondent No.1 after floating the
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tender decided not to go ahead with it for any reason, it cannot be
compelled to sell its property. It is entirely at the discretion of
Respondent No.1 to decide whether to accept the offer made by a
particular bidder to purchase its property. Even after the bids are
received, it is always open to Respondent No.1 not to accept any
offer and no party has a vested right in compelling Respondent
No.1 into accepting a bid of a particular bidder. He submitted that
Respondent No.1, not having accepted anyone's offer with respect
to Lot No. 10, there was no concluded contract between the
Petitioner and Respondent No.1 or any other person, and
therefore, the reliefs sought for in the Petition were wholly
misconceived and untenable in law.
10. As far as the issue of reserve price is concerned, Mr.
Naphade submitted that this issue is no longer res-integra and the
exact same argument has been considered by the Hon'ble Supreme
Court in the case of Haryana State Agricultural Marketing
Board and Others v/s Sadhu Ram.1 He submitted that the
Supreme Court has clearly held that there is nothing unfair in not
disclosing the reserve price and the tender is not vitiated on this
ground. It is common knowledge that when the reserve price is
1 (2008) 16 SCC 405
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disclosed, the bidders often form cartels and bid at or around the
disclosed price, though the market price is much higher. He
submitted that the Supreme Court held that in the facts of that
case the Appellant had not acted in an unfair manner in not
disclosing the reserve price at the time of inviting the tender or
even at the time of holding the auction. Looking to all this, Mr.
Naphade submitted that there was no merit in this Writ Petition
and the same ought to be dismissed.
11. We have heard the learned counsel for the parties at
length and carefully perused the papers and proceedings in the
Writ Petition. We find considerable force in the argument
canvassed by Mr. Naphade. It is not in dispute that the Petitioner
had bid in the E-auction that was conducted on 2nd February,
2017. It is also not in dispute that his bid was the highest bid and
that he was the only bidder for Lot No.10. It is now settled law
that in a tender, the bidder is the party that makes the offer and
the party floating the tender is the one that has to accept the offer.
It is only once the bid is accepted can a concluded contract come
into existence. If the party floating the tender before accepting
any bid, decides to scrap the tender, then, it is always free to do so
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because there is no concluded contract at all. In these
circumstances, we fail to see how the Petitioner can insist that
Respondent No.1 be directed to accept the bid of the Petitioner. It
is not as if the bid of the Petitioner was rejected and the bid of
some other party was accepted by Respondent No.1. After seeing
the bid of the Petitioner and it being the only bid, we are clearly of
the view that Respondent No.1 was well within its right not to go
ahead with the tender process as far as Lot No.10 was concerned.
There being no concluded contract at all and furthermore there
being no other bidder, Respondent No.1 was fully justified in its
actions. We, therefore, have no hesitation in rejecting the
Petitioner's contention that the bid of the Petitioner ought to be
accepted by Respondent No.1.
12. Equally, we find the argument of the Petitioner that
the tender process is vitiated because there was no disclosure of
the reserve price, without any substance. As rightly submitted by
Mr. Naphade, we find that this issue is squarely covered by a
decision of the Supreme Court in the case of Haryana State
Agricultural Marketing Board and Others.1 As can be seen from
the facts of that case, the Appellant, being a statutory authority,
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had invited the traders and the general public to purchase the
commercial sites in an open auction to be held on 8th July, 2004.
By this auction, shop plots (62 numbers) and booth plots were to
be auctioned. Whilst conducting this auction, the reserve price
was neither mentioned in the public notice nor was the same
announced before the start of the auction. The auction of the
plots was held as per the schedule and the Respondents were
declared to be the highest bidders. This was thereafter put up
before the market committee, which by its Resolution dated 24th
July, 2004, recommended the confirmation of the auction bids.
However, the Chief Administrator, except giving approval in
respect of one plot and three booths, rejected the auction of all
other plots and directed refund of the amounts to the Respondents
and put the plots in open auction once again. Being aggrieved by
this, the Respondents filed a batch of Writ Petitions in the Punjab
and Haryana High Court. Whilst deciding these Writ Petitions the
High Court inter alia held that non-disclosure of the reserve price
amounted to an unfair practice. Whilst setting aside the decision
of the Punjab and Haryana High Court, the Supreme Court, at
paragraphs 17, 18 and 19 held thus:-
"17. Mr Patwalia, the learned Senior Counsel appearing for the
respondents submitted that his clients were ready to pay the
enhanced amounts which were offered by the bidders in the
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second auction and therefore, in view of this, the decision of the
High Court should be upheld with such modification. We are
unable to accept this submission of Mr Patwalia because at the
present moment, third-party interests have also been created in
the matter and the bidders in the second auction were not made
parties to the writ petitions.
18. Let us now take up the other aspect of the matter. As noted
hereinearlier, the reserve price was not shown in the public
notice and therefore, the respondents had no knowledge of the
reserve price. Even assuming that the reserve price had to be
given in the public notice, then also, we are of the view that the
best course for the High Court would be to cancel the entire
auction in view of the decision of this Court in Tata
Cellular v. Union of India [(1994) 6 SCC 651] rather than
substituting its own opinion by directing allotment of alternative
plots. It is, therefore, difficult to accept the views expressed by
the High Court that since reserve price was not known to the
respondents and they were found to be the highest bidders in
the said auction, they have acquired a right to get the allotment
of alternative plots and the appellants had no authority to reject
the highest offers given by the respondents or to cancel the
auction itself. Since the entire auction was cancelled, we do not
find any justification how the High Court could pass an order
directing allotment of the alternative plots on the same terms
and conditions when, after cancellation, the second auction was
held in which the price fetched was much higher than the offers
made by the respondents. That apart, we do not find anything
unfair in not disclosing the reserve price. It is common
knowledge that when reserve price is disclosed, the bidders
often form cartels and bid at or around the disclosed price,
though the market price is much higher. We, therefore, do not
agree with the High Court that the appellants had acted in an
unfair manner in not disclosing the reserve price at the time of
inviting tenders or even at the time of holding the auction.
19. In view of the admitted fact that the money deposited by the
respondents with the appellants was refunded to the
respondents by account payee cheques which were duly
encashed by them and in view of the admitted fact that
subsequently, a second auction was held on 20-12-2004 in
respect of the same plots which were put up for auction on 8-7-
2004 and in the second auction, some other parties have now
acquired interest in the said plots, it was not open to the High
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Court to direct the appellants, in the exercise of its writ
jurisdiction, to allot alternative plots to the respondents only on
the ground that the auction dated 8-7-2004 could not be
cancelled by the Chief Administrator of the Board without
assigning any reason and also on the ground that the reserve
price was not disclosed in the public notice issued by the
appellants."
(emphasis supplied)
13. As can be seen from the aforesaid decision, the
Supreme Court has clearly opined that there is nothing unfair in
not disclosing the reserve price. It has taken judicial notice of the
fact that when the reserve price is disclosed, the bidders often
form cartels and bid at or around the disclosed price though the
market price may be much higher. We find that this decision of the
Supreme Court squarely answers the grievance raised by the
Petitioner that the E-auction conducted by Respondent No.1 was
vitiated on the ground that the reserve price was not disclosed.
We, therefore, have no hesitation in rejecting this argument made
on behalf of the Petitioner.
14. As far as the Chamber Summons is concerned, the
same was not on Board today. However, the same was taken up
with the consent of all parties. On perusing the Chamber
Summons, we fail to see how the Applicant therein (Ashwin
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Wadhwa) has any locus to intervene in the present Writ Petition.
In the present Writ Petition the challenge is to the rejection of the
Petitioner's bid for Lot No.10 in Section-V (in relation 10 AC
buses) of the E-auction dated 2nd February, 2017. It is common
ground before us that the Applicant in the Chamber Summons had
not even bid for the said Lot No.10. According to the Applicant, it
had taken part in some other auction that was conducted by
Respondent No.1. If it is aggrieved by any action taken by
Respondent No.1 with reference to his bid, then, he would have to
adopt independent substantive proceedings to challenge the
tender floated by Respondent No.1. We cannot in this Writ
Petition take cognizance of any such argument made on behalf of
the Applicant (Ashwin Wadhwa). Therefore, reserving the right of
the Applicant (Ashwin Wadhwa) to adopt his independent
substantive proceedings, if so advised, we dismiss the Chamber
Summons.
15. In view of the foregoing discussions, we find no merit
in the Writ Petition as well as Chamber Summons (L) No. 126 of
2017 and both are accordingly dismissed. However, in the facts
and circumstances of the case, we leave the parties to bear their
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own costs. In view of the disposal of the Writ Petition, nothing
survives in Notice of Motion (L) No. 210 of 2017 and the same is
disposed of accordingly.
(B. P. COLABAWALLA, J.) (SHANTANU S. KEMKAR, J.)
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