Summary
The Supreme Court set aside a High Court Division Bench direction to allot a development authority's plot to the highest bidder in a cancelled tender at Rs.26,000 per sq. m., holding that the highest bidder acquires no vested right before acceptance and allotment, that the authority validly rejected all bids under the NIT to correct an under-fixed reserve price, and that the High Court cannot sit in appeal over such a decision or fix the price itself.
Issues
- Whether the highest bidder in a tender, whose bid was never accepted and to whom no allotment letter issued, had any enforceable right to allotment.
- Whether the High Court, in judicial review, could interfere with the authority's decision to reject all bids and issue a fresh NIT, and direct allotment to the bidder at a price fixed by the Court.
Provisions considered
- Article 226, Constitution of IndiaJudicial review of contractual decisions of public bodies is confined to the decision-making process; absent mala fides or arbitrariness, the High Court could not sit in appeal over the cancellation of the tender, modify the bid or fix the base price. (¶¶ 12, 13, 14)
- Article 14, Constitution of IndiaReferred to through Tata Cellular: the State's right to refuse any tender must respect Article 14, but no violation arises where it seeks the best price and does not act for a collateral purpose. (¶¶ 12, 13)
Held
- In judicial review of tender decisions the Court does not sit in appeal over the authority but reviews only the manner of decision-making; the authority, as guardian of public finances, may refuse any tender, and its decision will be upheld unless arbitrary, mala fide or for a collateral purpose (State of Jharkhand v. CWE-SOMA Consortium, (2016) 4 SCC 172; Tata Cellular). (¶¶ 12, 13)
- The highest bidder has no vested right to have the auction concluded in his favour; without acceptance of the bid and issue of an allotment letter there is no concluded contract, and a court cannot accept the bid or direct allotment (HUDA v. Orchid Infrastructure Developers, (2017) 4 SCC 243). (¶¶ 12, 13, 14)
- A bidder has no right beyond fair treatment in evaluation and cannot insist on further negotiation; the NIT condition reserving the right to accept or reject any or all bids entitled the authority to reject the bids, which it did for valid reasons, namely that an outstanding property tax demand of about Rs.1.25 crore had not been factored into the reserve price. (¶¶ 12, 14)
- By directing allotment at Rs.26,000 per sq. m. to a bidder who had not participated in the fresh NIT, the Division Bench usurped the auctioning authority's power and effectively enforced a non-existent contract. (¶¶ 13, 15)
- Eva Agro Feeds v. Punjab National Bank was distinguished: there the auction was cancelled without any reason and was manifestly arbitrary, whereas here cancellation was undertaken to remedy an erroneous minimum rate. (¶ 15)
Result
Appeal allowed; Division Bench judgment set aside; the IDA was directed to issue a fresh NIT and not to dispose of the land except by public auction or NIT.