IMPORTANT POINT
In a writ challenging cancellation of an auction held by a public body, court should always keep the larger public interest in mind in order to decide whether it should interfere with decision of the authority.

Headnote:Constitution of India - Article 226 - Rajasthan Housing Board Act - Section 60 - Auction of 50 Commercial plots by appellant - Respondent was the highest bidder @ Rs. 5750/- per sq. meter - After getting report of bungling in the auction, State Govt. passed an order disapproving the auction - Writ filed by respondent allowed by High Court - Appeal State Govt. was fully empowered in terms of Section 60 of Housing Board Act to issue direction whereby it disapproved auction - Auction notice contained a condition that Chairman of Housing Board shall have final authority regarding acceptance of bid - Rights of an auction bidder - Respondent acquired no right to claim that auction be concluded in his favour - Scope of exercise of writ jurisdiction where challenge was cancellation of an auction held by public body - Court should keep larger public interest in mind - Material to show that in past, plots in the area had fetched a price of Rs. 10,000/- per sq. meter & it indicated that auction had not been conducted in fair manner - Impugned order of High Court was liable to be set aside.
       Held : We have given our careful consideration to the submissions made by the learned counsel for the parties. As mentioned earlier, after getting report of the bungling done in the auction, the State Government had passed an order on 22.2.2002 staying all further proceedings in connection with the auction. On 20.3.2002 disciplinary proceedings had been initiated against the concerned officers and they were placed under suspension and a further direction was issued that in future no auction shall be held through any agency including Satish Auction House, which had conducted the auction in question. A specific order was passed on 3.4.2002 disapproving the auction held on 20.2.2002 and it was mentioned in the order that the same was being done in exercise of powers conferred by Section 60 of the Rajasthan Housing Board Act.(Para 5)
       The auction notice dated 3.2.2002 contained a condition to the effect that the Chairman of the Housing Board shall have the final authority regarding acceptance of the bid. The second auction notice issued on 19.2.2002 mentioned that the conditions of the auction will be same as mentioned in the earlier auction notice. In view of this condition in auction notice it is obvious that a person who had made the highest bid in the auction did not acquire any right to have the auction concluded in his favour until the Chairman of the Housing Board had passed an order to that effect. Of course the Chairman of the Housing Board could not exercise his power in an arbitrary manner but so long as an order regarding final acceptance of the bid had not been passed by the Chairman, the highest bidder acquired no vested right to have the auction concluded in his favour and the auction proceedings could always be cancelled.(Para 6)
       The sale of plots by the Rajasthan Housing Board by means of an auction is essentially a commercial transaction. Even if some defect was found in the ultimate decision resulting in cancellation of the auction, the court should exercise its discretionary power under Article 226 of the Constitution with great care and caution and should exercise it only in furtherance of public interest. The court should always keep the larger public interest in mind in order to decide whether it should interfere with the decision of the authority. In the present case there was enough material before the State Government to show that in the past plots in the area had fetched a price of Rs.10,000/- per square meter and the highest bid made by the respondent in the present case was nearly half, i.e., Rs.5750/- per square meter, which clearly indicated that the auction had not been conducted in a fair manner. If in such a case the State Government took a decision to disapprove the auction held and issued a direction for holding of a fresh auction, obviously the said decision was taken in larger public interest. In these circumstances there was absolutely no occasion for the High Court to entertain the writ petition and issue any direction in favour of the contesting respondent. The orders passed by the learned single Judge on 4.8.2004 and the order passed by the Division Bench of the High Court on 23.9.2004 are clearly erroneous in law and are liable to be set aside.(Para 8)

JUDGMENT

G.P. Mathur, J. - Leave granted.

2. This appeal, by special leave, has been filed challenging the judgments and orders dated 4.8.2004 of a learned single Judge of Rajasthan High Court by which the writ petition filed by respondent No. 1 M/s. G.S. Investments was disposed of with certain directions and also the order dated 23.9.2004 passed by the Division Bench by which the special appeal preferred by the appellants against the said order was dismissed at the admission stage. The appellants have also challenged the order dated 4.4.2005 which was passed in the contempt petition initiated by the respondent No. 1.

3. The appellant No. 1 Rajasthan Housing Board published an auction notice on 3.2.2002 for auction of 50 commercial plots in the Mansarovar Scheme, which was followed by another auction notice dated 19.2.2002. The auction was conducted on 20.2.2002 in which M/s. G.S. Investments (respondent No. 1) made the highest bid @ Rs.5750/- per square meter. A news item was published in some newspaper that large scale bungling had been done in the auction due to which the price fetched for the plots in question was much below the market rate. The State Government issued a direction on 22.2.2002 summoning the records and staying all further proceeding relating to auction of the plots. Thereafter, an order was passed by the State Government on 20.3.2002 directing that the officers of the Rajasthan Housing Board, who were responsible for conducting the auction, be placed under suspension and in future no auction shall be conducted through the agency of Satish Auction House which had conducted the auction on 20.2.2002 or through any other auction agency. After a detailed consideration of the matter, including the report of the Financial Commissioner which showed that in the past plots in the said area had fetched a price of Rs.10,000/- per square meter, the State Government passed an order on 3.4.2002 disapproving the auction held on 20.2.2002 and a further direction was issued for holding a fresh auction. On 23.4.2002 the appellant No. 1 sent a communication to respondent No. 1 that the auction held on 20.2.2002 had been cancelled and it may produce the original receipt regarding deposit of the amount so that the same may be refunded to it. Feeling aggrieved by the aforesaid communication, the respondent No. 1 M/s. G.S. Investments filed a writ petition in the High Court which was admitted by a learned single Judge on 29.5.2002 and an interim order was passed that in the meanwhile no order prejudicial to the writ petitioner shall be passed. The writ petition was contested by the appellant on various grounds by filing a counter affidavit. The learned single Judge by a short order dated 4.8.2004 disposed of the writ petition and the relevant portion of the order is being reproduced below:

"I have carefully examined the orders impugned. It appears that no opportunity of hearing was given to the petitioner by the respondents whereas the petitioner is willing to deposit the balance amount according to the terms and conditions. Consequently, the impugned orders dated 23.4.2002 and 2.5.2002 are hereby quashed and set aside. The petitioner is directed to file fresh representation before the respondents. The respondents are directed to consider the representation of the petitioner and shall issue the demand note of balance amount after filing of representation by the petitioner within a period of one month.

With the aforesaid observation, the writ petition stands disposed of."

The appellant preferred a special appeal against the order of the learned single Judge before the Division Bench of the High Court which dismissed the same at the admission stage on 23.4.2004 observing as under:-

"Considering the fact that the direction was given on the facts that there was open auction wherein the writ petitioner was highest bidder and he had deposited initial amount. There is no allegation of the appellant that auction in question was in collusion

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2006 Supreme(SC) 1026

IMPORTANT POINTIn a writ challenging cancellation of an auction held by a public body, court should always keep the larger public interest in mind in order to decide whether it should interfere with decision of the authority.

Cases Referred (2)

IMPORTANT POINT
In a writ challenging cancellation of an auction held by a public body, court should always keep the larger public interest in mind in order to decide whether it should interfere with decision of the authority.