Punjab-Haryana High Court
Komal Aggarwal And Anr vs Hsvp And Ors on 21 November, 2024
Author: Arun Palli
Bench: Arun Palli
Neutral Citation No:=2024:PHHC:152883-DB
CWP-20265-2024 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP-20265-2024
Reserved on : 22.08.2024
Pronounced on : 21.11.2024
Komal Aggarwal and another ...... Petitioners
Versus
Haryana Shehri Vikas Pradhikaran and others ...... Respondents
CORAM : HON'BLE MR. JUSTICE ARUN PALLI
HON'BLE MR. JUSTICE VIKRAM AGGARWAL
***
Present : Mr. Johan Kumar, Advocate
for the petitioners.
Mr. Deepak Sabharwal, AAG, Haryana
for the respondent(s)-State.
***
VIKRAM AGGARWAL, J
1. The petitioners pray for the issuance of a certiorari for quashing
the order dated 11.07.2024 (Annexure P-13), passed by respondent No.1-
Haryana Shehri Vikas Pradhikaran, Panchkula (for short 'the respondent-
HSVP') vide which the claim of the petitioners in respect of SCO
(Commercial Plot No.S-64, Sector 12, Faridabad) (hereinafter referred to as
the 'plot in dispute') has been declined despite the fact that they were the
highest bidders and further to quash the re-auction process of the plot in
dispute which was stated to be fixed for 23.08.2024. The petitioners also
seek the issuance of a mandamus directing the respondents to issue Letter of
Intent (for short 'LOI') to them.
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2. The facts, as emanating from the paper book are that the
respondent-HSVP framed a policy dated 20.07.2022 (Annexure P-1) for the
sale of commercial, residential and institutional properties. On 14.12.2022,
the respondent-HSVP announced the e-auction of various commercial
properties in various sectors of Faridabad and published the list of
commercial properties (Annexure P-2). The auction was to be held on
14.12.2022. The procedure for e-auction and allotment of the plots was laid
down in the Policy/Brochure (Annexure P-1). As the petitioners were
desirous to purchase the plot in dispute, they jointly registered themselves in
the said auction. They deposited an amount of Rs.15,23,600/- i.e. 5% of the
reserve price of Rs.3,04,71,200/- as earnest money deposit alongwith
registration charges of Rs.1,000/-.
3. Having participated in the e-auction on 14.12.2022, the
petitioners emerged as the highest bidders. The bid history (Annexure P-4)
duly depicts the petitioners as the highest bidders. On that very day i.e.
14.12.2022, the petitioners received an e-mail (Annexure P-6) from the e-
mail address of respondent-HSVP that as per the policy dated 20.07.2022, the
petitioners being the highest bidders were required to make the payment upto
19.12.2022. The petitioners deposited an amount of Rs.15,26,520/- i.e. 10%
of the quoted bid of Rs.3,05,01,200/- vide receipt dated 17.12.2022
(Annexure P-7).
4. As per the policy dated 20.07.2022, after deposit of 10% of the
quoted amount, the respondent-HSVP had to issue LOI in favour of the
petitioners but it did not issue the same. It has been averred that petitioners
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approached Estate Office, Faridabad many times about the issuance of LOI
but they were informed that the file had gone to the head quarters and the
LOI shall be issued shortly.
5. Instead of issuing LOI in favour of the petitioners, the
respondent-HSVP deposited the whole amount as deposited by the
petitioners, in the bank account of petitioner No.2 in two installments without
giving any intimation to them. On 12.01.2023, the respondent-HSVP again
put the plot in dispute for e-auction which was slated to be held on
28.01.2023. It has been averred that the petitioners submitted a
representation to respondent No.3 on 18.01.2022 but respondent No.3 refused
to accept the same. Thereafter, the petitioners sent an e-mail dated
18.01.2023 (Annexure P-10) at the e-mail address of respondent-HSVP
seeking reasons for the refund of the amount deposited by the petitioners.
However, no response was given by the respondent-HSVP to the said e-mail.
6. Aggrieved by the action of the respondent-HSVP, the petitioners
preferred CWP No.1417 of 2023 which was duly contested by the
respondent-HSVP in which a stand was taken that the authorities were well
within their right to accept or reject any bid or withdraw any or all the
properties from e-auction or cancel/postpone the e-auction without assigning
any reason. The said writ petition was disposed vide order dated 12.03.2024
(Annexure P-11) directing the respondents to pass a speaking order within a
period of two months from the date of the order.
7. Pursuant to the order dated 12.03.2024, the petitioners
submitted a representation dated 26.03.2024 (Annexure P-12) which was,
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however, rejected vide the impugned order dated 11.07.2024 (Annexure P-
13) leading to the filing of the instant writ petition.
8. Learned counsel for the petitioners and learned counsel
representing the respondent-HSVP, who had caused appearance on advance
copy having been served, were duly heard.
9. It was strenuously urged by learned counsel representing the
petitioners that the action of the respondent-HSVP in rejecting the highest bid
given by the petitioners in the e-auction is completely illegal and arbitrary
and, therefore, deserves to be quashed. Learned counsel referred to the terms
and conditions of the policy and submitted that the power vested with the
respondent-HSVP to accept or reject the bids has been exercised arbitrarily.
Learned counsel submitted that this power had to be exercised judiciously
and it would not mean that highest bids received by the HSVP were to be
rejected by taking contradictory stands in different litigations with regard to
the same auction.
10. Learned counsel for the respondent-HSVP, on the other hand,
opposed the submissions made by learned counsel for the petitioners and
submitted that the action of the respondent-HSVP in not accepting the highest
bid is completely justified as the respondent-HSVP was not to suffer a
financial loss by accepting bid at a comparatively lower rate, though being
higher than the reserve price. Specific reference was made to the relevant
clause of the Policy to submit that the respondent-HSVP was well within its
authority to accept or reject even the highest bid. Reference was made to the
judgment of a Coordinate Bench in S.K.Woollen Mills and others versus
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State of Haryana and others, decided on 07.10.2023 (in CWP-9502-2022)
and Haryana Urban Development Authority and others versus M/s Orchid
Infrastructure Developers Pvt. Ltd., 2017 (4) SCC 243. It was submitted
that it is well settled by now that such actions do not call for any interference
while exercising the power of judicial review.
11. We have given our thoughtful consideration to the issue in hand.
12. The facts are not in dispute. The petitioners emerged as the
highest bidders qua the plot in dispute. After the decision rendered on
12.03.2024 in CWP No.1417 of 2023, the respondent-HSVP passed a
speaking order dated 11.07.2024 thereby justifying its action of not accepting
the highest bid. While justifying its action, reliance has been placed upon the
relevant clause of the policy:-
"17. The Competent authority of HSVP reserves the
right to accept or reject any bid or withdraw any or
all the properties from e-auction or cancel/postpone
the e-auction, without assigning any reason."
13. A perusal of the aforesaid Clause makes it manifestly clear that
the right to accept or reject the bid was retained by the competent authority
and it was specifically laid down that even the highest bid may be accepted or
rejected without assigning any reason. Be that as it may, on directions having
been issued by this Court, a speaking order was passed after giving due
hearing to the petitioners. It has been observed that the highest bid amount
was more than 20% below the average auction price of such property as a
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result of which the H1 bid of the property in dispute could not be accepted by
the competent authority.
"The Competent Authority found the bid on the lower
side and rejected the bid and refunded 10% deposited
amount on 10.01.2023 i.e. Rs.30,50,120/-. As per para
No.17 of the policy dated 20.07.2022 the Competent
Authority of HSVP reserves the right to accept or
reject any bid or withdraw any or all the properties
from e-auction or cancel/postpone the e-auction,
without assigning any reason.
After hearing the representanist and perusal of
the record submitted before me, and considering the
present market conditions, I found that the refund
has already been made to the petitioner as per the
then prevailing policy and there is no contractual
obligation left between the parties as such allowing
the request of petitioner at this stage will not be in the
interest of State Exchequer."
14. Now coming to the law on the subject, it is by now well settled
that in the absence of a concluded contract, no right would accrue to the
highest bidder. The Supreme Court of India was dealing with one such issue
in the case of 'Haryana Urban Development Authority and Others Vs.
Orchid Infrastructure Developers Private Limited' (supra) where after the
rejection of the bid of M/s Orchid Infrastructure Developers Private Limited,
a suit for declaration had been filed. In that case, the plaintiff had given the
highest bid which, as per the plaintiff had been accepted. Formal letter of
allotment was, however, not issued and ultimately, the 10% amount deposited
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by the plaintiff was refunded on the ground that the bid had not been
accepted. This action was challenged by way of a suit which was decreed by
the trial Court. However, appeal against the same was allowed by the Court
of the District Judge and the suit was dismissed. The High Court then
allowed the second appeal and restored the judgment and decree of the trial
Court after which the matter reached the Apex Court and the Apex Court
ultimately upheld the decision of the First Appellate Court and held that no
right had accrued to the highest bidder. The Supreme Court of India while
relying upon other decisions in the cases of 'State of Uttar Pradesh and
Others Vs. Vijay Bahadur Singh and Others', (1982) 2 SCC 365,
'Laxmikant and Others Vs. Satyawan and Others', (1996) 4 SCC 208,
'Meerut Development Authority Vs. Association of Management Studies
and Another', (2009) 6 SCC 171, 'M/s Star Enterprises and Others Vs. City
and Industrial Development Corporation of Maharashtra Limited and
Others', (1990) 3 SCC 280 and 'Kalu Ram Ahuja and Another Vs. Delhi
Development Authority and Another', (2008) 10 SCC 696, held as under:-
"27. This Court in the case of State of Uttar Pradesh
& Ors. v. Vijay Bahadur Singh & Ors. (1982) 2 SCC
365 has laid down that there is no obligation to accept
the highest bid. The Government is entitled even to
change its policy from time to time according to the
demands of the time.
- - - - - - - -
- - - - - - - -
28. In Laxmikant & Ors. v. Satyawan & Ors. (1996) 4
SCC 208, this Court has laid down that in the absence
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of completed contract when the public auction had
not culminated to its logical end before confirmation
of the bid, no right accrued to the highest bidder.
- - - - - - - -
- - - - - - - -
29. In Meerut Development Authority v. Association
of Management Studies & Anr.(2009) 6 SCC 171, this
Court has laid down that a bidder has no right in the
matter of bid except of fair treatment in the matter
and cannot insist for further negotiation. The
Authority has a right to reject the highest bid.
- - - - - - - -
- - - - - - - -
33. We are constrained to observe in the instant case
that with respect to reserve price also, there was a
hitch to fix and approve it right from the word go. It
was a case of auction of big commercial tower having
a huge area of 9.527 acres. Only the reserve price of
the same was forwarded for fixation to the Chief
Administrator, whereas the reserve prices of other
properties were fixed by the Administrator. When the
bids were received, the Administrator considering the
huge stakes involved, forwarded the matter to the
Chief Administrator. However, the Chief
Administrator washed off his hands and did not
decide it and sent the matter back to the
Administrator, clearly indicating that the
Administrator was delegated with the power to decide
the bids. Thus, under compelling circumstances and
duly considering the reports, the Administrator had
taken the decision to reject the bids not only of the
plaintiff but also six others. For the first time in the
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history of State of Haryana, such big properties were
put to hammer on the prices indicated. The hitch in
fixing the reserve price also indicates that the reserve
price was not determined in a fair manner in the
instant case. Not only the plaintiff but HUDA also did
not place the delegation of power on record of the
courts below. None of the officials of HUDA had been
examined. Only an Assistant - a junior ranking
person had been examined who was not posted there
when the auction was held and came only in 2008. As
the property was a commercial tower in Sector 29,
Gurgaon, with huge commercial complex, the first
appellate court was right in dismissing the suit.
34. Plaintiff came to the court for mandatory
injunction, for issuance of allotment letter without
payment of court fee also. It was incumbent upon the
plaintiff to pay the ad valorem court fee as prevailing
and the valuation of the suit should not have been less
than the bid amount of Rs.111.75 crores, as rightly
held by the first appellate court. The plaintiff is
directed to pay the ad valorem court fee not only
before the trial court but also before the High Court.
Plaintiff is directed to deposit the court fee within two
months from today, as payable.
35. Resultantly, the appeal is allowed. The judgment
and decree passed by the High Court is set aside and
that of the first 7 of 14 appellate court is restored. In
the facts and circumstances of the case, we impose
costs of Rs.5 lakhs on the plaintiff/respondent to be
deposited as : L 2.5 lakhs in the Advocates' Welfare
Fund and Rs.2.5 lakhs in the Supreme Court
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Employees' Welfare Fund within a period of two
months from today."
15. A similar issue arose before a Co-ordinate Bench of this Court in
the case of Dr. Sarika Gautam and Others Vs. Haryana Shehari Vikas
Pradhikaran (HSVP) and Others (supra). The petitioner therein had
submitted an online bid for a plot in Sector 38, Gurugram for ₹1,87,99,300/-.
Despite being the highest bid, the same was not accepted nor was any
specific order passed informing the petitioners as regards the fate of the bid.
Here also, the clauses of the E-auction policy were considered and it was held
that there would be no vested rights with the petitioner which would obligate
the respondents to accept the highest bid of the petitioners. It was held that to
the contrary, the highest bidder only had a right of consideration for such bid
to be evaluated against the reserve price determined by the committee. The
contention regarding deemed acceptance of the highest bid was rejected.
Clause 28 of the said policy which obligated the acceptance or rejection of
the H-1 bid within a period of 07 working days was also examined and it was
held that such provision were not mandatory and they are incorporated only
to prevent undue delays on the part of the competent authority in taking a
final decision:-
"14. Counsel has not been able to point out any
provision under the E-auction policy which would
obligate the respondents to accept the highest bid.
There would be no such right vested with the
petitioners. To the contrary the highest bidder only has
a right of consideration and for such bid to be
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evaluated against the reserve price determined by the
Committee.
15. In the facts of the case there is no material for us to
conclude that any contract came into force between the
petitioners and the respondents. The right of the
highest bidder at public auctions has been examined
repeatedly by the Apex Court as also this Court and the
consistent view taken is that State or the authority
which can be held to be State within the meaning of
Article 12 of the Constitution is not bound to accept the
highest bid. A reference in this regard may be made to
the decisions of the Hon'ble Supreme Court in
Trilochan Mishra etc. v. State of Orissa(1971) 3 SCC
153: AIR (1971) 3 SC 733: State of Orissa v.
Harinarayan Jaiswal (1972) 2 SCC 36: AIR 1972 SC
1816; Union of India v. Blum Sen Walaiti Ram (sic),
(1969) 3 SCC 146 : AIR 1971 SC 2295 and State of U.P.
v. Vijay Bahadur Singh (1982) 2 S.C.C. 365. Same view
was taken by a Division Bench of this Court in Laxmi
Narain Vs., State of Haryana and another (2009) 1
RCR (Civil ) 556.
16. The contention raised by counsel as regards a
deemed acceptance of the highest bid and on the basis
thereof a concluded contract having come into force
between the petitioners and the respondents in the light
of Clause 28 of the E-auction policy, is not well-
founded."
Another such view was taken by a Co-ordinate Bench of this Court in the
case of Mahavir Singh Vs. Haryana Shehari Vikas Pradhikaran (HSVP) and
Others (supra), in which it was held as under:
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"8. The Apex Court also in Orchid Infrastructure's
case (supra) examined the issue of the competency of
the Administrator to accept or reject the bid and also
the issue whether there was legality regarding the
rejection of the bid and held that any action where
there are sufficient reasons to indicate the stand of the
authorities and there are valid reasons and on account
of public money being involved, interference should be
minimal.
- - - - - - - -
- - - - - - - -
11. It is in such circumstances, the respondents have
taken a conscious decision to refund the amount. The
reasons, thus, are apparent on the file and, therefore,
in our considered opinion that the same has been done
in view of the settled position of law. Merely because
the petitioner was the highest bidder, there is no vested
right as such on the basis of which a writ of mandamus
can be issued to him for confirmation of the auction.
There are no such allegations that the process of
rejection of bids was mala fide or intended to grant
benefit to another set of persons and, therefore,
interference would not be warranted as one has to keep
in mind the fact that the larger issue would be of public
funds involved which would be affected if the reserve
price was not properly fixed. The stipulations as such
of the clause which provided that the action had to be
taken within a specified period cannot be held to be
mandatory and binding as such and it has only been
put in for the purpose of expediting the process so that
the authorities should act at the earliest. The perusal of
the files would go on to show that the larger picture all
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over the State as such was examined and a conscious
decision was thereafter taken and there have been valid
reasons as such in taking such stand. We do not find
any reasonable ground as such to take a contrary view
keeping in mind the above settled position and are also
of the considered opinion that the petitioner has not
been able to make out a case as such for interference."
16. The law is, therefore, very clear that the highest bidder would
have no right in the absence of her bid having been accepted by the
competent authority.
17. Having considered the arguments addressed by learned counsel
for the parties, the relevant Clause of the policy dated 20.07.2022 as has been
discussed in the preceding paragraphs, the impugned order dated 11.07.2024
as also the law on the subject, we are of the considered opinion that no
interference is called for in the impugned order which is well reasoned and
perfectly legal and valid in view of the power vested in the respondent-HSVP
by virtue of the clause incorporated in the policy/brochure. It is also no
longer res integra that merely offering the highest bid does not clothe a
person with any right and that it is ultimately the decision of the authorities
as to whether such a bid is to be accepted or not. Of course, reasons which
may be found to be extraneous and malafide can always be looked into but in
the present case the impugned order does not reflect any reason other than
bonafides of the respondent-HSVP which could have impelled this Court to
interfere.
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In view of the aforementioned facts and circumstances, we do not find
any merit in the instant writ petition and the same is accordingly dismissed.
(ARUN PALLI) (VIKRAM AGGARWAL)
JUDGE JUDGE
Reserved on : 15.07.2024
Pronounced on : 21.11.2024
mamta
Whether speaking/reasoned Yes/No
Whether Reportable Yes/No
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