D. M. DHARMADHIKARI, J.

( 1 ) THE petitioners are all traders in timber. They were the highest successful bidders at the public auction held on 25-6-91 of lots of timber detailed in the impugned notice (Annexure-A ). The auction conditions are contained in the auction notice (Annexure-A ). The petitioners had made initial deposits of earnest money of 10% of reserve price as per auction condition No. 1. They signed the bid-sheet as successful bidders in terms of auction condition No. 9 and had deposited 25% of the bid amount, as required by condition No. 2 (a) (i ).

( 2 ) THE contention of the petitioners is that the sales of various timber lots, for which they had offered the highest bid, were complete. Hence the respondents who are the authorities in the Forest Department of the State of M. P. , had no right to cancel the auction sales vide impugned communication dated 25-7-91 (Annexure-C) of the respondent - D. F. O. directing refund of the prices paid by them and for taking steps to reauction the timber lots.

( 3 ) THE respondents supported their actions stating that the D. F. O. respondent No. 2, who was conducting the auction sale, had later on discovered that the petitioners had formed a "ring". The "ring" may be explained as a sort of combination or mutual understanding between the bidders to refrain from bidding against each other. Thus, according to the respondents, since there were no bid offered on competitive basis, the D. F. O. reported the matter vide its letter dated 4-7-91 (Annexure R-1) to the Conservator of Forests. The Conservator of Forests on his part reported the matter vide letter dated 4-7-91 (Annexure R-3) to the Chief Conservator of Forests, who took a decision on 16-7-91 to cancel the entire auction sale of teak lots. This resulted in issuance of the impugned communication dated 25-7-91 (Annexure C) by the D. F. O. intimating annulment of all auction sales of teak lots and refund of prices already paid to the petitioners.

( 4 ) LEARNED counsel appearing for the petitioners contended that the D. F. O. being admittedly the authority competent to accept the bid, the contract of sale in respect of each lot was completed on fall of hammer and announcement of the closure of the auction, followed by signing of bid-sheet by each of the successful bidder. It was not open thereafter to the D. F. O. to seek advise of the superior officers and cancel such completed sales. It was submitted that the auction condition only permitted the D. F. O. to reject even the highest bid on the alleged ground of formation of a "ring" or collusion between bidders. But that stage was before the fall of hammer or announcement of the closure of auction on signing of bid-sheet. Reliance is placed on a Division Bench decision of this Court in Darshan Singh v. State of M. P. , M. P. No. 2881, decided on 30-3-81. Where the same auction conditions came for interpretation by this Court.

( 5 ) LEARNED Additional Advocate General appearing for the respondents frankly conceded that if on interpretation of the terms of auction, it is held that the sales were complete, the respondents' action cannot be supported. The contention on behalf of the respondents, however, is that since the D. F. O. had not signed the bid-sheets, there was no acceptance of the highest bids, offered by each of the petitioners for the lots knocked down in their favour and there were no complete sales. The D. F. O. was, therefore, competent to reject the bid holding that the bidders had formed a "ring" to deprive the State of fair competitive price of its forest produce. Learned counsel appearing for the respondents read the contents of all bid-sheets, which are common in nature and contended that against each of the lot, there was only one sole bidder, which shows a clear conspiracy of bidders with a view to depress the prices. The submission on behalf of the respondents is that such a collusive bids could be rejected before its acceptance by the D. F. O.

( 6 ) THE f

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