2006 Supreme(SC) 1235

2007(1) Supreme 622
SUPREME COURT OF INDIA
(From Bombay High Court)
S.B. Sinha and Dalveer Bhandari, JJ.
Ramchandra Murarilal Bhattad & Ors.—Appellants
versus
State of Maharashtra & Ors.—Respondents
Civil Appeal No. 5610 of 2006
(Arising out of SLP (C) No. 5900 of 2004)
With
Civil Appeal No. 5611 of 2006
(Arising out of SLP (C) No. 23665 of 2004)
Decided on 5-12-2006
Counsel for the Parties :
For the Appellants : R.F. Nariman, Dr. A.M. Singhvi, Sr. Advocates, P.N. Gupta, H. Devarajan and N.V. Vimadalal, Advocates.
For the Respondents : Shekhar Naphade, Harish N. Salve, Milind Sathe, Sr. Advocates, A.S. Bhasme, Ravindra Keshavrao Adsure, Atul S. Dayal, K.R. Sasiprabhu, Ashwin Dave, Ms. Meenakshi Grover and Chandrachud, Advocates.

IMPORTANT POINT
Where the power has been exercised by the Region Development Authority in cancelling the tenders so as to enable it to have a relook of the entire project, no reason was required to be assigned as there has been change in the policy decision.

Headnote:(i) Mumbai Metropolitan Region Development Authority Act, 1974—Sections 4, 4A, 12, 13 and 14—Mumbai Metropolitan Region Development Authority (Disposal of Land) Regulations, 1977—Regulations 7 and 9—Powers of Mumbai Metropolitan Region Development Authority—Tender process—Cancelling tenders in view of change in policy decision—No reason was required to be assigned—Tenders were invited for establishing a Convention and Exhibition Centre (C&EC)—Appellant submitted its tender—Authority, however, took a decision to reject all the bids—Subsequently, news item appeared in ‘Economic Times’ that the authority was close to finalizing the Convention Centre by getting private participation—Writ petition filed by appellants challenging right of Authority to reject all or any of the bids without assigning any reason—Authority called for fresh tenders in terms whereof bidders were required to quote separately for C&EC and Real Estate Components—Whether the Development Authority had any jurisdiction to cancel the bid—(Yes)—Whether any reason was required to be assigned—(No).

       Held : The Executive Committee is a statutory functionary. The powers and functions of the authority and the respective committees concededly are governed by the provisions of the statute, but, then the jurisdiction of the Executive Committee is limited. It was confined to rejection or acceptance of the tender. The Authority exercises a larger power. For the said purpose we would assume that the Authority had no incidental or ancillary power, but there cannot be any doubt or dispute that the Executive Committee could not cancel the entire tender. It could not have caused any change in the entire scheme or policy. It could not make alterations in the methodology of tender. It could not have gone into the working of the project. It also could not have gone into the question as to whether the project would be financially viable if the method of calculation is changed. (Para 28)

       Jurisdiction of the Authority being larger, and the power to cancel the tender being not vested in the Executive Committee, the action on the part of the former was neither illegal nor without jurisdiction. (Para 30)

       As noticed hereinbefore, we have proceeded on the basis that the powers of the Executive Committee and the Authority are separate and distinct and we have pointed out that the powers vested in the Executive Committee being limited, the decision taken by the Authority cannot be said to be illegal.(Para 32)

       The Authority is a statutory authority. It consists of not only politicians but also various other responsible officers. It, while exercising its power under the Act, must necessarily take policy decisions. Whereas under the 2002 tender the bidder had to quote the rate of premium in terms of rupees per square meter of FSI and the total premium separately for C&EC and the Real Estate component subject to the condition that the rate quoted for the Real Estate component should be greater than that quoted for the C&EC, upon having come to know that the value of the land would be much more, the Authority in the 2005 tender decided that the bidders should be required to quote a fixed rate of 20,000 per sq.m. of built-up area for total built-up area 65,000 sq.m. for Convention & Exhibition Centre. Economic viability of the entire project component, taking into consideration two different components for C&EC and the Commercial Complex, could have been taken differently. The premium amount was to be quoted higher than Rs. 350 crores for the Commercial Complex. While exercising its jurisdiction of judicial review, the Court is required to decide the cases before it, keeping the well known principles therefor in mind and having regard to the fact situation obtaining therein. No hard and fast rule can be laid down therefor.(Para 38)

       In this case, highest offer has not been rejected. A new policy decision has been taken. Question as noticed herein is not as to whether the offer of the Appellants should have been rejected but is as to whether the Authority in law could have altered its policy in regard to disposal of its properties.(Para 42)

       The next question which arises for consideration is as to whether any reason was required to be assigned. A power to deal with a contractual matter and a power of a statutory authority to exercise its statutory power in determining the rights and liabilities of the parties are distinct and different. Whereas reasons are required to be assigned in a case where civil or evil consequences may ensue, the same may not be necessary where it is contractual in nature, save and except in some cases.(Para 44)

       Power has not been exercised by the Executive Committee in rejecting the tender. The power has been exercised by the Authority in canceling the tenders so as to enable it to have a re-look of the entire project. (Para 47)

       Some reasons may be required to be assigned for rejecting the bid, but in the instant case, in our opinion, no reason was required to be assigned as there has been a change in the policy decision.(Para 48)

       It may be true that the Authorities at one point of time, as was disclosed in the Counter Affidavit, had thought of setting up a Convention Centre of their own and without any private participation, but only because there has been a deviation from the said stand would not, in our considered opinion, render the entire policy decision vitiated in law. It had set up its Evaluation Committee. The decision presumably has been reached by experts.(Paras 50 and 51)

       It is not a case where the Court is called upon to exercise its equity jurisdiction. It is also not a case where ex facie the policy decision can be held to be contrary to any statute or against a public policy. A policy decision may be subjected to change from time to time. Only because a change is effected, the same by itself does not render a policy decision to be illegal or otherwise vitiated in law. (Para 53)

       Appellant did not participate in the second bid. The tender process is complete. Before us only a higher bid has been given. We do not intend to enter into the intricacies of the question. Appellants could have submitted its bids pursuant to the new tender and new conditions, even without prejudice to its rights and contentions in this appeal. The stipulations made in 2002 tender could have been repeated by it so as to demonstrate before the experts comprising members of the Executive Committee that its bid was the highest. If, in view of the change in the policy decision, the Authority does not intend to become a partner in the profit making and opt for having the entire bid amount at one go instead of waiting for 20 years, we do not find any fault therewith.(Para 58)

       (ii) ADMINISTRATIVE LAW—Natural Justice—Tender process—Assignment of reasons for cancellation of bid—Whether reasons are required to be assigned when rejection of bid is on change in the policy decision—(No)—Power to deal with a contractual matter and a power of a statutory authority to exercise its statutory power in determining the rights and liabilities of the parties are distinct and different—Whereas reasons are required to be assigned in a case where civil or evil consequences may ensue, the same may not be necessary where it is contractual in nature, save and except in some cases.(Para 44)