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1999 Supreme(Mad) 683
High Court of Judicature at Madras
THE HONOURABLE MR. JUSTICE P.D. DINAKARAN
Mrs. Farida Shaukath
Versus
Unit Trust of India, Madras-1 and another
Rev.Appln. No. 8 of 1999
Decided On : 26-07-1999
K. Chandru, S.C. for Ms. Aparna Nandakumar, Advocate for Review Applicant. Mr.R. Krishnamurthy, Senior Counsel for Mr. Rangarajan for Respondent No.1. Mr.T.V. Ramanujam, SC for Mr. T.V. Krishnamachari for Respondent No.2.
A public authority's decision not to accept the highest bid in a sale of property may be justified on the Wednesbury principle of reasonableness, even if it defeats the legitimate expectation of a bidder.
Headnote:
CONTRACTUAL DISPUTE - ARTICLE 226 - ARTICLE 14 - JUDICIAL REVIEW - LEGITIMATE EXPECTATION - SALE OF PROPERTY - PUBLIC AUTHORITY - RIGHT TO REJECT OFFERS - CHANGE IN POLICY - WEDNESBURY PRINCIPLE - REVIEW APPLICATION - GROUNDS FOR REVIEW - ORDER 47, RULE 1, C.P.C. - CIVIL SUIT - REMEDY - WRIT PETITION - DISMISSAL - REVIEW APPLICATION - DISMISSAL - NO PATENT ERROR - NO GROUNDS FOR REVIEW - NO PREJUDICE TO REMEDY IN CIVIL SUIT.
Fact of the Case:
The review applicant, who was the owner of a property adjacent to the property owned by the 1st respondent, sought a writ of mandamus to direct the 1st respondent to sell the property to her. The 1st respondent had invited sealed offers for the sale of the property, and the review applicant and the 2nd respondent had made offers. However, the sale could not be finalized due to negotiations between the 1st respondent and the 2nd respondent. The review applicant contended that she was not invited for negotiations and that her legitimate expectation of having her bid confirmed was violated.
Finding of the Court:
The court held that the 1st respondent had the right to reject any offer, including the highest offer, without assigning any reason, as per the terms of the sale notice. The court also held that the 1st respondent's decision not to accept the bid offered by the review applicant or the 2nd respondent was justified on the Wednesbury principle of reasonableness, as it was aimed at getting a higher bid. The court further held that the review application did not disclose any patent error in the order dismissing the writ petition and that there were no grounds for review under Order 47, Rule 1, C.P.C. read with Article 226 of the Constitution of India.
Issues: 1. Whether the 1st respondent's decision not to accept the bid offered by the review applicant or the 2nd respondent was arbitrary and unreasonable. 2. Whether the review applicant's legitimate expectation of having her bid confirmed was violated. 3. Whether there was any patent error in the order dismissing the writ petition. 4. Whether there were any grounds for review under Order 47, Rule 1, C.P.C. read with Article 226 of the Constitution of India.
Ratio Decidendi: 1. The court held that the 1st respondent's decision not to accept the bid offered by the review applicant or the 2nd respondent was not arbitrary and unreasonable, as it was justified on the Wednesbury principle of reasonableness. The court also held that the 1st respondent had the right to reject any offer, including the highest offer, without assigning any reason, as per the terms of the sale notice. 2. The court held that the review applicant's legitimate expectation of having her bid confirmed was not violated, as the 1st respondent's decision not to accept her bid was justified on the Wednesbury principle of reasonableness. 3. The court held that there was no patent error in the order dismissing the writ petition. 4. The court held that there were no grounds for review under Order 47, Rule 1, C.P.C. read with Article 226 of the Constitution of India.
Final Decision: The review application was dismissed without prejudice to the review applicant's right to pursue her remedy in the civil suit.
1. The above review application is directed against the order dated 211. 1998, made in W.P. No. 20884 of 1992, whereby the said writ petition was dismissed in the following terms: "The petitioner seeks for issue of a Writ of Mandamus to direct the respondent to sell the property at 75, Poes Garden, Madras-86 to the petitioner.
"It appears that the petitioner is the owner of Door No. 76 Poes Garden, Madras and the house at Door No. 75, Poes Garden, Madras- 86, is admittedly, owned by the first respondent, who invited sealed offers for disposing of the suit property, to which, the petitioner and the second respondent, made their offers. In spite of some negotiations between the first respondent and the second respondent in disposing the said property, the sale could not be finalised by the first respondent. Not satisfied with the terms of negotiations or the result thereon, the petitioner has approached this Court for the above relief. I am of considered opinion that the petitioner is not entitled to invoke Article 226 of the Constitution of India for the relief as prayed for in the writ petition, as the same is very much contractual in nature. Hence the writ petition is dismissed."
2. Mr.K. Chandru, learned senior counsel for the review applicant contends that even though the review applicant/writ petitioner could not unfortunately be represented on 21. 1998. the writ petition was disposed of only on the basis of the submission that even though the writ petitioner was invited for negotiations, but the terms of the negotiations are not satisfactory. The contention of Mr. K. Chandru, learned senior counsel for the review applicant, that the review applicant was not invited for negotiations persuaded me to admit the above review application.
3. Placing reliance on the decision of the Apex Court in Food Corporation of Indias case, 1993 (1) SCC 71, Mr.K. Chandru, learned counsel for the review applicant contends that even in contractual transactions, the State and the instrumentalities of the State are expected to act fairly and reasonably; that any act of arbitrariness by the State or instrumentalities of the State in such contractual dealings would attract Article 14 of the Constitution of India; and that the aggrieved persons, staking their claim on legitimate expectation, can question the same by way of judicial review. Hence any decision of the 1st respondent herein, which is a public authority, affecting the legitimate expectation of the review applicant that his bid would be confirmed, is subject to judicial review under Art. 226 of the Constitution of India.
4. Per contra, Mr. R. Krishnamurthy, learned senior counsel for the 1st respondent, inviting my attention to the averments in para 6 of the affidavit filed in support of the above writ petition that in the month of October, 1992, on the call from the 1st respondent requesting her to come over to the office of the 1st respondent for personal discussion, the review applicant went to the office of the 1st respondent and met Shri S.S. Hegde and S. Gopukumar and she was informed by them that her offer was the highest valid offer and during the course of discussion, the review applicant was requested to quote a figure higher than that quoted by her by increasing the same and, however, the review applicant refused to quote a higher figure, contends that in view of such averment by the review applicant herself in the affidavit filed in support of the writ petition, it is not correct to contend that the review applicant was not called for the negotiations. Mr. R. Krishnamurthy, learned senior counsel further contends that unless the review applicant points out any error, which is self-evident and does not require any process of reasoning, apparent on the face of the order dated 211. 1998 made in W.P. No. 20884 of 1992, the same cannot be reviewed. Mr. R. Krishnamurthy, learned senior counsel for the 1st respondent, placing reliance on the decision of the Apex Cou
