Madhya Pradesh High Court
Ajay vs State Of M.P. Through Directorate Urban ... on 9 October, 2025
Author: Pranay Verma
Bench: Pranay Verma
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IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE PRANAY VERMA
WRIT PETITION No. 17060 of 2020
AKASH
Versus
THE STATE OF MADHYA PRADESH AND OTHERS
Appearance:
Shri Prasanna R. Bhatnagar - Advocate for the petitioner.
Shri Anirudh Malpani - Government Advocate for respondents No.1, 3
and 4/State.
Mrs. Archana Kher - Advocate for the respondent No.2.
............................................................................................................................
WITH
WRIT PETITION No. 17146 of 2020
AJAY
Versus
STATE OF M.P. THROUGH DIRECTORATE URBAN
ADMINISTRATION AND DEVELOPMENT AND OTHERS
Appearance:
Shri Harshwardhan Sharma- Advocate for the petitioner.
Shri Anirudh Malpani - Government Advocate for respondents No.1, 3
and 4/State.
Mrs. Archana Kher - Advocate for the respondent No.2.
ORDER
(Reserved on 09.09.2025)
(Pronounced on 09.10.2025)
Since these petitions raise common questions of facts and law, they
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have been heard together and are being decided by a common order.
2 . Facts are being taken from W.P. No.17060 of 2020.
3 . By this petition, preferred under Article 226 of the Constitution of
India, the petitioner has challenged the order dated 25-09-2020 passed by
respondent No.2, order dated 23-09-2020 passed by respondent No.3, for
allotment of the disputed shop in his favour after depositing of pending
amount and for quashing the order dated 18-07-2020.
4 . As per the petitioner, on 10-01-2019, Shop Auction Bulletin was
published by office of Nagar Palika Parishad, District Dhar, respondent
No.2, for auction of 27 shops situated at SPDA ground in front of Mahajan
Hospital, Dhar, which were reserved for General, OBC and Scheduled Caste
and Scheduled Tribe. On 31-01-2019, tender form was submitted by the
petitioner along with earnest money of Rs.10,80,000/- to participate in the
auction. On 01-02-2019, respondent No. 2 completed the auction process and
allotted the shops to the highest bidders. Respondent No.2 had fixed the
offset price at Rs.10,80,000/- per shop. The petitioner had made a bid of
Rs.14,11,000/- which was the single and highest bid made and higher than
the offset price. Auctioned shops were allotted to the tenderers. On 02-03-
2019 notice was issued by respondent No.2 to the petitioner stating that it has
allotted the disputed shop to him and directed him to deposit 20% of the bid
amount within 21 days. The petitioner deposited the amount on 13.03.2019.
After about 12 months, on 18-07-2020, letter was issued by Additional
Commissioner, Urban Administration and Development Department, MP,
with a copy to respondent No.2 granting permission to allot the shops except
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the disputed shop. Thereafter, on 22-02-2020 the petitioner made an
application for depositing of the remaining amount and for allotment of the
shop in his favour.
5. On 25-09-2020, respondent No.2 issued an order as regards
cancellation of the allotted shop to the petitioner with the reason that
Government has declined to permit the alienation of the allotted disputed
shop due to single tenderer in the tender/auction. The petitioner was directed
to collect back the earnest money and 25% deposit amount. It is this action of
the respondents in cancelling the allotment of the disputed shop which is in
question in the petition.
6 . Learned counsel for the petitioners have submitted that the
petitioners had fulfilled all the criteria and had also paid the stipulated
amount of money as directed yet the allotment of the disputed shop has been
cancelled after 19 months of allotment which is illegal and unlawful. The
petitioners had submitted their bids above the offset price and which bids
was accepted. The same were single bid and there was no competition hence
there was no reason not to allot the disputed shops in their favour. No reason
has been given for cancellation of the allotment except the fact that the Joint
Director, Urban Administration and Development has not approved the
auction since it was a case of a single tenderer. The same could not have
been a valid reason for cancellation of the tender process in respect of the
disputed shops. Two other shops in respect to which also there were single
bids have been allotted to the bidders. There has hence been apparent
discrimination on part of the respondents against the petitioners violating
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Article 14 of the Constitution of India. Reliance has been placed on the
judgment of the Apex Court in Sanchit Bansal Vs. Joint Admission Board
(2012) 1 SCC 157, Venkateshwara Theatre Vs. State of A.P. (1993) 3 SCC
677, Banshidhar Construction Pvt. Ltd. Vs. Bharat Cooking Coal Limited
and others (2024) 10 SCC 273 and of this Court in Balaji Securities Services
Pvt. Ltd. State of M. P. and others (2024) 3 MPLJ 322.
7 . Reply has been filed by respondent No.2 and the learned counsel for
respondents have submitted that on 23-09-2020 respondent No.3 invoking
right under Rule 5(1)(ka) (2) of the Schedule issued by Urban Development
and Environment Department dated 24-02-2016 issued a letter stating that
out of 27 shops which were for auction, shop No.18, 19 and 25 cannot be
allotted to the participants because in all of them there was single
participation and sole participant who applied was allotted the shop. The said
order was passed so that a fresh auction could be conducted and more
participants can take part in the auction, ensuring more revenue to the State
Government. Pursuant to the aforesaid letter, respondent No.2 issued a letter
dated 25-09-2020 to the petitioners informing them that respondent No.3 has
directed to scrap the current auction and issue a notice for fresh auction.
Respondent No.2 has acted as per the directions issued by the State
Government. The offer of the petitioner has not been approved by the
competent authority who has instead directed for re-auction of the shop in
question. Pursuant to the cancellation, another proposal for fresh auction of
the aforesaid shops has been issued. The cancellation of tender process in
respect of the aforesaid shops is perfectly legal in which no illegality can be
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pointed out. Reliance has been placed on the decision of the Apex Court in
State of Orissa and others Vs. Harinarayan Jaiswal and others (1972) 2 SCC
36, Air India Ltd. Vs. Cochin International Airport Ltd. and others (2000) 2
SCC 617, Rajasthan Housing Board and another Vs. G.S. Investment and
another (2007) 1 SCC 477, H. P. Housing and Urban Development Authority
Vs. Universal Estate and another AIR 2011 SC 887 a n d Indore Vikas
Pradhikaran (IDA) and another Vs. Shri Humud Jain Samaj Trust and
another 2024 SCC Online SC 3511.
8 . I have considered the submission of learned counsel for the parties
and have perused the record.
9 . From the documents available on record, it is clear that the
respondent authorities undertook auction of 27 plots in response to which the
petitioners submitted their bids which were above the offset price in respect
of one of the shops each. The petitioners were the only applicants and
bidders for the aforesaid shops in the auction proceedings. From the record
which has been produced by the respondents, it is seen that the respondents
have received an offer of Rs.21,00,000/- in respect of one of the shop which
is nearly double the amount that they had received in the previous auction. In
respect of the other shop also bid in the sum of Rs.14,00,000/- has been
received. It is also stated that no final decision to either accept or reject the
offers received pursuant to the re-auction has been taken in view of the
interim order passed by this Court. From a perusal of the petitions, it is seen
that the petitioners have not made any specific averment while assailing the
decision of respondents/authority to the effect that the same was motivated
by any malafide or that it was taken with a specific object of benefiting any
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third person.
10. The Apex Court in Rajasthan Housing Board and another (supra)
has held that merely because a person is the highest bidder in an auction, he
does not acquire any right to have the auction concluded in his favour until
the Chairman of the housing board or competent authority, as the case may
be, has passed an order accepting the offer. Merely because a person is the
highest bidder, he does not acquire any vested right to have the auction
concluded in his favour and the auction proceedings can always be cancelled.
The aforesaid decision of the Apex Court and various other similar decisions
were considered by this Court in Sanjay Agarwal Vs. MP Housing and
Infrastructure and others 2013(1) MPLJ 308 and it was held as under:
"14. The Supreme Court in the case of Rajasthan Housing Board v. G.S.
Investments, (2007) 1 SCC 477 while dealing with a similar situation in respect of
auction conducted by the Rajasthan Housing Board has held that merely because a
person is the highest bidder in an auction he does not acquire any right to have the
auction concluded in his favour until the Chairman of the Housing Board or
competent authority, as the case may be, has passed an order accepting the offer.
It has further been held that merely because a person is the highest bidder, he
does not acquire any vested right to have the auction concluded in his favour and
the auction proceedings can always be cancelled. The Supreme Court in the
aforesaid decision has relied upon the decision rendered in the case of Laxmikant
v. Satyawan, (1996) 4 SCC 208 wherein several previous decisions of the
Supreme Court had been considered and has gone on to state that the aforesaid
legal position is settled. The aforesaid decision of the Supreme Court has been
affirmed and relied upon by the Supreme Court in the case of Haryana State
Agricultural Marketing Board v. Sadhu Ram, (2008) 16 SCC 405 wherein it has
also been reiterated that a decision to cancel the auction proceedings cannot be
assailed, if it is not shown to be mala fide, unfair or arbitrary. The Supreme Court
in the case of Meerut Development Authority v. Association of Management
Studies, (2009) 6 SCC 171 has also held that the authorities concerned have the
right not to accept the highest bid and even to prefer a tender other than the
highest bidder, if there exists good and sufficient reason such as the highest bid
does not represent the market price, in case it is shown that the decision to do so is
free from arbitrariness or favoritism."
11 . Recently, the Apex Court in the case of Indore Vikas Pradhikaran
and Another Vs. Shri Humud Jain Samaj Trust and Another (Supra) has
categorically held that in absence of allotment letter and acceptance of
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highest bid, no relief can be granted as there is no concluded contract and
decision taken by the Tender Evaluation Committee to generate more
revenues cannot be interfered with. The bidder has no right in the matter of
bid except of fair treatment.
12. In the present case, no concluded contract had come into existence
between the parties. On opening of the tender, petitioner's bid were found to
be highest and they were directed to deposit 25% of the amount. It was hence
only the highest bid which was accepted and it cannot be said that any
contract had come into existence. The letter of intent or the letter of
acceptance was not issued to the petitioners as regards the disputed
shops. The submission of tender by the petitioners and the direction for them
to deposit 25% of the bid amount was only an offer in the eye of law. The
same did not culminate into a concluded contract and in the meantime, the
tender was cancelled on the ground that the petitioners were the sole bidders.
The action of the respondents in cancelling the tender cannot be held to be
illegal or malafide.
13. A perusal of the conditions of offers shows that the highest offers
were subject to the approval by the competent authority. The offers of the
petitioners have not been approved by the competent authority who has
instead directed for re-auction of the shops. After completion of the auction
process, entire auction proceedings were forwarded to the Commissioner for
confirmation on 14-08-2019 vide Annexure R/4. Thereafter, by letter dated
06-09-2019, the Joint Director directed to submit further information which
was so forwarded. The Additional Commissioner by letter dated 18-02-2020
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informed that out of 27 auctioned shops, 21 shops are permitted to be
transferred except 6 shops. Thereafter, on 23-09-2020, the Joint Director
directed to re-auction shop No.18, 19 and 25. Since approval was not given
by the competent authority for the disputed shops, the petitioners were not
directed to deposit 75% of the bid amount. As submitted by the respondents,
as per MP Nagar Palika (Transfer of Immovable Property) Rules 2016,
approval from the competent authority is mandatory.
14. Merely because the petitioners were sole bidders in respect of the
shops, they did not acquire any vested right for allotment of the shops in
absence of any acceptance of their offers in writing by the competent
authority and therefore a direction to the respondents to accept the bids of the
petitioners as sought for by them cannot be issued being misconceived and
being impermissible in law. The respondent authorities have given sufficient
reasons to justify taking a decision to reject the single offer of the petitioners
and putting up the shops for re-auction, whereas the petitioners have failed to
demonstrate or establish that the said decision suffers from any malafide,
arbitrariness or favoritism. In fact, the offers received by the respondents in
the subsequent auction proceedings justify their decision.
15. Much emphasis has been laid by the learned counsel for the
petitioners on the fact that for Shop No.10 and 12 which also received single
bids, the competent authority has accorded sanction and the shops were
actually allotted and possession delivered which is hence discriminatory and
arbitrary in nature. However, in Air India Limited (Supra) it has been
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categorically laid down by the Apex Court that even when some defect is
found in the decision making process, the Court must exercise its
discretionary power under Article 226 with great caution and should exercise
it only in furtherance of public interest and not merely on the making out of
a legal point. The Court should always keep the larger public interest in mind
in order to decide whether its intervention is called for or not. Only when it
comes to the conclusion that overwhelming public interest requires
interference, the Court should interevene. In Rajasthan Housing Board
(Supra) it was further held by the Apex Court that even if some defect was
found in the ultimate decision, the Court should exercise its discretionary
power under Article 226 of the Constitution of India with great care and
caution and should exercise it only in furtherance of public interest.
16. In the present case, in respect of one of the shops in the reauction a
bid almost double of the amount offered by the petitioner has been received.
The bid in respect of the other shop is also considerably higher. It is always
in the interest of the State that highest price possible is fetched. Thus, even if
two shops in which there were single bidders have been allotted to the
bidders it would not make any difference since in respect of the disputed
shops higher bids have been received hence in public interest, interference in
the matter does not appear to be justified.
17. In view of the aforesaid discussion, I find no reason to interfere in
the decision of the respondent authorities rejecting the petitioner's offer for
the disputed shops. The petitions are found to be devoid of any merit. It is
however, made clear that since the respondent authorities have not yet
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finalized the second auction proceedings and as the validity of the result
thereof is not the subject matter of the present petitions, this Court has not
made any comments or expressed any opinion on the validity or otherwise of
the same.
18. With the aforesaid observations, the petitions filed by the
petitioners stand dismissed.
(PRANAY VERMA)
JUDGE
jyoti
