State or authority, which can be held to be State within meaning of Article 12 of Constitution, is not bound to accept highest bid, reiterates HC

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Read Order- Mayank Dua v. Haryana Shehari Vikas Pradhikaran and others

LE staff

Chandigarh, September 20,2021: The Punjab and Haryana High Court has recently opined that in a case of disposal of public property, the question whether the right of a person who has put in the highest bid in the public auction is to be preferred over the right of the public in ensuring that valuable public assets are not disposed of except for a fair price, public interest ought to prevail.

Herein, the petitioner had submitted a bid online for SCO Site No.93, Sector 56, Gurugram in pursuance to an auction process that had been initiated by the Haryana Shehri Vikas Pradhikaran (respondent).  

This writ petition had been filed raising a prayer that such bid for the site in question be accepted, being the highest bid. Further grievance raised in the petition was that no specific order had been passed informing the petitioner as regards the fate of his bid, the same having been accepted or rejected. A challenge was also laid to Clause No.8 and 16 of the E-Auction Policy/Brochure by the respondent on the assertion that the afore-noticed clauses are arbitrary and unconstitutional.

The Division Bench of Justice Tejinder Singh Dhindsa and Justice Vivek Puri observed that a conjoint reading of certain terms and conditions of E-auction policy would clarify that the base price of a property being put to an auction would be the current Collector rate of that area of the relevant financial year. The base price would not necessarily be the reserve price of the property. The reserve price is to be determined by a committee constituted for such purpose. Furthermore, reserve price was to remain confidential and was the relevant parameter for evaluating the highest bid.

While stating that the counsel for the petitioner had not been able to point out any provision under the E-auction policy which would obligate the respondent to accept the highest bid, the Division Bench clarified that there would be no such right vested with the petitioner. To the contrary the highest bidder only has a right of consideration and for such bid to be evaluated against the reserve price determined by the Committee. There was no material to conclude that any contract came into force between the petitioner and the respondent.

Referring to various judgments of the Apex Court, the Bench stated that the consistent view taken is that State or the authority which can be held to be State within the meaning of Article 12 of the Constitution is not bound to accept the highest bid.

The Court went on to add that the contention raised by counsel as regards a deemed acceptance of the highest bid and on the basis thereof a concluded contract having come into force between the petitioner and the respondent in the light of Clause 28 of the E-auction policy,was not well-founded.

According to the Bench, clause 28 and the time frame of 7 days stipulated in the E-auction policy couldnot be permitted to be invoked to propound a theory of a concluded contract in the realm of disposal of public property by the State or State instrumentality in an E-auction process. Holding otherwise would run contrary to public interest, noted the Bench.

Also, in the absence of any document/material reflecting acceptance of the bid submitted by the petitioner at the hands of the competent authority, no concluded contract had come into being.

Dismissing the petition and keeping the question as regards the validity of Clause 8 and 16 of the E-auction policy open, the Court opined that the petitioner was aware of all the terms and conditions and having accepted the same had submitted his bid. Having participated in the auction process and thereafter having come to know that he was unsuccessful, it would not lie in his mouth to turn around and contend that the terms and conditions are void and illegal. The challenge to Clause 8 and 16 of the e-auction policy at the hands of the petitioner after his bid having not been accepted could only be termed as an afterthought, added the Bench.

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