Bombay High Court
M/S. Future Icon Builders Llp And Anr vs The City And Industrial Development ... on 13 February, 2025
Author: Bharati Dangre
Bench: Bharati Dangre
2025:BHC-AS:10115-DB
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
WRIT PETITION NO.11360 OF 2022
M/s. Future Icon Builders LLP & Ors .. Petitioners
Versus
The City and Industrial Development .. Respondents
Corporation of Maharashtra Limited
& Ors.
...
Mr.R.D. Soni a/w Mr. V.R. Kasle a/w Mr. Tushar R. Momaiyah
i/b. Ram & Co. for the Petitioners.
Mr. G.S. Hegde, Senior Advocate i/b Ms. P.M. Bhansali, Advocate
for Respondent Nos.1 to 3- CIDCO.
Mr. O.A. Chandurkar, Addl. GP a/w Mrs. G.R. Raghuwanshi,
AGP for Respondent No.4.
Mr. Abhay Khandeparkar, Sr. Adv. a/w Mr. Sujay Gawade a/w Ms.
Sumedha Dhopate a/w Ms. Mudita Pawar with Ms. Manasi
Sawant i/b Shree & Co. for Respondent Nos. 5 and 6.
CORAM : ALOK ARADHE, CJ &
BHARATI DANGRE, J
DATED : 13th FEBRUARY, 2025
JUDGMENT:
- (PER BHARATI DANGRE)
1. The City Industrial and Development Corporation of
Maharashtra Ltd (CIDCO), Navi Mumbai, published an
advertisement in prominent newspapers under the caption-
'Scheme No. MM/SCH-22/2021-2022' for lease of 22
residential, commercial and residential-cum-commercial (R+C)
use plots at Kharghar, Panvel and Pushpak Nagar Nodes in Navi
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Mumbai through E-tender cum E-auction. The details of the
plots at various nodes offered in the E-auction find mention in
the advertisement along with its area in sq. mt, use/Base FSI as
well as the Base rate. The plots were offered by way of proposed
E-auction and the advertisement contemplated the amount of
EMD to be paid by the bidder against the particular plot
according to the base permissible FSI.
Pursuant thereto, the scheme booklet with detailed
information of the scheme including the schedule for the auction
was uploaded on the website of CIDCO.
The booklet comprise of the terms and conditions,
which included the schedule details for closed bid and/or E-
auction with specific instruction to the Bidders that they are
allowed to participate in closed Bid, and E-auction only after the
document fees and EMD payment is successfully received by
CIDCO. The eligibility of the persons making an offer as well as
the modality for participation in the E-tender cum E-auction was
also set out in the booklet.
The special terms and conditions of the allotment
were also a part of the booklet clearly informing that the plots are
marketed on 'as is where is basis'.
2. In furtherance of the said advertisement, the
petitioner no.1, a Limited Liability Partnership, engaged in the
business of land development through its partner i.e. petitioner
no.2 submitted their bid for plot no.5 in Sector 5 at Node
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Pushpak Nagar on 25/11/2021, via E-auction mode. The base
rate for the plot being fixed at Rs. 51,700/- per sq. mt, it
furnished an EMD in the amount of Rs. 1,27,90,787/-, taking
into consideration the total plot area of 2474.04 sq.mt. The EMD
was deposited through RTGS well within the time line and the
petitioner received an acknowledgment for tender submission as
well as payment of EMD from the CIDCO website.
3. Against the base rate of Rs. 51,700/- per sq.mt, the
petitioners offered a bid of Rs. 56,700/- which was opened on
29/11/2021 and the auction result was displayed on the website
of CIDCO. The bid of the petitioners was the highest and it was
the claim of the petitioners that it was higher than the prevalent
market price in the area and therefore, the petitioner legitimately
expected allotment of the plot in their favour.
As per the petitioners, in anticipation of the allotment
of plot, it mobilized the funds for payment of lease premium and
also other infrastructure necessary for developing the said plot.
4. After a lapse of about six months, the petitioners were
served with a communication dated 19/05/2022, from CIDCO,
informing that plot no.5 was removed by the auction scheme for
purported administrative reasons and it is the grievance of the
petitioners that after the entire tender process was complete,
CIDCO unilaterally removed the plot from the process for a
vague reason as it merely stated as below:-
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"Now the Corporation has decided to cancel Plot no.5, Sector-5,
Node-Pushpak Nagar from the Scheme No.MM/SCH-22/2021-
2022 due to administrative reason. The EMD amount paid by
you is being refunded to your bank account."
5. The aforesaid decision of CIDCO communicated to
the Petitioners on 19/05/2022, is the subject matter of challenge
in the Writ Petition and it is prayed that the cancellation order/
letter dated 19/05/2022 is liable to be quashed and set aside,
since the decision was taken without affording an opportunity of
hearing to the petitioners and there is no legal justification in
cancelling the bid process, where the Petitioner was the highest
bidder.
6. During the pendency of the petition, the Writ
Petition came to be amended in the wake of the subsequent
event, being rejection of the representation of the petitioner
preferred to CIDCO by a communication dated 27/09/2022,
which divulged the reason for cancellation of E-auction of the
plot in question. The petitioners therefore raised a challenge to
the said rejection contained in letter dated 27/09/2022 and
further pleadings are added in the Writ Petition for setting aside
the letter of cancellation as well as the subsequent order
reconfirming the same.
7. Pursuant to the notice being issued, CIDCO has filed
its affidavit in reply through Marketing Manager (Commercial)
opposing the claim in the petitioner.
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8. An Intervention Application No.15245 of 2024 was
filed by one Today Royal Lifespace and one Lalji Bhachu Patni
seeking intervention, by claiming that they had participated in
the tender in respect of the subject plot in scheme no. MM-SCH-
39/2024-25, which included plot no.5 and their bid was highest
among the 12 bids received and therefore, they are entitled for
allotment of the said plot.
By order dated 29/01/2025, the Intervention
Application was allowed. The proposed respondents also filed
their affidavit in reply on 20/01/2025.
9. We have heard learned counsel Mr. R. D. Soni for the
petitioners, learned senior counsel Mr. G.S. Hegde for respondent
nos.1 to 3 i.e. CIDCO, the learned Additional Government
Pleader, Mr. Chandurkar for respondent no.4, and learned senior
counsel Mr. Abhay Khandeparkar for respondent nos.5 and 6.
By consent of the respective counsel representing the
parties, we issue 'Rule' and we have taken up the petition for final
hearing.
10. Mr. Soni, has called in question the arbitrary action of
CIDCO in cancelling the tender process which included plot no.5
for which the petitioners have quoted the highest bid and even
deposited the EMD amount on 25/11/2021. however, after
almost period of six months, CIDCO took a decision to cancel
the said auction without citing any reason, however only on a
representation being made to the Managing Director of CIDCO,
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the reasons where offered. According to Mr. Soni by no stretch of
imagination can the reason justify the cancellation.
By relying upon the decision in case of Banshidhar
Construction Pvt. Ltd. vs. Bharat Coking Coal Ltd and Ors 1 , has
urged before us that the decision of the Government/its
instrumentality must be free from arbitrariness and must not be
affected by bias or actual malafides and the government bodies
being public authorities are expected to act in fairness, equality
and public interest, even while dealing with contractual matters
and the reasons cited, that an expert committee was appointed,
who has re-determined the rate of plot no.5 in the hope that
CIDCO can get a better deal, and hence it choose to cancel the
said tender can be only described as an arbitrary decision
according to Mr. Soni.
Mr. Soni has further submitted that on 6/10/2022,
petitioner gave an offer letter to CIDCO stating that they are
ready and willing to match the expert agency rate to purchase the
plot @ Rs. 66,252 per Sq. mt, which was the price quoted by
M/s. Knight Frank. He would therefore submit that it was
imperative for CIDCO to accept the offer, but instead it re-E-
tendered plot no.5 under the scheme of 2024-25 on 8/07/2024
and it is not disputed by Mr. Soni that the petitioner did not
participate in the second tender inviting bids for plot no.5.
1 (2024) 10 S.C.R. 4251.
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Per contra the learned Senior Counsel Mr. Hegde,
would place reliance on the affidavit in reply filed on behalf of
CIDCO and he would invite our attention to the terms and
conditions of tender document and in specific clause 5 D of part
A thereof which reads thus:-
'The issuance of this Bid document does not imply as CIDCO is bound
to abide the said plots to the bidder and it reserve the rights to reject all
or any of the bids without assigning any reason thereof.'
Reliance is also placed upon clause 10 in the booklet
at part B, where it is stipulated as under:-
'CIDCO reserves right to amend, revoke any or all the above condition
or to cancel the scheme at any time at its own discretion. The right to
reject any or all the offers without assigning any reason whatsoever is
reserved with the Corporation'
11. Mr. Hegde would submit that as per the prevailing
practice an independent expert agency M/s. Knight Frank was
asked to evaluate the highest bid received by the Corporation and
it assessed that the market potential of the said plot is in the range
of Rs. 66,252 to Rs. 81,105 per sq mt. Accordingly, the
Corporation decided to cancel the offer received for the plot and
infact even refunded the earnest money to the petitioner, which is
accepted without any demur. He would also submit that if the
corporation was entitled for receiving a higher amount than the
one quoted by the petitioners, which was far below the market
range, in comparison to the plots in the vicinity of Pushpak Nagar
Node per the expert agencies report, no illegality could found in
its decision.
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12. Learned Senior Counsel Mr. Abhay Khandeparkar,
representing respondent nos.5 and 6 has also joint hands with Mr.
Hegde and in specific he submit, that the petitioners could not
have been allotted the plot, since the tender floated was cancelled
and upon a subsequent tender being floated the respondent nos.5
and 6 have participated and have quoted the highest bid, but on
account of the pendency of the Writ Petition, the final allotment
was not made in their favour.
Mr. Khandeparkar would lay emphasis on the fact
that since the petitioners have not participated in the re-E-tender
notice published on 8/07/2024, and hence they are not entitled
for any relief as claimed in the petition.
13. On analysis of the rival contentions advanced before
us, one thing which evidently emerges before us is that there is no
concluded contract came into existence between the parties, as the
offer submitted by the petitioners qua plot no.5, which was put to
auction by public advertisement in November 2021, did not
result into any written agreement.
CIDCO, which is a new town development authority
for Navi Mumbai, as defined under sub-section 3A of Section 113
of the Maharashtra Regional & Town Planning Act 1966, has the
power and authority to dispose land vested in it for the purpose of
development. This power is further delegated to its Board of
Directors and in furtherance thereof, an advertisement came to be
issued inviting applications through E-tender cum E-auction for
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lease of plots and this included plot no.5 situated at Pushpak
Nagar, Node permitting the bidders to participate in closed bid
and E-auction on submitting the document fees and making
payment of the EMD, which was dependent upon the base rate
indicated in the advertisement. The advertisement declared the
right of CIDCO to cancel, amend, revoke, modify, the conditions
of the scheme or any plot at its discretion or reject without
assigning any reason and in case of cancellation of the scheme it
was declared that the bidder will not have any say.
Though we may not accept this as an absolute
proposition, the question that falls for our consideration is
whether merely because the petitioners were the highest bidder,
are they entitled for enforcing their right against CIDCO, since its
bid was accepted.
14. When the tender was abruptly cancelled, the
petitioners along with other bidders, who were aggrieved by the
action of CIDCO had approached this Court challenging its
action, to be arbitrary. This Court on 13/06/2022, permitted the
aggrieved persons to file the representation/ application to the
Managing Director, with a direction to take a decision on its merit
and according to the prevailing policy, and the petition was
disposed off.
Accordingly, the petitioner preferred a detail
representation on 17/06/2022, where it claimed that CIDCO had
retained the EMD of Rs.1,27,90,787/- paid on 25/11/2021, for
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period of six months and thereafter, had unilaterally taken a
decision to cancel the allotment and this action without assigning
any reason was arbitrary.
15. Upon consideration of the representation of the
petitioners, vide communication dated 27/09/2022, the decision
to cancel the tender was upheld by stating that a Committee of
Chief Planner (NM), Senior Economist and Marketing Officer
(Commercial) was constituted to re-examine the rates received
against the Pushpak Nagar plots from scheme 22 and 23 in
consultation with the independent expert agency M/s Knight
Frank's evaluation report of the highest bids received for the plot.
The Committee recommended that, the market potential of the
plot is within a range of Rs.66252/- to 81105/- per sq mt and the
rate received by the plot was at a lower rate it deserve to be re-
tendered.
The decision taken was communicated to the
petitioners as the Marketing Manger (Commercial) directed
thus:-
"1. Rate received for this plot falls below the market potential.
2. The referred plot is a public property and the market has not been
tested considerably in order to fetch better revenue.
3. Better rate, adequate participation and good competition is expected
by Corporation."
16. Pursuant to the aforesaid decision, the said plot was
again re-tendered/re-auctioned in scheme No. MM/SCH-39-
24/25 with the reserve price of Rs. 1,03,612 per sq mt. 12 bids
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were received this time and the respondent no.6 and 7 offered the
highest amount of Rs. 1,75,689/- per sq mt in respect of plot no.5
against the reserved price of Rs. 1,03,612/- per sq mt.
It is pertinent to note that in the earlier tender process
for plot no.5, the petitioners had offered price of Rs. 56,700/-
per sq mt, whereas in the new process, the highest bidder has
offered the price of Rs. 1,75,689/- per sq mt, which is
substantially higher and rather 2 and ½ time more than the bid
submitted by the petitioner.
17. We find sufficient justification in CIDCO recalling
the earlier tender process, which was based upon a lower base
rate and its decision to re-tender has yielded result, since the bid
that is received in respect of the plots is more than two times
what was offered by the petitioner, which ultimately would be in
the interest of CIDCO, which is town development authority for
Navi Mumbai and as such must act in larger public interest and if
it is getting an amount higher for a plot, which is to be auctioned
by it, we find no illegality in its action to re-tender the same in the
wake of the fact that it would fetch a higher price, considering its
potential.
Mr. Soni has placed reliance upon the decision of the
Apex Court in case of Banshidhar Construction Pvt Ltd, vs Bharat
Coking Coal Ltd (BCCL), where a public sector undertaking
floated a tender and on participation, the appellant was found to
be technically disqualified and a successful bidder was declared.
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A Writ Petition filed by the appellant raised a ground
that the successful bidder had also failed to comply with the
requirement of the tender conditions and he was afforded an
opportunity to improvise. The High Court had dismissed the
Writ Petition confirming the decision of the technical bid
committee in rejecting the bid of the appellant, while accepting
the bid of respondent no.8.
On a challenge being raised to the same, the Apex
Court set aside the decision as arbitrary, illegal and
discriminatory and violative of Article 14.
The said decision is not of any succor Mr. Soni, as we
have not noticed any arbitrariness in the action of the respondents
in cancelling the tender for want of inappropriate base price.
18. In Subodh Kumar Singh Rathore vs. CEO and ors 2 ,
the Apex Court has once again reiterated the aspect of
overwhelming public interest in the cases relating to the award of
contract by State. An important consideration in tender matters
particularly to be floated by the State Government or its agencies
has received long consideration, being to allow free play in its
joints, when it decides to award a contract and a policy of
minimum interference in the decision working process unless and
until it is found to be arbitrary. Their lordships while examining
the sanctity of public private partnership tenders specifically
observed thus:-
2 (2024) SCC Online SC 1682
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"124. Public tenders are a cornerstone of governmental procurement
processes, ensuring transparency, competition, and fairness in the
allocation of public resources. It emanates from the Doctrine of Public
Trust which lays down that all natural resources and public use
amenities & structures are intended for the benefit and enjoyment of
the public. The State is not the absolute owner of such resources and
rather owns it in trust and as such it cannot utilize these resources as it
pleases. As a trustee of the public resources, the State owes i) a duty to
ensure that community resources are put to fair and proper use that
enures to the benefit of the public as-well as ii) an obligation to not
indulge in any favouritism or discrimination with these resources. The
State with whatever free play it has in its joints decides to award a
contract, to hold up the matter or to interfere with the same should be
accompanied by a careful consideration of the harm to public interest.
125. Public tenders are designed to provide a level playing field for all
potential bidders, fostering an environment where competition thrives,
and the best value is obtained for public funds. The integrity of this
process ensures that public projects and services are delivered
efficiently and effectively, benefiting society at large. The principles of
transparency and fairness embedded in public tender processes also
help to prevent corruption and misuse of public resources. In this
regard we may refer to the observations made by this Court in Nagar
Nigam v. Al. Farheem Meat Exporters Pvt. Ltd. reported in (2006) 13
SCC 382, which reads as under: -
'16. The law is well settled that contracts by the State, its corporations,
instrumentalities and agencies must be normally granted through
public auction/public tender by inviting tenders from eligible persons
and the notification of the public auction or inviting tenders should be
advertised in well-known dailies having wide circulation in the locality
with all relevant details such as date, time and place of auction, subject-
matter of auction, technical specifications, estimated cost, earnest
money deposit, etc. The award of government contracts through public
auction/public tender is to ensure transparency in the public
procurement, to maximise economy and efficiency in government
procurement, to promote healthy competition among the tenderers, to
provide for fair and equitable treatment of all tenderers, and to
eliminate irregularities, interference and corrupt practices by the
authorities concerned. This is required by Article 14 of the
Constitution.'"
19. Despite the aforesaid principle being well settled and
accepted, the scope of interference in exercise of the powers of
judicial review is warranted when there is denial of equal
opportunity and fairness, as the Courts are bound to zealously
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protect the sanctity of any tender that has been duly conducted
and concluded by ensuring larger public interest of upholding
bindingness of the contracts, which is not sidelined by a
capricious of or by arbitrary exercise of power by the State.
20. In the facts which are unfolded before us, we are not
convinced with submission of Mr. Soni that the decision taken by
CIDCO is arbitrary, and according to us nor is it unilateral but we
find the said decision in larger public interest as the Petitioners
have no right to stake a claim for award of the contract to itself
merely because it is the highest bidder. It is ultimately for the
authority floating the tender and in this case CIDCO which has
to take a decision whether the plot to be auctioned by it would
fetch a higher price and the scope for our interference being
limited, in absence of any malafides being established in the
decision to re-tender, we are not persuaded to show any
indulgence.
21. Reliance is placed upon a decision of this Court in
case of Varniraj Group vs. CIDCO3 delivered on 16/10/2024,
where a similar challenge was raised, when the CIDCO had
decided to cancel the bid in respect of the subject plot for which
the petitioner therein had submitted the highest bid, on account
of the administrative reasons. The petitioner before the Court was
also directed to prefer a representation to the Managing
Director/the Competent Authority, who communicated the
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reasons and upheld the order passed by CIDCO to put the plot
for re-auction.
An identical contention, that once the petitioner has
offered a bid, which match the bid of respondent no.2 in the
subsequent bid process, the plot ought to have been allotted in its
favour faced a similar opposition and it was specifically held that
it was not necessary for the Corporation to have accepted the
highest bid offered by the Petitioner, keeping in view the
commercial aspect of the matter. In this regard reliance was placed
upon the law laid down by the Apex Court in case of Jaipur
Vidyut Vitran Nigam Ltd and Ors vs. MB Power (Madhya
Pradesh) Ltd and Ors4 , and it was observed thus:-
"28. Thus, it is well settled by now that the State, its instrumentalities
or agencies are bound to adhere to the norms, standards and procedures
laid down by them and they cannot be permitted to depart from such
norms, arbitrarily. However, in the same breath, it can also be observed,
as enunciated by the Hon'ble Supreme Court in Jaipur Vidyut Vitran
Nigam Ltd. (supra), that the award of contract, whether it is by a
private party or by a public body or the State, is essentially a
commercial transaction and in arriving at a commercial decision,
considerations which are paramount are commercial considerations. In
Jaipur Vidyut Vitran Nigam Ltd. (supra), the Hon'ble Supreme Court
has observed that the State can choose its own method to arrive at a
decision and that the State may not accept the offer, though it is the
highest or the lowest. It is further to be noticed that a Division Bench of
this Court in Aditya Enterprises vs. City Industrial and Development
Corporation of Maharashtra Ltd. Has in paragraph 24 held that no
rights are created in favour of any party merely for the reason that the
party is the highest bidder in the tender process. Paragraph 24 of the
report in Aditya Enterprises (supra) is also extracted hereinbelow:
'24. We therefore hold that no right is created in favour of petitioners to
have plots allotted to them by CIDCO by mere reason of they being the
highest bidders in the tender process.'
29. Therefore, having regard to the settled legal position, as discussed
above, the commercial considerations of the respondent- Corporation
cannot be lost sight of while considering the pleas raised by the
petitioner in the instant case. If the market potential as per the report
4 (2024) SCC Online SC 26
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submitted by an expert, of the subject plot ranges between Rs. 71,638/-
to 1,00,067/- per square meter, the commercial considerations
underneath the decision to be taken by the respondent- Corporation as
to whether the bid offered by the petitioner to be accepted or not,
cannot be ignored."
22. A similar view in identical situation is also to be
found in the decision delivered on 20/04/2023 in case of M/s
Aditya Enterprises Vs. CIDCO5, when reliance was placed upon
decision of the Apex Court in case of Huda vs. Orchid
Infrastructure6 , which had categorically held that the highest
bidder had no vested right to have auction concluded in its
favour, as the government or its authority could retain the power
to accept or reject the highest bid in the interest of public
revenue. The very same challenge that CIDCO had cancelled the
earlier tender process arbitrarily was specifically rejected by
relying upon the decision in case of Silppi Constructions
Contractors Vs. Union of India7, that the tendering authority is
not required to give reasons while rejecting the tender as this
decisions are neither judicial nor quasi judicial, as if reasons are to
be given at every stage, than the commercial activities of the state
would come to a grinding point. It is reiterated that the State
must be given sufficient leeway in this regard.
Relying upon the aforesaid view expressed by the
highest Court of this Court, it was concluded that neither any
right is created in favour of the petitioners to have the plots
allotted to them nor there is any arbitrariness on part of CIDCO
6 (2017) 4 SCC 243
7 (2020) 16 SCC 489
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in cancelling the tender process.
We find no reason in not adopting the same line of
reasoning in the aforesaid two decisions of this Court which dealt
with a similar challenge and received a similar response from
CIDCO.
For the reasons recorded above, we find no merit in
the petition and the same is dismissed.
We however direct the respondents CIDCO to
proceed ahead with the allotment of the plot being made in
favour of respondent nos.6 and 7, in an expeditious manner as
there is no legal embargo in finalizing the tender process in which
they have emerged as successful bidder.
(BHARATI DANGRE, J.) (CHIEF JUSTICE)
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