State of Punjab & Others v. Mehar Din (Civil Appeal No. 5861 of 2009) (Supreme Court)
FACTS– The appellants in this case were the custodian of a sub-urban property which was to be disposed as per the procedure provided under Chapter III of Punjab Package Deal Properties (Disposal Rules) 1976 being the custodian they initiated the process of public auction and issued a public notice for the same. The Tehsildar Sales, Malerkolta conducted the auction and only three bidders participated of which Mehar Din was highest bidder and his bid was provisionally accepted. Pursuant to provisional acceptance he deposited one-fifth of the bid amount. As the acceptance was provisional the confirmation was to be made by Sales Commissioner as per the prescribed procedure. Further, the competent authority (Sales Commissioner) was of the view that Public Property has not been put to proper publicity and the said bid was inadequate pursuant to said views the bid of Mehar Din was cancelled and a direction for re-auction was issued. This decision was challenged before Chief Sales Commissioner who confirmed the order of Sales Commissioner. The order of Chief Sales Commissioner was challenged before the Divisional Commissioner who set aside the order of cancellation. Aggrieved by the said decision this order was challenged before Financial Commissioner Revenue who set aside the orders of Divisional Commissioner and ordered re-auction. Subsequently, this order was challenged in High Court where the court stated that competent authority shall confirm the sale and complete the formalities. Hence the case was presented before Supreme Court.
RULE-8(1)(c) OF Chapter III Punjab Package Deal Properties (Disposal Rules) 1976 – As per Rule 8(1)(c), auction notice has to be given wide publicity and one copy of the notice is to be affixed at the conspicuous place in the locality where the property is situated and as per Rule 8(1)(h), if the bid money exceeds Rs.500/-, the bidder shall be required to pay an amount equal to 1/5th of the bid amount as earnest money and acceptance of the highest bid in respect of which the deposit has been made shall be provisional, subject to confirmation by the Sales Commissioner
RATIO–
It was clear from the above-mentioned rule even if the public auction has been completed to highest bidder no rights accrue till confirmation letter is issued to him as the acceptance is provisional subject to confirmation by competent authority.
Scope of judicial review in matters of tenders/public auction have been explored in catena of cases. It has been followed that Superior Courts should not interfere in matters of tenders unless substantial public interest was involved in the transaction or when there is arbitrariness, irrationality, unreasonableness, malafide and biases in tender process. But at the same time Court must exercise power of judicial review with lot of restraint, particularly in contractual and commercial matters. The Court relied on following Judgements-
- Tata Cellular v. Union of India (1994) 6 SCC 651
- Jagdish Mandal v. Sate of Orissa and Others (2007) 14 SCC 517
- Silppi Construction Contractors v. Union of India (2020) 16 SCC 489
DECISION– This being a settled law that the highest bidder has no vested right to have the auction concluded in his favour and in the given circumstances under the limited scope of judicial review under Article 226 of the Constitution, the High Court was not supposed to interfere in the opinion of the executive who were dealing on the subject, unless the decision is totally arbitrary or unreasonable, and it was not open for the High Court to sit like a Court of Appeal AND THE DECISION OF High Court was set aside.
LEARNING–
While challenging a non-confirmation of tender of the highest bidder the ground(s) (with demonstrable admitted facts) available to the highest bidder are:
- decision is totally arbitrary
- unreasonable
- irrationality or
malafide and biases