The Municipality's action in conducting reauction and rejecting the appellant's highest bid was justified as it obtained a significantly higher bid, satisfying the requirement of non-arbitrariness.

U.P. Singh, CJ.

The sole question raised for consideration is whether the offer of the highest bid necessarily conferred any right on the appellant which could be an enforceable right by writ of mandamus. In other words, whether the appellant had acquired any legal right to force the Municipal authorities to grant approval to his highest bid. The reply must be in the negative. Admittedly, the auction in favour of the appellant had not been confirmed by the Municipality and, consequently, no right was created in favour of the appellant on the basis of the highest bid offered by him. The so-called highest bid at the auction having not been confirmed, there was no binding contract between the parties and, consequently, the appellant had no enforceable right to challenge in this appeal.

2. The Kuthuparambu Municipality invited applications from public by issuing tender notification, Ext. P2 for allotment of shop rooms on licence basis. Several persons applied. The appellant, original petitioner in O.P.No. 1380 of 1996, submitted his tender for shop room No. 7 in VI-660 on the ground floor of the shopping complex. For shop No. 7 in VI-660A there were 92 tenders of which the appellant was the highest having offered an amount of Rs. 6,60,000/-. The appellant was expecting that the auction would be confirmed in his favour. He, however, received the proceedings of the Municipality, Ext. P4 stating that since the offer was below Rs. 7 lakhs which the Municipality legitimately expected, the council decided to re-tender the shop room. The said order was challenged by the appellant in O.P. No. 1380/1996 before the learned single Judge. The Original Petition was dismissed against which this appeal has been preferred. It was contended that since the appellant had given the highest offer, there was no justification for the Municipality to re-tender the shop room. Even though the Municipality has the power, they could exercise it only after assigning proper reasons. It was further contended that the proceedings, Ext. P4 communicated to the appellant in not accepting the highest offer did not assign any reason. Reliance was placed on a decision of the Supreme Court in the case of Star Enterprises v. C & I Development Corporation Ltd., 1990 (2) KLT 37, for the proposition that when highest offers are rejected, reasons sufficient to indicate the stand of the appropriate authority should he made available. In the absence of any justifiable reasons, the Municipality had no legal right to conduct reaction.

3. In the counter affidavit the Municipality took up their stand that acceptance of highest offers were subject to confirmation by Council and the Municipal Council was the authority to confirm the auction. Since the highest offer was below Rs. 7 lakhs, which was below the legitimate expectation, the Council decided to conduct reauction. The Municipality invited the appellant as well for negotiations on the belief that he may enhance his offer to Rs.1 lakhs. Since the offer was below Rs. 7 lakhs, the Municipal Council had quite justifiably decided to reauction the room. It was contended that the first respondent - Municipality - had the legal right to do so and there was sufficient reason for conducting reauction because the offers received were below Rs. 7 lakhs.

4. At the very out set it may be pointed out that the reasons for rejecting the offer of the appellant is quite specifically stated in the order Ext. P4 itself. The Municipality had the legitimate expectation to get the maximum amount in a public auction. It was certainly entitled to look for the best deal with regard to its properties. There was no material to show that the Municipality acted in an arbitrary or malafide manner. The admitted position is that the auction had not been confirmed in favour of the appellant. The Municipality quite genuinely and bonafidely found that the offer was below the amount expected by it. Its bonafide could not be doubted in conducting reauctio