Gulmarg Restaurant vs Delhi Development Authority
2005 Latest Caselaw 597 Del

JUDGMENT

Sanjay Kishan Kaul, J.

1. A public auction was held by the respondent DDA for shops in CSE, Basant Enclave Market, under self-financing group housing scheme on 25.07.1983. The appellant was the highest bidder for a restaurant-cum-shop on the top floor having bid for an amount of Rs. 6,67,000/-. The appellant deposited 25% of the bid amount being the earnest money on the fall of the hammer amounting to Rs. 1,66,750/-.

2. The aforesaid bid was subject to acceptance by the Vice Chairman, DDA being the competent authority and on such bid being accepted and the acceptance being communicated the balance amount had to be deposited within 30 days of such communication. In case of non-acceptance of the bid, earnest money to be refunded to the bidder without any interest. There is no dispute over these terms.

3. The appellant claims to have received no communication and it is only some time in January 1984 found out that the bid had not been accepted. There is some dispute on this aspect since according to the respondents this fact was duly communicated and even the cheque had been refunded back but the appellant returned the cheque.

4. The appellant aggrieved by the non-confirmation of the bid filed WP (C) 164/1984. The said writ petition was admitted and interim orders were granted in favor of the appellant. The writ petition was decided by the impugned order dated 20.08.2004 whereby the writ petition has been dismissed.

5. A reading of the impugned order shows that the appellant relied upon the judgment of the learned Single Judge of this Court in WP (C) 822/1983 Subhash Arora v. DDA decided on 30.09.1983. However, in terms of the impugned order the learned Single Judge has recorded that he is not in agreement with the views taken by another learned Single Judge of this Court in Subhash Arora's case(supra) and thus the judgment delivered earlier on 25.02.1999 was being maintained. It may be noticed that the writ petition was earlier dismissed vide order dated 25.02.1999 on merits but none had chosen to appear for the petitioner therein (appellant herein). On an application being filed seeking recall of the order, the application had been allowed and that order had been recalled. This was in terms of the order dated 06.08.2004. The reasons stated for recall of the order was judgment in Subhash Arora's case(supra).

6. Learned counsel for the appellant thus contended that the impugned order cannot be sustained for the reason that once the learned Judge had recalled the earlier order dated 25.02.1999 on the basis of the judgment in Subhash Arora's case (supra), there could have no occasion to differ with the said view and dismiss the writ petition on that ground relying on the earlier order dated 25.02.1999. It was further submitted that even if there was a difference of view, it ought to have been referred to a larger Bench.

7. There is some merit in the contention of the learned counsel for the appellant. In case a co-ordinate Bench of the Court finds itself unable to agree with the findings of another Co-ordinate Bench of that Court, the matter is liable to be referred to a larger Bench to avoid inconsistency in judicial pronouncements. Further once the order dated 25.02.1999 was recalled on the basis of the judgment in Subhash Arora's case (supra), the matter was required to be considered on its own merits and not to rely on the order dated 25.02.1999. This does not mean that the learned Judge was bound to follow the view taken in Subhash Arora's case (supra). But in case of difference of view, the matter was required to be referred to a larger Bench.

8. Be that as it may, there were two options before us. The first option was to remand the matter back to the learned Single Judge. The second option was to consider the case on its own merits specially in view of the fact that two learned Single Judges of this Court were holding a different view in respect of the same subject matter. We considered it appropriate to exercise the second option and to hear the parties at length on the merit since on account of difference in views, the matter in any case would be required to be considered by a Division Bench.

9. Learned counsel for the appellant could not seriously dispute the proposition that till such time as the bid was confirmed by the competent authority, the competent authority could reject the bid subject to there being cogent reasons for the same. The matter thus has to be looked from the prospective as to whether there could be any material stated to exist or reasons to support the decision of the competent authority in not accepting the bid.

10. The only reason existing is that there was a reserve price fixed in and around the time of the auction for all the bids though undoubtedly this reserve price did not form part of terms and conditions of the bid. This price, however, was taken as the guiding factor and all bids received above the reserve price were not accepted while two bids below the reserve price including that of the appellant were rejected. The grievance of the appellant is that such reserve price did not form part of the terms and conditions of the bid nor was reasons communicated to the appellant for the rejection of the bid. A further plea raised is that in other cases in different auctions bids made below the reserve price have also been accepted.

11. It would be appropriate at this stage to consider the judgment in Subhash Arora's case (supra). That was also a case of an auction held where the petitioner therein was the highest bidder. The bid was not accepted on the basis of reserve price which had not been disclosed at the time of the auction. The learned Single Judge was of the considered view that the discretion to be exercised by the Vice Chairman, which no doubt existed, must be on reasonable and proper grounds. A non-disclosed reserve price was considered to be an irrelevant factor. A writ was granted for acceptance of the bid on payment of the balance amount of 75%. An appeal was filed before the Division Bench but the matter was compromised before the Division Bench as the DDA agreed to accept the balance amount.

12. In order to consider the rights and obligations of parties in cases of such bids a more detailed examination of some of the judgments are necessary.

13. In a recent judgment one of us (Sanjay Kishan Kaul, J.) had the occasion to consider the rights of the auction purchaser in Harash Talwar v. Delhi Development Authority and Ors., 107 (2003) DLT 126. It was held that in case of auction purchase the bid of the petitioner was dependent on the acceptance by the competent authority. That was a case where DDA had negligently put into an auction a plot to which it did not have title. Some of the earlier judgments of this Court and the Apex Court were considered. The petitioner therein had relied upon the Division Bench judgment of this Court in WP (C) 618/1990 Shri Ravindra Mohan Aggarwal v. DDA and Anr., decided on 01.08.1991 wherein alternative plot was directed to be given in similar circumstances. It was pointed out that this judgment had in fact been over-ruled by the Supreme Court in DDA v. Ravindra Mohan Aggarwal AIR 1999 SC 1256. It was held by the Supreme Court that the initial acceptance of the bid and deposit of 25% of the amount did not constitute transfer of property and DDA could not be compelled to finalise the sale and deliver possession to the bidder after a lapse of 14 years or in the alternative to allot another plot even though the disability attached with the plot had since ceased to exist on the date of the petition. Only the amount was directed to be refunded with interest. The Supreme Court observed as under in para 15 of the judgment :

15. The facts relevant and material for the disposal of this appeal are :- (i) that the plot on the date of the auction was situated within the green-belt and hence could not have been put to auction by the DDA; (ii) that the sale was not finalised inasmuch as the same was stayed by the High Court in a public interest litigation; (iii) that the authority competent to accept the bid recorded its acceptance at a point of time when the High Court had already stayed the same though the order of the High Court was not till that point of time brought to the notice of the authority; (iv) that the acceptance of the bid was never communicated by the DDA to the respondents; (v) that the tendered amount was 25 per cent only of the bid amount. The balance 75 per cent was yet to be paid by the respondents to the petitioner; and (vi) that it was only in the year 1994 that the zonal plan was modified to alter the use of the plot to residential purpose.

14. The Supreme Court did not rest at this and proceeded to pass judgment on the contention of the parties in the following terms :

7. Having heard the learned counsel for the parties, we are of the opinion that there is merit in the appeal and the same deserves to be allowed. On the date of the auction the plot being in the green-belt, could not and should not have been put to auction. There is no estoppel against statute and when the considerations of public interest are involved. The acceptance of the bid recorded by the Vice-Chairman, DDA on the file was bad for two reasons. Firstly, it was so recorded after the passing of the interim order of stay by the High Court though it was in the process of being communicated. Secondly, the acceptance was not communicated by the DDA to the respondents and therefore the acceptance was not complete. Merely because the respondents gathered knowledge of the acceptance having been recorded on the file would not make any difference. Reliance on Section 43 of the Transfer of Property Act is entirely misconceived inasmuch as there was no transfer or grant ever made by the DDA in favor of the respondents. Acceptance of the bid at a public auction and deposit of 25% of bid amount do not constitute a transfer of property. The respondents have no basis in law to support their claim. Even the equitable considerations would not justify a public authority like DDA being directed today to provide an alternate plot to the respondents in the same locality and at the same price after a lapse of 14 years from the date of the auctions.

8. We may place on record that according to the appellant, the auction having been stayed by the High Court, the amount of Rs. 81,250/- was sent by cheque to respondents, but they did not accept the same. The amount has remained with the DDA for all these 14 years.

9. The appeal is allowed, the impugned order of the High Court directing the DDA to allot an alternate plot to the respondents is set aside. The writ petition filed by the respondents is directed to be dismissed. However, in the facts and circumstances of this case, the amount of Rs. 81,250/- which has remained with the DDA is directed to be returned to the respondents with interest calculated at the rate of 9 per cent per annum from 5-2-1985 till the date of return. No order as to the costs.

(emphsis supplied)

15. The judgment of the Apex Court in Bachhittar Singh v. State of Punjab and Anr., AIR 1963 SC 395 referred too in Hararsh Talwar case (supra) is also relevant for the present case. The appellant cannot be said to be concerned with the decision making process or discussion in the file till the acceptance is not communicated as observed in the said judgment. It was held that communication of the order to the concerned person(s) is the essence of the order and to make the opinion amount to a decision of the Government, it must be communicated to the person concerned. Till such communication is made, the order cannot be regarded anything more than provisional in character. In the present case the matter was not one of an order but of contract and there was no occasion to communicate the acceptance since a decision was taken to reject the bid.

16. It has also to be appreciated that auction was only an invitation to offer. The petitioner made an offer in pursuance thereto but no acceptance of the same was communicated to the petitioner. Thus no concluded contract came into being. The communication refusing to accept was in terms of Section 5 of the Indian Contract Act, 1872. The Supreme Court in Haridwar Singh v. Bagun Sambrui and Ors., (1973) 3 SCC 889 had considered a case of auction sale and it was held that there could not be said to be a concluded contract in view of the fact that a provisional or conditional acceptance would not make any difference since it cannot itself make a binding contract.

17. In the present case, if a writ was to be issued, it would amount to a specific performance of a contract which had not even been concluded. It would amount to taking away the power vested with the Vice Chairman, DDA not to accept an auction bid. There is however, no doubt that since DDA is the public authority such power should not be exercised in an arbitrary and illegal fashion and the exercise of power must have some basis. The Court can go into the reason forming the basis of the rejection of the bid.

18. In Vinod Chadha v. DDA, 1997 V AD (Delhi) 13, the Division Bench of this Court held that rejection of the bid by the Vice Chairman DDA even though it is the highest bid but less than the reserve price could not be doubted. In case of bid made marginally higher than the reserved price the rejection of the Vice Chairman was held to be valid as the same did not confer any right for allotment on the petitioner as per the judgment in Ajay Kumar Goel v. DDA 44 (1991) DLT 183 (DB)

19. The same view was taken by the Division Bench of this Court in Kusum Lata Khajanchi and Ors. v. DDA and Ors., 61 (1996) DLT 37, where it was held that discretion conferred on the Vice Chairman, DDA to accept or not to accept a bid could not be faulted where there was no mala fide or arbitrariness or unreasonableness.

20. In so far as the communication of the reasons for rejection are concerned, it was held by the Division Bench in Kalkaji Industries & Association and Anr. v. DDA 75 (1998) DLT 801, that the same would not make any difference and would not nullify the act of the Vice Chairman on rejecting the bid. It was held open for the party affected to seek directions against the DDA to disclose the reasons to enable it to challenge the same.

21. It may be noticed at this stage that learned counsel for the appellant relied upon the judgment of the Apex Court in Star Enterprises Etc. Etc. v. The City and Industrial Development Corporation of Maharashtra Limited and Others, JT 1990 (2) SC 401, to advance the contention that the reasons for rejection ought to have been communicated. This judgment of the Apex Court has been considered in Kalka Industries association case (supra), but it was held that the effect of M/s Star Enterprises case (supra), is that the reasons must be available for the affected party to challenge the same in appropriate court of law but mere non-communication of the ground of rejection would not make any difference as long as the reasons existed and are subsequently made available to the petitioner to avail of the legal remedy.

22. In the present case, the reason is known and has in fact been impugned by the appellant as contended in the present appeal.

23. There is really no case made out of mala fide nor are any particulars given thereof. Thus what is to be considered is whether the decision is arbitrary or unreasonable as set out in Kusum Lata Khajanchi & Ors. case (supra).

24. The judgments in Vind Chadha case (supra) and Ajay Kumr Goel case (supra) leave no manner of doubt that the economic considerations of getting a high value for a plot is valid. Thus even where the bid price is more than reserve price, it is open to DDA to reject the bid. If that be the position can it be said that competent authority/DDA is precluded from rejecting the bid below the reserve price albeit reserve price not being disclosed or forming part of the tender conditions? In our considered view the answer is in the negative. The reserve price even though undisclosed can be said to form a guiding principle for the competent authority to take a decision. The reserve price was fixed in an around the same period of time and at least for the auction in question a consistent principle was followed by rejecting the two bids below the said reserve price. Such a decision cannot be said to be so arbitrary or unreasonable as to call for interference.

25. No doubt certain illustrations were given of other auctions, where the bids below the reserve price have been accepted. This is, however, a power to be exercised by the competent authority. In case it is found that there is no possibility of the reserve price being achieved dependent on the market conditions, the capital of the DDA would remain blocked. It is open to the DDA to confirm such an auction bid. This cannot be said to form a uniform principle for determination of cases without reference to the facts of the case.

26. In our considered view, the observations in Bachhittar Singh case (supra), DDA v. Shri Ravinder Mohan case (supra) and Haridwar Singh case (supra) by the Supreme Court would squarely apply to the facts of the present case. No contract has come into existence and no acceptance was ever communicated to the appellant. A specific performance cannot be decreed in this fashion.

27. The judgment in Subhash Arora's case (supra) thus stands over-ruled.

28. It may be noted that the original records were called for but were not available. There is, however, been considerable communication on the subject and nothings on the file when efforts were made to settle the matter unsuccessfully over a period of time. The facts culled out from this show the communication of rejection and refund of amount though the letter is not available for the same. It is, however, nobody's case that the acceptance was ever communicated to the appellant.

29. It may be noticed that the appellant had even approached the National Commission for Scheduled Caste and Scheduled Tribes and directions were issued on 02.08.1997. These directions were, however, issued in a pending disputed matter. In any case within the Constitutional Scheme of Article 338 of the Constitution of India, the observations of such a Commission can only be recommendatory in nature. The directions passed by the said Commission seek to transfer the property in favor of the appellant at a price of Rs. 12,42,700/-, can hardly be acceptable as either the auction bid was rightly rejected or wrongly rejected. It would not proper for any other authority to determine the price. However, we are not required to deal any further with this issue since those are only recommendatory in nature.

30. If the present case is decided on the touch-stone of a decision making process, it cannot be said that the decision of the Vice Chairman, DDA is so arbitrary or unreasonable that no reasonable person could have arrived at such a conclusion. The matter is in the domain of an economic decision made by the DDA and the decision cannot be said to be hit by the Wednesbury principle as held in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation, 1947 (2) (All ER 680) as noticed by the SC in Tata Cellular v. Union of India, (1994) 6 SCC 651 :) "A decision of a public authority will be liable to be quashed or otherwise dealt with by an appropriate order in judicial review proceedings where the court concludes that the decision is such that no authority properly directing itself on the relevant law and acting reasonably could have reached it."

31. In view of the aforesaid reasons in the present facts and circumstances of the case, we are of the considered view that the appellant is not entitled to the writ as prayed for.

32. The last aspect to be considered arises from the deposit of 25% of the bid amount by the appellant.

33. The amount is still with the respondent and stated to be so on the basis of a refund made by the appellant. This position was disputed by the counsel for the appellant. Unfortunately the original records of the same are not available. In any case the appellant has enjoyed the benefit of the interim orders of stay with the result that the property has not been re-auctioned.

34. In view thereof, we are of the considered view that the appellant is entitled to refund of 25% amount deposited at the fall of hammer which is Rs. 1,66,750/- without interest. It may be noticed that even as per the terms and conditions this amount could be refunded without interest. The amount be refunded back within a period of one month from the date of receipt of this order, failing which the appellant shall be entitled to interest @ 9% per annum for the period of delay in refunding the amount.

35. The appeal is disposed of in the aforesaid term leaving the parties to bear their own costs.