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Synopsis

The Supreme Court has said that without any concluded contract, the highest bidder has no vested right in the matter of auction except fair treatment and cannot insist on further negotiation.

A bench of Justices Bela M Trivedi and Satish Chandra Sharma set aside the Madhya Pradesh High Court's division bench judgment which held that the 2020 bid made by the respondent Shri Humad Jain Samaj Trust for leasing out land admeasuring 3382 sq meters situated at Indore could not have been cancelled.

"The terms and conditions of NIT (notice inviting tender) particularly condition No 6, empowers the Indore Development Authority to accept or reject any or all bids. In the present case, the bid was rejected for valid and cogent reasons and, therefore, the order passed by the division bench of the High Court of Madhya Pradesh is set aside," the bench said.

In the present case, the court noted the decision to cancel the auction was not unfounded, it was undertaken to remedy the erroneous minimum rate provided in the NIT of July 07, 2020.

"Therefore, the appellants were well within their rights to cancel the auction. More importantly, in the present case, pursuant to the cancellation of the first NIT, a second NIT was issued wherein the respondent No 1 did not participate. Despite this fact, the division bench of the High Court effectively usurped the powers of the auctioning authority and fixed the price at Rs 26,000 per square meter," the bench said.

Referring to the State of Jharkhand and others Vs CWE-SOMA Consortium (2016) and Haryana Urban Development Authority and others Vs Orchid Infrastructure Developers Private Limited (2017), the bench pointed out that while exercising power of judicial review, the court does not sit as an appellate court over the decision of the government but merely reviews the manner in which the decision was made.

In the case, the bench said, the High Court had virtually passed an order sitting in appeal over the decision of the government in absence of any mala fide exercise of power by the IDA.

"This court is of the considered opinion that in the absence of allotment letter and acceptance of highest bid, no relief could have been granted in favour of respondent No 1 as there was no concluded contract in the matter and the decision taken by the Tender Evaluation Committee to generate more revenues could not have been interfered with in the manner and method as has been done by the division bench of the High Court of Madhya Pradesh at Indore Bench. The bidder has no right in the matter of bid except of fair treatment and cannot insist for further negotiation as has been done in the present case," the bench said.

The court directed the IDA to issue a fresh NIT for disposal of the land in question enabling it to generate more revenues in respect of the land in question.

The court allowed the previous bidder to participate in the fresh NIT as and when issued by the IDA.

"It is made clear that the IDA shall not dispose of the land in question except by way of public auction/by issuing NIT in future," the bench ordered.

Case Title: Indore Vikas Praadhikaran (IDA) & Anr Vs Shri Hamud Jain Samaj Trust & Anr