IMPORTANT POINT
The principle of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism.

Headnote:(a) Government Contract – Public Auction – Failure of the authorities to make the reserve price known to the bidders was not sufficient ground for the High Court to direct allotment of alternative plots to the respondents. (Paras 9 and 12)
        (b) Constitution of India – Article 226 – Judicial Review – The principle of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism – Since the power of judicial review is not an appeal from the decision, the court cannot substitute its own decision – Even if some defect was found in the ultimate decision resulting in cancellation of the auction, the court should exercise its discretionary power with great care and caution and only in furtherance of public interest – When a designated authority had the final authority regarding acceptance of the bid, even the highest bidder did not acquire any right to have the auction concluded in his favour until that authority had passed an order to that effect. (Para 11)
        (1994)6 SCC 651; (2007)1 SCC 477 – Relied upon.
        (c) Government Contract – Public Tender – Third party interests having been created and such parties not having been made parties prayer of the respondents willing to pay enhanced amounts offered in second auction cannot be accepted. (Para 13)
        (d) Constitution of India – Article 226 – Amount deposited by the respondents refunded to them and they accepted the same – Secondly third party interests had been created in the matter and such persons were not made parties – It was not open to the High Court to direct the appellants to allot alternative plots to the respondents. (Para 15)
       Facts of the case:
        1. The appellants are statutory authorities under the Punjab Agricultural Produce Markets Act, 1961. A public notice was issued by the office of Market Committee, Panchkula, Haryana, appellant no.2 inviting traders and general public to purchase commercial sites measuring 20' X 50' each in an open auction. The reserve price was neither mentioned in the public notice nor was the same announced before the start of the auction.
        2. The respondents were declared to be the highest bidders for the plots who deposited 25% of the bid money as per the requirement of law.
        3. The Chief Administrator, on 15th of December, 2004 conveyed his approval in respect of the bids given for plot No. 1 measuring 20' X 50' and three booths bearing Nos. 149, 150, 152 measuring 12' X 27'. The auction of all the other plots was rejected and it was directed to refund the amounts to the respondents and to put the plots in open auction on 20th of December, 2004.
        4. On 17th of December, 2004, the respondents received a communication from the Market Committee that since the auction in their favour had not been approved by the Chief Administrator, 25% of the bid money deposited by them was being refunded.
        5. The second public auction, as scheduled, was held on 20th of December, 2004, and a price higher than that of the earlier price was fetched from the auction purchasers.
        6. On 4th of January, 2005, the respondents filed a batch of writ petitions seeking quashing of the order dated 17th of December, 2004 canceling the allotments of plots in their favour.
        7. The High Court held that the respondents were entitled to be allotted alternative plots.
       Findings of the Court :
        High Court judgment is not sustainable.
       Result : Appeals allowed.

JUDGMENT

Tarun Chatterjee, J. —

1. Leave granted.

2. These bunch of appeals have arisen from a common judgment and order dated 27th of April, 2006 of the High Court of Punjab & Haryana at Chandigarh whereby the High Court had allowed a bunch of writ petitions filed by the respondents challenging an order dated 17th of December, 2004 canceling the allotments of Plots in their favour in an open auction. Since common questions of law and fact arise in the disposal of these bunch of appeals and the High Court has disposed of the entire bunch of writ petitions following the judgment passed in Mangat Ram & Ors. Vs. State of Haryana & Ors. [CWP No. 213 of 2005 decided on 27th of April, 2006], we take up the facts leading to the filing of these appeals from the judgment dated 27th of April, 2006 passed in CWP No. 213 of 2005 of the High Court of Punjab and Haryana at Chandigarh, which are as under : -

3. The appellants are statutory authorities under the Punjab Agricultural Produce Markets Act, 1961 (in short “the Act”). A public notice was issued by the office of Market Committee, Panchkula, Haryana, appellant no.2 inviting traders and general public to purchase commercial sites in an open auction to be held on 8th of July, 2004 in the New Grain and Vegetable Market, Panchkula. By this auction, Shop plots (62 Nos.) and Booth plots measuring 20 X 50 were to be auctioned. On 16th of May, 2003, the High Powered Committee constituted by an office order recommended that the reserve price for a plot measuring 20 X 50 be fixed at Rs. 33,91,391/- which was approved at the level of the Chief Administrator of the Board. However, the reserve price so fixed was neither mentioned in the public notice nor was the same announced before the start of the auction. The auction of the plots was held as per schedule. The respondents were declared to be the highest bidders for the plots who deposited 25% of the bid money as per the requirement of law. On 24th of July, 2004, the auction committee report of the aforesaid auction held on 8th of July, 2004 was put up before the Market Committee, Panchkula, which by a resolution dated 24th of July, 2004 recommended the confirmation of the auction bids and resolved that the approval of the Chief Administrator, Haryana State Agricultural Marketing Board be taken under Section 18 of the Act. On 30th of November, 2004, a letter was sent on behalf of the Chief administrator to the Executive Officer-cum-Secretary, Market Committee, Panchkula by which some discrepancies were conveyed. On 6th of December, 2004, the Executive Officer addressed a letter to the Chief Administrator informing him that the discrepancies pointed out have been attended to and requested for approval. The Chief Administrator, on 15th of December, 2004 conveyed his approval in respect of the bids given for plot No. 1 measuring 20 X 50 and three booths bearing Nos. 149, 150, 152 measuring 12 X 27 =’. The auction of all the other plots was rejected and it was directed to refund the amounts to the respondents and to put the plots in open auction on 20th of December, 2004. On 17th of December, 2004, the respondents received a communication from the Market Committee that since the auction in their favour had not been approved by the Chief Administrator, 25% of the bid money deposited by them was being refunded. The second public auction, as scheduled, was held on 20th of December, 2004, and a price higher than that of the earlier price was fetched from the auction purchasers.

4. On 4th of January, 2005, the respondents filed a batch of writ petitions seeking quashing of the order dated 17th of December, 2004 canceling the allotments of plots in their favour. The batch of writ petitions filed by the respondents before the High Court were taken up for hearing and the main judgment that was passed was in the case of Mangat Ram & Ors. Vs. State of Haryana & Ors., CWP No. 213 of 2005 decided on 27th of April, 2006 and thereafter, following the same judg

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2008 Supreme(SC) 620

IMPORTANT POINT The principle of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism.

Cases Referred (2)

IMPORTANT POINT
The principle of judicial review would apply to the exercise of contractual powers by Government bodies in order to prevent arbitrariness or favouritism.