Hon'ble Om Prakash-VII,J.
(Delivered by Hon'ble Rajes Kumar, J.) This appeal, under Section 96 of the C.P.C., is being filed challenging the order dated 25.1.1997 passed by the Civil Judge (Senior Division), Agra in Original Suit No. 130 of 1994.
The brief facts of the case are that on 15.12.1993, the Agra Development Authority made an auction of a plot measuring 174.19 sq. metre under Sanjay Palace Restaurant Scheme. The respondent-Anirudh Vir Singh participated in the said auction and his bid for Rs.7,45,000/- was the highest. He deposited a sum of Rs.1,90,000/-, being 1/4th of the amount. However, the auction has not been approved and finalized in favour of Sri Anirudh Vir Singh. The said plot has again been subjected to auction on 23.12.1993 wherein the reserved price has been enhanced from Rs.7,00,000/- to Rs.7,50,000/-. Sri Anirudh Vir Singh again participated in the said auction. His bid at Rs.7,80,000/- was the highest. He deposited a sum of Rs.1,95,000/-, after the adjustment of Rs.1,90,000/-, deposited earlier. The said auction has also not been approved and finalized and has been cancelled.
It appears that the Agra Development Authority found that at a same place plot measuring 156.77 sq. metre has been sold in auction held on 2.12.1993 for Rs.13,50,000/- . Therefore, the Auction Committee has not recommended for the approval of the bid of Sri Anirudh Vir Singh and in pursuance thereof, the Vice-Chairman has cancelled the bid on 7.1.1994. It also appears that on 3.1.1994, Sri Anirudh Vir Singh moved an application for the return of the amount, however, the said application was not on record and it is alleged that with the collusion of the employee it has been got misplaced and concerned employee has also been suspended. It appears that subsequently, after the advertisement being made in Amar Ujala, an auction has been held on 30.7.1994. Sri Sudip Potdar and Sri Pradeep Potdar were the highest bidder of Rs. 11,77,000/-. The said plot was settled in favour of both Sri Sudip Potdar and Sri Pradeep Potdar and a registered lease deed has also been executed in their favour by the Agra Development Authority on 13.2.1996 and the map has also been sanctioned for the construction and on which construction took place.
Sri Anirudh Vir Singh filed a suit no. 130 of 1994 against Agra Development Authority for the relief that the Agra Development Authority be restrained from re-auctioning the plot in suit and may be ordered to issue allotment order in his favour of such plot. In the said suit, Sri Sudip Potdar and Sri Pradeep Potdar have not been made as the party. The said suit has been decreed by the impugned order dated 25.1.1997 with the direction to the Agra Development Authority to accept the bid of the plaintiff-respondent in an auction held on 23.12.1993 and thereafter after getting the balance amount deposited and on completion of the formalities, the defendant-appellant may complete the remaining formalities. The suit has been mainly decreed on the ground that without cancelling auction held on 23.12.1993, the subsequent auction was illegal and arbitrary.
Against the aforesaid order, present appeal has been initially filed by the Agra Development Authority against Sri Anirudh Vir Singh. The appeal has been entertained on 20.5.1997. The Court has passed the order staying the execution of the decree. On the request of counsel for the respondent Sri Anirudh Vir Singh, learned counsel for the Agra Development Authority made a statement to refund the amount deposited by him.
Thereafter, an impleadment application was moved by Sri Sudip Potdar and Sri Pradeep Potdar. The application has been allowed and they have been impleaded as respondent nos. 2 and 3. Subsequently an application was moved by them that they may be transposed as the appellant nos. 2 and 3. The said application has been allowed and they have been transposed as the appellant nos. 2 and 3. In this way, this appeal is by the Agra Development Authority and by Sri Sudip Potdar and Sri Pradeep Potdar against Sri Anirudh Vir Singh.
Heard Sri Ravi Kant, learned Senior Advocate, appearing on behalf of the appellant nos. 2 and 3, Sri Sanjay Om, learned counsel appearing on behalf of appellant no. 1 and Sri A.K. Gupta, learned counsel appearing on behalf of the respondent.
Learned counsel for the appellant submitted that condition no. 3 of auction notice clearly provides that the acceptance and rejection of bid shall be in exclusive domain of Vice-Chairman of the Agra Development Authority and plot may only be transferred on the approval of Vice-Chairman. He further submitted that the bid of the respondent in an auction held on 15.12.1993 was not accepted and has been disapproved. The letter/order in this regard is at page 108 of the paper-book. He submitted that after the non-approval of the bid of the respondent, the second auction was fixed on 23.12.1993. The respondent participated in the said auction and has not raised any objection about the non-approval of the auction dated 23.12.1993 nor disputed the auction or non-communication of non-approval of the auction and also not disputed the second auction fixed on 23.12.1993. Therefore, it was not open for the respondent to take a plea in the suit that the first auction has not been cancelled. The second auction has also been cancelled wherein the respondent participated, by the Vice-Chairman vide order dated 17.1.1994 on being recommended by the Auction Committee. The cancellation of the said auction has not been challenged by the respondent. By the letter dated 14.6.1994, the Joint Secretary informed the respondent about the cancellation of auction by the Vice-Chairman and also asked the respondent to take back the money. He submitted that the respondent has taken back the entire money. He submitted that third auction took place on 30.7.1994, in which the appellant nos. 2 and 3 were the highest bidder offering the bid of Rs.11,77,000/. Their bid has been accepted and the lease deed has been executed on 13.2.1996 and the possession was given on 22.6.1996. A map was sanctioned on 4.4.1996. When the suit was filed on 17.2.1994, no injunction has been granted by the court below. The injunction was granted on 27.5.1996 ex-parte restraining the appellant to raise construction without impleading appellant nos. 2 and 3. He submitted that it is a settled principle of law that even if public auction had been completed, no right would accrue to the highest bidder till the confirmation letter is being issued in his favour. Reliance has been placed on the decision of the Apex Court in the case of Rajasthan Housing Board and another Vs. G.S. Investments and another, reported in (2007) 1 SCC 477 and a recent decision of the Apex Court in the case of Uttar Pradesh Avas Evam Vikas Parishad and others Vs. Om Prakash Sharma, reported in (2013) 5 SCC 182. It is further submitted that the respondent had a remedy to file a suit for specific performance under the Specific Relief Act, 1963. Section 41 (h) of the Specific Relief Act provides that an injunction, which is a discretionary equitable relief cannot be granted when equally efficacious relief is obtainable in any other usual mode or proceeding except in cases of breach of trust. Learned counsel for the appellant submitted that the suit for injunction on this ground was also not maintainable. Reliance is placed on the decision of the Apex Court in the case of The Municipal Corporation of Delhi Vs. Suresh Chandra Jaipuria and another, reported in AIR 1976 SC 2621 and the decision of the Madras High Court in the case of K.S. Balasubramaniam Vs. S. Munnuswamy, reported in 2000 (2) CTC 417.
Learned counsel for the Agra Development Authority has adopted the argument of learned counsel for the appellant nos. 2 and 3.
Sri A.K. Gupta, learned counsel for the respondent submitted that the auction dated 15.12.1993 has not been cancelled. Specific finding has been recorded by the trial court in this regard, therefore, without cancelling the said auction further auction held by the Agra Development Authority was illegal and, therefore, the trial court has legally decreed the suit and granted necessary relief claimed in the suit.
We have considered rival submissions and perused the impugned order.
The facts are not in dispute. The only disputed fact is that whether the auction dated 15.12.1993 has been cancelled or not and if not cancelled what is the effect.
Clause 3 of the auction notice is reproduced as below:
" iz'uxr Hkw[kaM mik/;{k vkxjk fodkl izkf/kdj.k dh Lohd`fr ds ckn gLrkuUrfjr fd;k tk;sxkA mPpre cksyh vFkok U;wUre cksyh vFkok fdlh Hkh cksyh dks fcuk dksbZ dkj.k crk;s Lohdkj vFkok vLohdkj fd;s tkus dk iw.kZ vkf?kdkj mik?;{k dks gksxk vkSj bl lEcU/k ess fdlh cksyhnsrk dh fdlh Hkh vkifRr ij dksbZ fopkj ughs fd;k tk;sxskA "
Clause 3 of the auction notice provides that the acceptance and rejection of bid shall be in exclusive domain of Vice-Chairman of the Agra Development Authority and plot may only be transferred on the approval of Vice-Chairman.
There is no dispute that the bid of the respondent in an auction held on 15.12.1993 has not been approved by the Agra Development Authority. From perusal of the proceeding of the auction dated 15.12.1993, which is at page 108 of the paper-book, there is a signature of all the higher officials of the Agra Development Authority. It reveals that the bid of the respondent has been rejected, therefore, the plea of the respondent that it has not been rejected and accepted by the trial court, is erroneous. Moreover, the respondent himself participated in the second auction held on 23.12.1993. He participated without raising any objection about the non-acceptance of his bid in auction dated 15.12.1993 and challenging the second auction dated 23.12.1993. Therefore, it was not open to the respondent to raise the plea subsequently that his bid has not been rejected. Even assuming that his bid has not been rejected, but it is also undisputed that his bid has not been accepted by a specific order. Therefore, in the absence of any acceptance of the bid by the authority concerned, no right accrued to him.
The Apex Court in the case of Rajasthan Housing Board and another Vs. G.S. Investments and another (supra) has held as follows:
"The auction notice dated 3.2.2002 contained a condition to the effect that the Chairman of the Housing Board shall have the final authority regarding acceptance of the bid. The second auction notice issued on 19.2.2000 mentioned that the conditions of the auction will be same as mentioned in the earlier auction notice. In view of this condition in auction notice it is obvious that a person who had made the highest bid in the auction did not acquire any right to have the auction concluded in his favour until the Chairman of the Housing Board had passed an order to that effect. Of course the Chairman of the Housing Board could not exercise his power in an arbitrary manner but so long as an order regarding final acceptance of the bid had not been passed by the Chairman, the highest bidder acquired no vested right to have the auction concluded in his favour and the auction proceedings could always be cancelled. What are the rights of an auction bidder has been considered in several decisions of the this Court. However, we will refer to only one such decision, viz., Laxmikant vs. Satyawan (1996) 4 SCC 208 which is almost identical on facts as it related to auction of a plot by Nagpur Improvement Trust. The auction notice in this case contained a condition that the acceptance of the highest bid shall depend upon the Board of Trustees and further the person making the highest bid shall have no right to take back his bid and the decision of the Chairman of the Board of Trustees regarding acceptance or rejection of the bid shall be binding on the said person. After taking note of the aforesaid conditions it was held :
"From a bare reference to the aforesaid conditions, it is apparent and explicit that even if the public auction had been completed and the respondent was the highest bidder, no right had accrued to him till the confirmation letter had been issued to him. The condition of the auction clearly conceived and contemplated that the acceptance of the highest bid by the Board of Trustees was a must and the Trust reserved the right to itself to reject the highest or any bid. This Court has examined the right of the highest bedder at public auctions in the cases of Trilochan Mishra, etc.vs. State of Orissa (1971) 3 SCC 153. State of Orissa vs. Harinarayan Jaiswal (1972) 2 SCC 36, Union of India vs. Mis. Bhim Sen Walaiti Ram (1969) 3 SCC 146 and State of Uttar Pradesh and Ors. vs. Vijay Bahadur Singh (1982) 2 SCC 365. It has been repeatedly pointed out that State or the authority which can be held to be State within the meaning of Article 12 of the Constitution of is not bound to accept the highest tender or bid. The acceptance of the highest bid is subject to the conditions of holding the public auction and the right of the highest bidder has to be examined in context with the different conditions under which such auction has been held. In the present case no right had accrued to the respondent either on the basis of the statutory provisions under Rule 4(3) or under the conditions of the sale which had been notified before the public auction was held."
This being the settled legal position, the respondent acquired no right to claim that the auction be concluded in its favour and the High Court clearly erred in entertaining the writ petition and in not only issuing a direction for consideration of the representation but also issuing a further direction to the appellant to issue a demand note of the balance amount. The direction relating to issuance of the demand note for balance amount virtually amounted to confirmation of the auction in favour of the respondent which was not the function of the High Court."
In the case of Uttar Pradesh Avas Evam Vikas Parishad and others Vs. Om Prakash Sharma (supra), the Apex Court held as follows: (Para-27, 28, 29, 30 and 31) "It is an undisputed fact that public auction was held in relation to the property of the first defendant vide public notice dated 4-3-1977 published in the local newspapers by the Parishad for auction of nine shops and the plot earmarked for cinema hall measuring 3441 sq. m. The auction was supervised and conducted on 11-3-1977 by on Mr Ram Kumar Singh Bisen, the then Assistant Housing Commissioner. It was also an admitted fact that the plaintiff was the highest bidder as he had quoted Rs.1.31,500 in relation to the plot and he has deposited a sum of Rs.26,500, that is, 20% of the amount of bid plus Rs. 500 as earnest money.
It is also an undisputed fact that the offer of the plaintiff is highest as per the terms of the conditions of the sale of plot in question by public auction are concerned, 20% of the bid amount deposited by him that by itself does not amount to accepting his bid by the competent authority for grant of leasehold rights of plot in his favour.
This Court in Meerut Development Authority v. Assn. of Management Studies, (2009) 6 SCC 171 has laid down the legal principle that the bidder who has participated in tender process has no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to the notice inviting tenders in a transparent manner and free from hidden agenda. The relevant paragraphs are extracted hereunder : (SCC p. 182, paras 27 & 29) "27. The bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive bids offered by interested persons in response to notice inviting tenders in a transparent manner and free from hidden agenda. One cannot challenge the terms and conditions of the tender except on the abovestated ground, the reason being the terms of the invitation to tender are in the realm of the contract. No bidder is entitled as a matter of right to insist the authority inviting tenders to enter into further negotiation unless the terms and conditions of notice so provided for such negotiations.
29. The Authority has the right not to accept the highest bid and even to prefer a tender other than the highest bidder, if there exist good and sufficient reasons, such as, the highest bid not representing the market price but there cannot be any doubt that the Authority's action in accepting or refusing the bid must be free from arbitrariness or favoritism."
In support of the said proposition, the learned Senior Counsel for the defendant, Mr Rakesh Dwivedi has also placed reliance upon another decision of this Court in State of U.P. v. Vijay Bahadur Singh, reported in (1982) 2 SCC 365. The learned Senior Counsel has rightly placed reliance upon the judgment of this Court in Rajasthan Housing Board case which reads as under: (SCC p. 483, para 9) "9. This being the settled legal position, the respondent acquired no right to claim that the auction be concluded in its favour and the High Court clearly erred in entertaining the writ petition and in not only issuing a direction for consideration of the representation but also issuing a further direction to the appellant to issue a demand note of the balance amount. The direction relating to issuance of the demand note for balance amount virtually amounted to confirmation of the auction in favour of the respondent which was not in the function of the High Court."
The law laid down by this Court in the aforesaid paragraph in support of the proposition of law that so long as an order regarding final acceptance of the bid had not been passed by the Chairman of the Housing Board, the highest bidder acquire no vested right to have the auction concluded in his favour and the auction proceedings could always be cancelled. Further, he has placed reliance on another decision of this Court in Lasmikant referred to supra. In support of the proposition of law this Court has rightly pointed out that the "State" or the authority, which can be held to the "State" within the meaning of Article 12 of the Constitution, is not bound to accept the highest tender/offer or bid and the Government could validly retain its power to accept or reject the highest bid in the interest of public revenue. In support of this contention, he has placed reliance on State of Orissa v. Harinarayan Jaiswal case, relevant paragraph of which reads as under : (SCC pp.44-45, para 13) "13. Even apart from the power conferred on the Government under Sections 22 and 29, we fail to see how the power retained by the Government under clause (6) of its order, dated 6-1-1971, can be considered as unconstitutional. As held by this Court in Cooverjee B. Bharucha v. Excise Commissioner, reported in AIR 1954 SC 220, one of the important purpose of selling the exclusive right to sell liquor in wholesale or retail is to raise revenue. Excise revenue forms an important part of every State's revenue. The Government is the guardian of the finance of the State. It is expected to protect the financial interest of the State. Hence quite naturally, the legislature has empowered the Government to see that there is no leakage in its revenue. It is for the Government to decide whether the price offered in an auction-sale is adequate. While accepting or rejecting a bid, it is merely performing an executive function. The correctness of its conclusion is not open to judicial review. We fail to see how the plea of contravention of Article 19(1)(g) or Article 14 can arise in these cases. The Government's power to sell the exclusive privileges set out in Section 22 was not denied. It was also not disputed that those privileges could be sold by public auction. Public auctions are held to get the best possible price. Once these aspects are recognised, there appears to be no basis for contending that the owner of the privileges in question who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate. There is no concluded contract till the bid is accepted. Before there was a concluded contract, it was open to the bidders to withdraw their bids (see Union of India v. Bhim Sen Walaiti Ram). By merely giving bids, the bidders had not acquired any vested rights. The fact that the Government was the seller does not change the legal position once its exclusive right to deal with those priviliges is concerned. If the Government is the exclusive owner of those privileges, reliance on Article 19(1)(g) or Article 14 becomes irrelevant. Citizens cannot have any fundamental right to trade or carry on business in the properties or right belonging to the Government- nor can there be any infringement of Article 14, if the Government tries to get the best available price for its valuable rights. The High Court was wholly wrong in thinking that purpose of Sections 22 and 29 of the Act was not to raise revenue. Raising revenue as held by this Court in Cooverjee B. Bharucha v. Excise Commr. case was one of the important purposes of which provisions. The fact that the price fetched by the sale of country liquor is an excise revenue does not change the nature of the right. The sale in question is but a mode of raising revenue. Assuming that the question of arbitrary or unguided power can arise in a case o this nature, it should not be forgotten that the power to accept or reject the highest bid is given to the highest authority in the State i.e. the Government which is expected to safeguard the finances of the State. Such a power cannot be considered as an arbitrary power. If that power is exercise for any collateral purposes, the exercise of the power will be struck down. It may also be remembered that herein we are not dealing with a delegated power but with a power conferred by the legislature.
The High Court erroneously thought that the Government was bound to satisfy the Court that there was collusion between the bidders. The High Court was not sitting on appeal against the order made by the Government. The inference of the Government that there was a collusion among the bidders may be right or wrong. But that was not open to judicial review so long as it is not proved that it was a make-believe one. The real opinion formed by the Government was that the price fetched was not adequate. That conclusion is taken on the basis of Government expectations. The conclusion reached by the Government does not affect any one's right. Hence, in our opinion, the High Court misapplied the ratio of the decision of this Court in Barium Chemicals Ltd. v. Company Law Board, reported in AIR 1967 SC 295 and Rohtas Industries Ltd. v. S.D. Agarwal, reported in (1969) 1 SCC 325."
(emphasis supplied) In view of the law laid down by this Court in aforesaid decisions, the learned Senior Counsel Mr Rakesh Dwivedi has rightly placed reliance upon the same in support of the case of the first defendant, which would clearly go to show that the plaintiff had not acquired any right and no vested right has been accrued in his favour in respect of the plot in question merely because his bid amount is highest and he had deposited 20% of the highest bid amount along with earnest money with the Board. In the acceptance of bid offere by the plaintiff to the competent authority of the first defendant, there iis no concluded contract in respect of the plot in question, which is evident from letters dated 26-5-1977 and 8-7-1977 wherein the third defendant had rejected the bid amoutn deposited by the plaintiff and the same was refunded to him by way of demand draft, which is an undisputed fact and it is also not his case that the then Assistant Housing Commissioner who has conducted the public auction had accepted the bid of the plaintiff."
In view of the aforesaid position of law, it is not necessary to deal with other argument of learned counsel for the appellant.
In view of the what has been discussed above, we are of the view that the order dated 25.1.1997 passed by the Civil Judge (Senior Division), Agra in Original Suit No. 130 of 1994 is erroneous and is liable to be set aside and is accordingly set aside. The appeal is accordingly allowed with cost of Rs.25,000/-.
Order Date :- 29.8.2014 OP