Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2009 Supreme(SC) 767

2009(3) Supreme 429
SUPREME COURT OF INDIA
Lokeshwar Singh Panta and B. Sudershan Reddy, JJ.
Meerut Development Authority — Appellant
versus
Association of Management Studies & Anr. — Respondents
Civil Appeal No. 2619 of 2009
(Arising out of SLP (C) No.3215 of 2008)
WITH
Civil Appeal Nos. 2620-2621 of 2009
(Arising out of SLP (C) No.1602-1603 of 2008)
Decided on : 17-04-2009

Advocates appeared:
P.S. Patwalia, Rakesh Swivedi, Sunil Gupta, J.S. Attri, Sr. Advs., Shiva Kumar Sinha, Kavin Gulati, Ms. Rashmi Singh, T. Mahipal, Vinay Garg, Ajay Kumar, Ms. Deepam Garg, Ms. Jyoti Sharma, Avnish Pandey, Advocates.

IMPORTANT POINTS
Courts do not exercise their will. They cannot impose their own values on society. Any such effort would mean to make value judgments.
Courts cannot convert judicial review proceedings into an inquisitorial one.
Equity is not a one way street.

Headnote:(a) Government contract – Tender – A tender is an offer – It must be unconditional, in the proper form, and the tenderer must be able and willing to perform his obligations – The terms of the invitation to tender cannot be open to judicial scrutiny except where the terms of the invitation to tender are tailor made to suit the convenience of any particular person with a view to eliminate all others from participating in the biding process – The bidders participating in the tender process only have the right to equality and fair treatment in the matter of evaluation of competitive bids in a transparent manner and free from hidden agenda. (Para 17)
        (1994)6 SCC 651; (2004)4 SCC 19; (2005)1 SCC 676; (2005)4 SCC 435; (2007)10 SCC 33 – Relied upon.
        (b) Judicial Review – Judicial quest in administrative matters is to strike the just balance between the administrative discretion and the need of fairness – Object of judicial review is to ensure that the authority does not abuse its power and the individual receives just and fair treatment. (Paras 23 and 24)
        (1994)6 SCC 651; (1982) 3 AIIER 141 – Relied upon.
        (c) Constitution of India,1950 – Article 14 – Once the State or its instrumentality decides to grant any right or privilege to others, then there is no escape from the rigour of Article 14. (Para 25)
        (1979)3 SCC 489; (1980)4 SCC 1; (1985)3 SCC 267; (1990)3 SCC 752; (1993)1 SCC 445; (2000)3 SCC 553 – Relied upon.
        (d) Judicial Review – In judicial review, the court is not concerned with the merits or correctness of the decision, but with the manner in which the decision is taken or the order is made – The distinction between appellate power and a judicial review is well known. (Para 25)
        (1993)1 SCC 445; 1996 JR 185 and 1996 EMLR 291; (1986) 1 AIIER 199 – Relied upon.
        (e) Judicial Review – General propositions do not decide concrete cases – It always depends upon the contextual facts. (Paras 26)
        198 U.S. 45, 76 (1995) – Relied upon.
        (f) Constitution of India,1950 – Article 14 – The effort, if any, made by MDA to augment its financial resources and revenue by itself cannot be said to be unreasonable – It is well said that the struggle to get for the State the full value of its resources is particularly pronounced in the sale of State owned natural assets to the private sector. (Para 27)
        (2002) 7 SCC 564 – Relied upon.
        (1991) 4 SCC 54 – Distinguished.
        (g) Constitution of India,1950 – Article 14 – Change of user – Disputed land reserved in Master Plan for ‘Residential’ purpose – MDA earlier relaxing the use making it for ‘educational’ purpose though earmarked for residential use – Nothing unreasonable in changing the land use and earmarking it again for ‘Residential’ use – In land reserved for residential use educational institutions could also be permitted within – Hence it cannot be said that there has been a change of land use as such. (Para 31)
        (h) Judicial Review – Contention that providing land for educational use will be more appropriate and sub-serve public interest than making it available for residential use rejected – Courts do not exercise their will – They cannot impose their own values on society – Any such effort would mean to make value judgments. (Para 33)
        (i) Judicial Review – Courts cannot convert judicial review proceedings into an inquisitorial one. (Para 33)
        (j) Judicial Review – Equity is not a one way street. (Para 34)
       Facts of the case :
        1. On 12.05.2000, MDA allotted a plot of land admeasuring 20,000 sq.mts. at the rate of Rs.560/- per sq.m. to AMS for construction of buildings meant to be utilised for educational purposes.
        2. The AMS requested to allot an additional land of 20,000 sq mts. and 37,000 sq. mts. for establishment of engineering college and other degree colleges.
        3. The MDA having considered the request and other relevant factors resolved to invite tenders from interested persons to allot the land admeasuring 20,000 sq.mts. and another extent of land admeasuring 37,000 sq. mts. available to be utilised for educational use. The reserved price has been fixed at Rs.690/- per sq.m. for 20,000 sq.mts. and for the remaining extent of 37,000 sq. mts. Of land at Rs.500/- per sq.m.; both being 50% of sector rate.
        4. In response to the advertisement inviting tenders AMS submitted its tender @ Rs.500/- for the plot of land admeasuring 37,000 sq. mts. and Rs.560/- for the plot admeasuring 20,000 sq. mts.
        5. MDA having considered the response of AMS vide its letter dated 27.11.2001 informed AMS that only 37,000 sq.m. of land has been allotted for the establishment of engineering college with the condition that the construction of the engineering college is made in accordance with the norms of the A.I.C.T.I.; and deposit of required amounts within the stipulated time. This was accepted by AMS and they took the allotment of only 37,000 sq.mts. of land.
        6. AMS having accepted the offer of 37,000 sq.mts. of land, raised an objection about the reserved price @ Rs.690/- per sq.m. even though adjoining plots were allotted @ Rs.500/- and Rs.560/- per sq.m.
        7. MDA in its meeting held on 15.03.2002 decided that the disposal of the land be made through Open Tender-cum-Auction for residential use after giving wide publicity.
        8. AMS vide its letter dated 27.03.2002 requested the Authority to allot the said land @ Rs.690/- per sq.m. or in the alternative, the topography of the land be so adjusted that both the 20,000 sq.m. of land and 37,000 sq.m. of land already allotted to the Society may be made contiguous to each other.
        9. On 15.04.2002, MDA got issued fresh advertisement inviting applications in newspapers for allotment of the aforementioned plot of land of 20,000 sq. m. with the reserved price of Rs.885/- per sq.m. and earnest money of Rs.5.50 lakhs.
        10. AMS filed C.M.W.P. in the High Court on 01.05.2002
        11. The High Court vide its interim order dated 07.05.2002, permitted MDA to allot the land in pursuance of the advertisement dated 15.04.2002 but the allotment shall be subject to the decision of this Writ Petition.
        12. In the auction Pawan Kumar Aggarwal, the appellant in C.A.Nos. 2620-2621/09 arising out of SLP ( C ) No. 1602-03/2008 became the highest bidder @ Rs.1365/- per sq.m. and the bid was accepted. But during the pendency of the Writ Petition, the MDA vide its order dated 14.05.2007, cancelled the auction and the decision of allotment to Pawan Kumar Aggarwal.
        13. He filed the Writ Petition challenging the order of cancellation.
        14. The High Court by the impugned order allowed the Writ Petition filed by AMS and dismissed the Writ Petition filed by Pawan Kumar Aggarwal. Hence these appeals.
       Finding of the Court :
        The MDA if at all committed an error it was by entertaining such representations and entering into avoidable correspondence with the AMS.
       Result : Civil Appeal No. 2619/09 allowed, and Civil Appeal Nos. 2620-2621/09 dismissed.

Judgement Key Points

Case Summary: Meerut Development Authority v. Association of Management Studies & Anr. (2009)

Parties and Background

Appellant: Meerut Development Authority (MDA), a statutory body under the U.P. Urban Planning and Development Act, 1973, responsible for planned urban development (!) .
Respondents: Association of Management Studies (AMS), a registered society running educational institutions (e.g., engineering, MBA, MCA courses) (!) ; and Pawan Kumar Aggarwal (in connected appeals).
Key Facts (!) (!) (!) (!) (!) (!) (!) (!) :
MDA allotted 20,000 sq.m. land to AMS in 2000 at Rs.560/sq.m. (50% sector rate) for educational use in a residential scheme (!) .
AMS sought additional 57,000 sq.m. (20,000 + 37,000 sq.m.); MDA invited tenders at reserved prices: Rs.690/sq.m. for 20,000 sq.m., Rs.500/sq.m. for 37,000 sq.m. (!) .
AMS bid below reserve (Rs.560 for 20,000 sq.m.); MDA allotted only 37,000 sq.m. to AMS, terminating process for the rest (!) (!) .
AMS made repeated representations post-allotment; MDA decided (15.03.2002) to re-tender 20,000 sq.m. for residential use via open tender-cum-auction (!) .
Fresh ad (15.04.2002) at Rs.885/sq.m. reserve; Aggarwal won auction at Rs.1365/sq.m., but MDA later cancelled (14.05.2007) amid litigation (!) (!) (!) .
High Court allowed AMS's writ (quashing ad/auction), dismissed Aggarwal's; MDA and Aggarwal appealed (!) .

Core Issues (!) [p_42-45]

Rights of tender bidders.
Scope of judicial review in contractual/tender matters.
Whether MDA's decisions (rejecting AMS bid, re-tendering for residential use) were arbitrary/violative of Article 14.
Public interest and equity claims favoring AMS.

Key Legal Principles and Holdings

Tender Process Rights (!) (!) (!) (!) :
Tenders are unconditional offers; bidders entitled only to equality, fair/transparent evaluation, free from bias (!) .
No right to negotiate or demand below-reserve price; MDA lawfully rejected AMS's sub-reserve bid (Rs.560 vs. Rs.690) (!) (!) .
AMS explicitly relinquished claim on 20,000 sq.m. (17.09.2001 letter); process terminated fairly (!) .
Judicial Review in Contracts (!) (!) (!) (!) :
Limited to decision-making process (reasonableness, no arbitrariness); courts cannot substitute views, act as appellate/enquiry body, or impose values (!) (!) (!) .
Not concerned with merits; focuses on abuse of power, fairness under Article 14 (!) (!) .
High Court erred by inquisitorial approach, finding "concluded contract" (unsupported) (!) .
Article 14 and Arbitrariness (!) (!) (!) :
MDA's rejection of sub-reserve bid and re-tendering not arbitrary; augmenting revenue via higher bids reasonable (public property as trust) (!) (!) .
No obligation to entertain AMS representations post-termination (!) .
Land Use Change (!) (!) :
Land zoned 'residential' in Master Plan; educational use permissible within; no unreasonable change (!) .
MDA undertook to allow both uses in fresh tenders (!) (!) .
Public Interest/Equity (!) (!) (!) :
No superior public interest in allotting to AMS at concessional rate (already availed for prior plot); courts avoid value judgments (!) .
Equity not one-way; AMS's conduct (sub-reserve bid, representations) bars relief (!) .

Outcome (!) (!)

MDA's appeal allowed (High Court judgment set aside); costs Rs.50,000 (!) .
Aggarwal's appeal dismissed (no interference with cancellation, despite some merit) (!) (!) .
MDA directed to issue fresh tenders notifying dual 'educational/residential' use, open to AMS/others (!) .

Result: Emphasizes restrained judicial review in tenders; prioritizes transparency, revenue maximization without arbitrariness (!) .

JUDGMENT

B. Sudershan Reddy, J.—

Leave granted.

2. Both these appeals can be dealt with under a common judgment since one and the same issue requires to be decided. The brief facts relevant for the purposes of disposing of these appeals may be stated.

3. Association of Management Studies (for short ‘AMS’) is a Society registered under the provisions of the Societies Registration Act, 1860. It is stated to be managing various educational institutions imparting education such as MBA, MCA, Engineering etc., the details of which are not required to be noted.

4. Meerut Development Authority (for short ‘MDA’) has been constituted as an Authority called as the Development Authority by the U.P. State Government under Section 3 of the Uttar Pardesh Urban Planning and Development Act, 1973. The said Act, has been enacted to provide for development of certain areas of Uttar Pradesh according to plan and for matters ancillary thereto. The main object and reasons for the enactment was to tackle resolutely the problems of town planning and urban development in the State of Uttar Pradesh.

FACTUAL MATTERS :

5. On 12.05.2000, MDA allotted a plot of land admeasuring 20,000 sq.mts. situated in Pocket ‘O’ Ganga Nagar Residential Scheme at the rate of Rs.560/- per sq.m. to AMS for construction of buildings meant to be utilised for educational purposes. The reserved price has been fixed in terms of G.O. dated 19.04.1996 which provides that plots for educational institutions/engineering colleges shall be sold at 50% of the sector rate. The AMS has requested to allot an additional land of 20,000 sq mts. And 37,000 sq. mts. In Ganga Nagar Residential Scheme for establishment of engineering college and other degree colleges, e.g. masters’ course such as MBA, MCA etc. It is noteworthy that the land use of the above mentioned land in the Meerut Master Plan 2001 has been shown as ‘Residential medium Density’. The MDA having considered the request and other relevant factors resolved to invite tenders from interested persons to allot the land admeasuring 20,000 sq.mts. and another extent of land admeasuring 37,000 sq. mts. Located in the said residential scheme available to be utilised for educational use. The reserved price has been fixed at Rs.690/- per sq.m. for 20,000 sq.mts. and for the remaining extent of 37,000 sq. mts. Of land at Rs.500/- per sq.m.; both being 50% of sector rate.

6. MDA issued advertisement inviting tenders in respect of several plots meant for educational institutions within various residential schemes including the aforesaid two plots in Ganga Nagar. The tenders were required to be submitted on 18.08.2001. In response to the advertisement inviting tenders AMS submitted its tender @ Rs.500/- for the plot of land admeasuring 37,000 sq. mts. And Rs.560/- for the plot admeasuring 20,000 sq. mts. The MDA having considered the tenders so submitted informed AMS vide letter dated 3rd September, 2001 that the commercial offer @ Rs.560/- per sq. m. was less than that of the reserved rate of Rs.690/- per sq. m. in respect of 20,000 sq. mts. Of land, out of the reserved 57,000 sq mts. Of land meant for the engineering colleges. AMS was put on notice to give its consent within one week if it was desirous of getting 20,000 sq.m. of land @ Rs.690/- per sq.m. MDA was willing to consider the allotment of entire land admeasuring 57,000 sq.mts. for the establishment of engineering colleges provided the institute was willing to pay the reserved price @ 690/- per sq.m. in respect of 20,000 sq.m. of land. AMS in response to the said letter requested the Authority to allot 37,000 sq.m. of land @ Rs.500/- per sq.m. offered by them in their tender. It is noteworthy that AMS in clear and categorical terms stated that the other land of 20,000 sq.m; ‘may be deleted from —— offer as the cost of that land is not viable for ——. However, we are ready to purchase the same @ Rs.560/- per sq.m. as quoted by us which is the same rate as we have already purchased th

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