2022 Supreme(Del) 1790

IN THE HIGH COURT OF DELHI AT NEW DELHI
Sachin Datta, J.
York Tech Pvt. Ltd. - Appellant
Versus
Delhi Development Authority - Respondent
W.P.(C) 10124 of 2022 & CM Appl. 29396 of 2022
Decided On : 31-10-2022

The DDA's right to withdraw any plot from auction or reject any bid without assigning any reason is not untrammelled or unrestricted. It must be exercised in a fair and reasonable manner and cannot be arbitrary or dictated by extraneous or irrelevant considerations.

Headnote:

AUCTION - WITHDRAWAL OF PLOT - ARBITRARINESS - CONTRACTUAL OBLIGATIONS - PUBLIC INTEREST - Delhi Development Authority (Disposal of Developed Nazul Lands) Rules, 1981, Rule 30.

Fact of the Case:

Petitioner participated in an e-auction for the sale of industrial plots conducted by Delhi Development Authority (DDA). Petitioner emerged as the highest bidder and paid the required EMD. DDA issued a Letter of Intent (LOI) accepting the petitioner's bid and asked the petitioner to pay the second stage EMD. Petitioner paid the second stage EMD and requested DDA to issue a demand letter for the remaining 75% of the amount. DDA, however, withdrew the plot from the auction and rejected the petitioner's bid due to an error in the property register, which resulted in an incorrect plot size being mentioned in the tender document.

Finding of the Court:

1. The DDA's right to withdraw any plot from auction or reject any bid without assigning any reason is not untrammelled or unrestricted. It must be exercised in a fair and reasonable manner and cannot be arbitrary or dictated by extraneous or irrelevant considerations. 2. The decision to withdraw the plot from auction in the present case was arbitrary and irrational. The DDA was aware of the error in the property register prior to issuing the LOI and accepting the petitioner's bid. The petitioner was willing to accept the plot despite the deficit area and had agreed to pay the entire bid amount. 3. The DDA's reliance on its Office Order dated 24.11.2000 to justify its action is misconceived. The said office order only delegates the power to regularize excess area of the plot within the permissible limit of 15%, not the deficit area. 4. The DDA's action in withdrawing the plot from auction after accepting the petitioner's bid and issuing the LOI is a breach of its contractual obligations.

Issues: 1. Whether the DDA's right to withdraw any plot from auction or reject any bid without assigning any reason is untrammelled or unrestricted? 2. Whether the decision to withdraw the plot from auction in the present case was arbitrary and irrational? 3. Whether the DDA's reliance on its Office Order dated 24.11.2000 to justify its action is misconceived? 4. Whether the DDA's action in withdrawing the plot from auction after accepting the petitioner's bid and issuing the LOI is a breach of its contractual obligations?

Ratio Decidendi: 1. The DDA's right to withdraw any plot from auction or reject any bid without assigning any reason is not untrammelled or unrestricted. It must be exercised in a fair and reasonable manner and cannot be arbitrary or dictated by extraneous or irrelevant considerations. 2. The decision to withdraw the plot from auction in the present case was arbitrary and irrational. The DDA was aware of the error in the property register prior to issuing the LOI and accepting the petitioner's bid. The petitioner was willing to accept the plot despite the deficit area and had agreed to pay the entire bid amount. 3. The DDA's reliance on its Office Order dated 24.11.2000 to justify its action is misconceived. The said office order only delegates the power to regularize excess area of the plot within the permissible limit of 15%, not the deficit area. 4. The DDA's action in withdrawing the plot from auction after accepting the petitioner's bid and issuing the LOI is a breach of its contractual obligations.

Final Decision: The impugned letter dated 01.06.2022, whereby the said plot had been sought to be withdrawn from the e-auction, is quashed. The respondent/DDA is directed to act in terms of Clause 2.4.5 of Chapter I of tender document, which contemplates that after deposit of second stage EMD, the DDA shall issue a demand cum allotment letter to the bidder whose bid has been accepted through registered post calling upon it to remit the balance 75% amount/premium of the bid offered within a period of 90 days of the issuance of demand letter. Once the petitioner pays the said amount, the respondent/DDA may thereafter proceed to hand over the vacant physical possession to the petitioner and to execute the conveyance deed as contemplated in the tender conditions, subject to compliance with all applicable formalities in this regard.