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High Court Of Delhi
VISHAL BUILDERS PRIVATE LIMITED - Appellant
Versus
DELHI DEVELOPMENT AUTHORITY - Respondent
Suit 409 of 1973
Decided On : 03/23/1977
AUCTION SALE - BID WITHDRAWAL - EFFECT - NAZUL LAND - SALE BY DEVELOPMENT AUTHORITY - VALIDITY - ACCEPTANCE OF BID - AUTHORITY OF VICE-CHAIRMAN.
Fact of the Case:
The Builders participated in an auction conducted by the Delhi Development Authority (Authority) for the sale of perpetual leasehold rights of land in Nehru Place. The Builders made bids for five plots, but later retracted their bids for three of the plots (Plots 39, 40, and 41) before the Authority's acceptance. The Authority, however, treated the retraction as a surrender of the plots and retained a sum of Rs. 3,66,000 as the loss suffered on the reauction of the plots. The Builders filed a suit for the recovery of the amount paid at the auction, and the Authority defended the suit, claiming that the Builders were not entitled to retract their bids and that the Authority had the right to retain the amount as compensation for the loss incurred.
Finding of the Court:
The court held that the Builders were entitled to retract their bids before acceptance, as per the general principles of auction sales and the provisions of Section 5 of the Indian Contract Act, which allows a proposal to be revoked before the communication of its acceptance is complete. The court also held that the Authority did not have the power to sell Nazul land (Plots 39, 40, and 41) without following the rules framed for the purpose or obtaining a positive direction from the Central Government, as required under Section 22 of the Delhi Development Act, 1957. Additionally, the court found that the Vice-Chairman of the Authority did not have the authority to accept the bid unless power was duly delegated to him by a Gazette notification, as laid down in Section 52 of the Act.
Issues: 1. Whether the Builders were entitled to retract their bids before acceptance? 2. Whether the plots sold at the auction were Nazul land and whether the Authority had the right to sell the same to the Builders? 3. Whether the auction of the plots was held because no rules had been framed by the Central Government under Section 22 of the Delhi Development Act, 1957, concerning the sale of Nazul Land? 4. Whether the terms and conditions of the auction were not binding on the Builders as being unreasonable? 5. Whether any of the terms and conditions of the auction were illegal and, therefore, not binding on the Builders. Especially, was the term and condition for withdrawal of bid before acceptance illegal or unreasonable and, therefore, not binding? 6. Did the plaintiff accept the terms and conditions of the auction, and if so, what is the effect of such acceptance on the rights of the plaintiff? 7. Is the plaintiff right in claiming that the contract between the plaintiff and defendant did not come into effect because the bid made by the plaintiff at the auction was never accepted by the defendant? 8. Is the suit had for misjoinder of causes of action, and if so, what is its effect? 9. Is the plaintiff entitled to recover any amount from the defendant and also to what interest? 10. Is the plaintiff estopped from maintaining this suit on account of having received certain sums back from the defendant after the filing of the suit? 11. Relief.
Ratio Decidendi: 1. A bid at an auction is a mere offer that can be retracted by the bidder before acceptance by the auctioneer. This principle is supported by the Sale of Goods Act, 1930, which provides that a sale by auction is complete only when the auctioneer announces its completion by the fall of the hammer or in other customary manner. 2. The Authority did not have the power to sell Nazul land without following the rules framed for the purpose or obtaining a positive direction from the Central Government, as required under Section 22 of the Delhi Development Act, 1957. 3. The Vice-Chairman of the Authority did not have the authority to accept the bid unless power was duly delegated to him by a Gazette notification, as laid down in Section 52 of the Act.
Final Decision: The court decreed in favor of the Builders for Rs. 3,66,000 with interest at 6% per annum from the date of the suit till payment. The Builders were also awarded costs of the suit on the sum of Rs. 5,68,750.
( 52 ) THE case of the Builders is that three plots 39, 40 and 41 from part of Nazul land and the Authority have no right to sell them. This is their additional ground of attack. It is proved in evidence that by a gazette notification dated August 30, 1963 (Ex. D-37) in pursuance of the provisions of sub-section (1) of s. 22 of the Act and by virtue of the power of the Central Government delegated to him by the President, the Chief Commissioner, Delhi placed at the disposal of the Authority for the purpose of development in accordance with the provisions of the said Act, the Nazul lands described in the schedule on the terms and conditions agreed to by the Authority in its Resolution No. 114 dated May 10, 1961. The land covered by the three plots forms a part of the land mentioned in the schedule to the said notification.
( 53 ) IT is the case of the Authority that they paid Rs. 1. 20 crores on October 19, 1968 on account of the purchase price of the land to the Delhi Administration and therefore they are entitled to sell it.
( 54 ) NOW when we turn to the Act we find that Chapter V deals with the "acquisition and disposal of land". Section 15 empowers the Central Government to acquire land under the Land Acquisition Act, 1894. Ours is not a case of acquisition. Therefore, section 15 does not apply.
( 55 ) SECTION 21 gives to the Authority power of disposal of land. In so far as it is material, it reads :"21. (1) Subject to any directions given by the Central Government under this Act, the Authority or, as the case may be, the local authority concerned may dispose of - (a) any land acquired by the Central Government and transferred to it, without undertaking or carrying out any development thereon ; or (b) any such land after undertaking or carrying out such development as it thinks fit; to such persons, in such manner and subject to such terms and conditions as it considers expedient for securing the development of Delhi according to plan. " (3) Nothing in this Act shall be construed as enabling the Authority or the local authority concerned to dispose of land by way of gift, mortgage or charge, but subject as aforesaid reference in this Act to the disposal of land shall be construed as reference to the disposal thereof in any manner, whether by way of sale, exchange or lease or by the creation of any easement right or privilege or otherwise. " Section 22 deals with Nazul lands. It reads : "22. (1) The Central Government may, by notification in the Official Gazette and upon such terms and conditions as may be agreed upon between that Government and the Authority, place at the disposal of the Authority all or any developed and the Authority all or any developed and undeveloped and undeveloped lands in Delhi vested in the Union (known and hereinafter referred to as 'nazul lands') for the purpose of development in accordance with the provisions of this Act. (2) No development of any nazul land shall be undertaken or carried out except by, or under the control and supervision of, the Authority after such land has been placed at the disposal of the Authority under sub-section (1 ). (3) After any such nazul land has been developed by, or under the control and supervision of, the Authority, it shall be dealt with by the Authority in accordance with rules made and directions given by the Central Government in this behalf. (4) If any nazul land placed at the disposal of the Authority under sub-section (1) is required at any time thereafter by the Central Govern
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