-1- Regular Second Appeal No. 14 of 2011 (O & M). IN THE HIGH COURT FOR THE STATES OF PUNJAB & HARYANA AT CHANDIGARH ... Date of Decision: January 17, 2011. Regular Second Appeal No. 14 of 2011 (O & M). M/s. Orchid Infrastructure Developers Pvt. Ltd. (Earlier known as Bhudeep Builders & Exporters Pvt. Ltd) having its registered office at 28, Community Centre, 2nd Floor, Saket, New Delhi, through its Director Ajay Goel .... Appellant VERSUS Haryana Urban Development Authority, Sector 6, Panchkula, through its Chief Administrator and others ... Respondents CORAM : HON'BLE MR.JUSTICE MOHINDER PAL. 1. Whether Reporters of Local papers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? Present: Mr. Arun Palli, Senior Advocate, with Mr. D.S. Patwalia, Advocate, and Mr. Tushar Sharma, Advocate, for the appellant. Mr. Arun Walia, Advocate, for the respondents. -.- MOHINDER PAL, J. The plaintiff is in second appeal aggrieved against the judgment and decree passed by the first Appellate Court, -2- Regular Second Appeal No. 14 of 2011 (O & M). whereby the judgment and decree passed by the trial Court was set aside and the suit filed by the plaintiff for declaration with consequential relief of mandatory and permanent injunction in respect of commercial tower situated in Sector 29, Urban Estate, Gurgaon, measuring 9.527 acres (hereinafter referred to as `the suit property') was dismissed. The Haryana Urban Development Authority (hereinafter referred to as `HUDA') issued advertisements in various Newspapers whereby 21 sites, including the suit property, were sought to be auctioned. The property in suit was proposed to be auctioned on 24.5.2004. The auction was held under the chairmanship of the Administrator, HUDA. The reserved price of the property in suit was approved by the Chief Administrator, HUDA. As per the terms and conditions of the auction, 10 per cent of the bid amount was to be tendered on the spot at the fall of hammer either in cash or by way of Bank Draft in favour of Estate Officer, HUDA, Gurgaon, while another 15 per cent of the money was to be deposited within 30 days from the date of issue of the allotment letter by way of Bank Draft and balance 75 per cent of bid amount was to be paid within 60 days from the date of issuance of allotment letter. Reserved price of the suit property was fixed by the HUDA as Rs.106.65 crores. Various bidders, after completing the necessary formalities, participated in the auction in respect of the suit property. The plaintiff emerged as the highest bidder of suit property at bid amount of Rs.111.75 crores. The offer of the plaintiff was accepted and an amount of -3- Regular Second Appeal No. 14 of 2011 (O & M). Rs.11,17,50,000/- (being 10 per cent of the bid amount) was accepted from the plaintiff. However, the officials of HUDA did not issue formal allotment letter to the plaintiff in spite of the repeated requests. On the contrary, the HUDA issued memorandum bearing No.1126 dated 24.9.2004 to the plaintiff purporting to refund the amount deposited by the plaintiff during the course of auction by stating that bid of the plaintiff had been rejected. According to the plaintiff, the said memo is illegal, null and void as the same was issued by the Administrator, HUDA, Gurgaon, who was not competent to do so as per Regulation 6 of Haryana Urban Development (Disposal of Land and Buildings) Regulations, 1978 (hereinafter referred to as `the Regulations'), which authorizes only the Chief Administrator, HUDA, Panchkula (defendant-respondent No.1) to accept or reject the bid. It has been asserted by the plaintiff that it has been victimized at the behest and instance of rivals in the real estate industry and there was no material available with the defendants on the basis of which they could arrive at a conclusion that the auction of the suit property was made at a lower rate and that the same would fetch a higher price in case of re-auction. The bid of the plaintiff was well above the reserved price of the suit property. The plaintiff, accordingly, filed the instant suit praying that memorandum No.1126 dated 24.9.2004 issued by the Estate Officer, HUDA, Gurgaon (defendant-respondent No.3) rejecting the bid of the plaintiff may be declared null and void, plaintiff may be declared successful bidder of suit property -4- Regular Second Appeal No. 14 of 2011 (O & M). and defendants may be directed to issue formal letter of allotment in respect of the suit property in favour of the plaintiff, it being the highest bidder. It was further prayed that a decree for permanent injunction may also be passed in favour of the plaintiff and defendants may be restrained from re-auctioning the suit property and from creating any third party interest in the same. In the reply filed by the defendants, it was admitted that the plaintiff was the highest bidder in respect of the suit property at a price more than the reserved price. However, it was pleaded that the auction in question was subject to provisions of Haryana Urban Development Authority Act, 1977 (for short `the Act') and the Bye-laws framed thereunder. It was further averred that the bid of the plaintiff was not accepted because the price fetched by auction in question was not in consonance with the price fetched in respect of similar properties in other Urban Estates like Faridabad and Panchkula etc. Further, the price received qua the suit property was also not on the rising trend as per the prevalent market price of similarly situated properties in Gurgaon and was on the lower side as compared to the prices fetched in Panchkula, Faridabad and Panipat. Therefore, the competent authority, after considering the individual reports / comments of the members of the Auction Committee, had decided to reject the bid of the plaintiff and had informed it accordingly vide memo No.1126 dated 24.09.2004 and had also refunded the amount of Rs.11,17,50,000/- vide cheque No.636316 dated 24.09.2004. -5- Regular Second Appeal No. 14 of 2011 (O & M). In the replication filed by the plaintiff, the averments made in the written statement were controverted and those made in the plaint were reiterated. On the pleadings of the parties, the following issues were framed by the trial Court:- “ 1. Whether the memo dated 29.4.2004 bearing No.1126 issued by defendants is illegal, null and void and the plaintiff is successful bidder of commercial tower measuring 9.527 acres situated in Sector 29, Urban Estate, Gurgaon in the auction dated 24.05.2004 ?OPP. 2. If issue No.1 is proved, whether the plaintiff is entitled to decree for mandatory injunction and permanent injunction as prayed for ? OPP. 3. Whether suit is not maintainable in the present form? OPD 4. Whether the suit has not been properly valued for the purpose of Court fee and jurisdiction and if so its effect ?OPD. 5. Relief”. The trial Court, after recording evidence led by both the parties and hearing their learned counsel, decreed the suit -6- Regular Second Appeal No. 14 of 2011 (O & M). of the plaintiff vide judgment and decree dated 14.10.2010. However, the lower appellate Court accepted the appeal filed by the defendants against the judgment and decree passed by the trial Court; thereby dismissing the suit of the plaintiff vide judgment and decree dated 29.11.2010. Hence this Regular Second Appeal by the plaintiff. I have heard Mr. Arun Palli, Senior Advocate, assisted by Mr. D.S. Patwalia, Advocate, and Mr. Tushar Sharma, Advocate, appearing for the plaintiff-appellant and Mr. Arun Walia, Advocate, appearing for the defendants-respondents and have gone through the records of the case. The primary question involved in this case is - whether the Chief Administrator, HUDA, on his own, can delegate the powers to the Administrator, HUDA, without any Notification having been issued in this regard by the State Government, as stipulated under Section 51 (4) of the Act. This question is answered hereinafter in the following manner. The plaintiff in this case examined three witnesses, namely, Amarjeet Ram, Clerk, HUDA (P.W.1), Pankaj Kumar Bajoria (P.W.2), an authorized person of the plaintiff and Parkash Chand Saini (P.W.3), Architect. Amarjeet Ram, Clerk, HUDA (P.W.1) proved Advertisements issued by HUDA regarding auction of various properties including the suit property, letter sent by the plaintiff requesting the defendants to issue formal allotment letter, the impugned memorandum sent by the defendants to the plaintiff rejecting its bid and the cheque vide which the -7- Regular Second Appeal No. 14 of 2011 (O & M). amount deposited by the plaintiff after the auction was refunded. In his cross-examination, Amarjeet Ram (P.W.1) stated that the Administrator, HUDA, had asked the Chief Administrator, HUDA to take final decision on the bid of the plaintiff vide letter dated 2.6.2004 (Exhibit P.16). In reply to the said letter of the Administrator, HUDA, the Chief Administrator, HUDA, in his letter dated 28.7.2004 (Exhibit P.17) stated that the Administrator, HUDA was competent to take decision in the matter and that he (Administrator, HUDA) should take decision at his own level. Letters dated 2.6.2004 (Exhibit P.16) written by the Administrator, HUDA, to the Chief Administrator, HUDA and dated 28.7.2004 (Exhibit P.17) written by the latter to the former in reply to his (former's) letter are, for facility of reference, reproduced below:- Letter Annexure P-16: “Subject: Auction of commercial sites - 5 sites of Shopping Mall, one site of Multiplex and the site of commercial Tower held on 25.4.2004 at Gurgaon. With reference to auction of commercial sites held on 24.5.2004, it is submitted that detail of commercial sites with area, reserve price and highest bid received has been given at Annexure ”A”. Since the question involves prime and big commercial sites and huge amount of revenue is involved and -8- Regular Second Appeal No. 14 of 2011 (O & M). such a big auction has been carried out for the first time, therefore, all the record pertaining to the auction is sent herewith. The auction price received against the aforesaid sites will be a bench mark to your good office to determine the reserve price for such commercial sites in future. Hence, Committee is of the opinion and decided that in view of the above, bid price may be scrutinized and approved at your level.” Annexure P-17: “Subject: Auction of commercial sites - 5 sites of shopping Mall, one site of Multiplex and one site of commercial tower held on 24.5.2004 at Gurgaon. This is with reference to your memo No.9995 dated 2.6.2004 and 11616 dated 28.6.2004 on the subject cited as above. After examining the inquiry report of Deputy Commissioner, Gurgaon and the report submitted by you along with the comments of Estate Officer and Sr.S.O, Gurgaon, the State Government has -9- Regular Second Appeal No. 14 of 2011 (O & M). observed that average price is not relevant for taking a decision regarding confirmation of the bid which should be only the price fetched by an individual property. It has further been observed that a decision as to confirm or otherwise of a bid should be taken by only the competent authority because order is appealable and therefore, these bids should be considered by the competent authority to confirm or otherwise in its own wisdom keeping in view the price fetched by an individual property on merits of the individual case. You being the competent authority in the case are requested to take a prompt follow up action and decide the matter at your level. The headquarter be also apprised of the decision taken by you. The original case file of your office containing therein the original bid sheets is also returned herewith. Please acknowledge receipt.” Pankaj Kumar Bajoria (P.W.2), who appeared on behalf of the plaintiff, deposed about the averments made in the plaint besides proving the Resolution (Exhibit P.1) passed in favour of -10- Regular Second Appeal No. 14 of 2011 (O & M). Ajay Goel, Director of plaintiff-Company by the Board of Directors of the Company authorizing him to institute and pursue the present litigation. He further deposed that once 10 per cent of the bid amount had been accepted at the time of auction, only Chief Administrator, HUDA was competent to take final decision. He denied that the Chief Administrator, HUDA had delegated his power to the Administrator, HUDA in this regard. Parkash Chand Saini (P.W.3), who is an Architect, proved the site plan of the suit property, which is Exhibit P.A. On the other hand, defendants examined only one witness, namely, P.K. Ramanand (D.W.1), who was an Assistant in the office of HUDA, Sector 56, Urban Estate, Gurgaon. He reiterated the averments made in the written statement filed by the defendants. This witness was not present at the time of auction because he admitted in his cross-examination that he came to be posted at Gurgaon only with effect from 8.8.2008. Neither the Administrator, HUDA (defendant-respondent No.2) nor the Estate Officer, HUDA, Gurgaon (defendant-respondent No.3) chose to appear in Court in support of their case. P.K. Ramanand (D.W.1) deposed that the bid in the instant case had been rejected by the Administrator, HUDA and that the Chief Administrator, HUDA had not passed any order rejecting the bid of the plaintiff. He denied, for want of knowledge, whether any Committee had been constituted after the auction in question and whether the said Committee gave any report or not. It may be mentioned here that the defendants did not choose to produce any document in -11- Regular Second Appeal No. 14 of 2011 (O & M). support of their case, as pleaded in the written statement. At this stage, sub-clause (2) of Regulation 6 of the Regulations deserves to be noticed, which reads as under:- “ 10 per cent of the highest bid shall be paid on the spot by the highest bidder in cash or by means of demand draft in the manner specified in sub-regulation (2) of Regulation 5. The successful bidder shall be issued allotment letter in form `CC' or `CII' by registered post and another 15 per cent of the bid accepted shall be payable by the successful bidder, in the manner indicated, within thirty days of the date of allotment letter conveying acceptance of the bid by the Chief Administrator, failing which the 10 per cent amount already deposited shall stand forfeited to the Authority and the successful bidder shall have no claim to the land or building auctioned.” A perusal of the above quoted provisions of sub-clause (2) of Regulation 6 of the Regulations reveals, in certain terms, that only the Chief Administrator, HUDA is the competent authority to take final decision on the bid. It is also relevant to -12- Regular Second Appeal No. 14 of 2011 (O & M). notice the provisions of Section 51 (4) of the Act, which are reproduced as below:- “ (4) The State Government may, by Notification, direct that any power exercisable by the Chief Administrator under this Act may be exercised by such other officer of the Authority as may be mentioned therein, in such cases and subject to such conditions, if any, as may be specified therein.” The defendants did not produce any document on record to show that the State Government had issued any Notification directing that any power exercisable by the Chief Administrator under the Act could be exercised by any other officer of the Authority. In fact, during the course of arguments, learned counsel for the respondents stated that no such Notification delegating the powers of the Chief Administrator, HUDA to any other officer of the said Authority had been issued by the State Government. In this view of the matter, only the Chief Administrator, HUDA was the competent authority to confirm / reject the bid of the appellant. Consideration, acceptance or rejection of the bid of the plaintiff-appellant by any authority other than the Chief Administrator, HUDA was inconsequential and such decision was not a valid decision. As noticed above, the -13- Regular Second Appeal No. 14 of 2011 (O & M). bid of the plaintiff-appellant was the highest bid in the validly conducted auction proceedings and ten per cent of the bid amount was duly accepted from the plaintiff-appellant being the successful bidder. In the absence of any irregularity in the auction process, the plaintiff's bid ought to have been accepted by the Chief Administrator, HUDA and the letter conveying acceptance of the bid ought to have been issued in favour of the plaintiff. In view of the provisions of sub-clause (2) of Regulation 6 of the Regulations only the Chief Administrator, HUDA was the competent authority to take final decision on the bid and, admittedly, no Notification having been issued by the State Government delegating the powers of the Chief Administrator, HUDA to any other Authority or Officer, as envisaged under the provisions of Section 51 (4) of the Act, quoted above, the Chief Administrator, HUDA had no authority to delegate his powers to the Administrator, HUDA. As noticed above, the Administrator, HUDA, had asked the Chief Administrator, HUDA to take final decision on the bid of the plaintiff vide letter dated 2.6.2004 (Exhibit P.16). In reply to the said letter of the Administrator, HUDA, the Chief Administrator, HUDA, in his letter dated 28.7.2004 (Exhibit P.17) stated that the Administrator, HUDA was competent to take decision in the matter and that he (Administrator, HUDA) should take decision at his own level. Such a delegation of authority cannot, by any stretch of reasoning, be said to be a valid delegation of authority in the absence of any Notification having been issued by the State Government under Section 51 -14- Regular Second Appeal No. 14 of 2011 (O & M). (4) of the Act. In this view of the matter, the observation made by the learned District Judge while reversing the judgment and decree passed by the learned trial Judge that the letter dated 28.7.2004 (Annexure P-17) written by the Chief Administrator, HUDA to the Administrator, HUDA in response to his (Administrator HUDA's) letter dated 2.6.2004 (Annexure P-16) “indicates that the Chief Administrator, HUDA, had apparently delegated his above quoted power of acceptance of bid on the Administrator, HUDA, Gurgaon” is against the provisions of sub-clause (2) of Regulation 6 of the Regulations which prescribes that only the Chief Administrator, HUDA was the competent authority to take final decision on the bid and against the provisions of Section 51 (4) of the Act, which clearly provides that the State Government may, by Notification, direct that any power exercisable by the Chief Administrator under this Act may be exercised by such other officer of the Authority as may be mentioned therein, in such cases and subject to such conditions, if any, as may be specified therein (Notification). As noticed above, it has been admitted by the learned counsel appearing for HUDA during the course of arguments that no Notification had been issued by the State Government delegating the powers of the Chief Administrator, HUDA to any other Authority or Officer, as envisaged under the provisions of Section 51 (4) of the Act. A perusal of the letter dated 28.7.2004 (Annexure P-17) written by the Chief Administrator, HUDA to the Administrator, HUDA in response to his (Administrator HUDA's) -15- Regular Second Appeal No. 14 of 2011 (O & M). letter dated 2.6.2004 (Annexure P-16) shows that the former had not used the word “delegated” and he simply wrote to the Administrator, HUDA that “you being the competent authority in the case are requested to take a prompt follow up action and decide the matter at your level”. As has been observed above, neither the Administrator HUDA is the competent authority in view of the provisions of sub-clause (2) of Regulation 6 of the Regulations which prescribes that only the Chief Administrator, HUDA is the competent authority to take final decision on the bid nor could the Chief Administrator, HUDA, on his own, delegate his powers in this regard on the Administrator HUDA because under Section 51 (4) of the Act, such powers could only be delegated by the Government by way of issuance of a Notification. Therefore, no presumption could be raised by the lower appellate Court about the delegation of powers by the Chief Administrator, HUDA to the Administrator, HUDA, as has been done by it while reversing the judgment and decree passed by the trial Court. So far as the issue framed i.e whether the suit has not been properly valued for the purpose of Court fee and jurisdiction and if so its effect, is concerned, it may be mentioned here that it has been rightly held by the trial Court that the instant being a suit for declaration with consequential relief of permanent injunction and not for specific performance of contract, it has been properly valued for the purpose of Court fee and jurisdiction by the plaintiff. Besides, the plaintiff in this suit has -16- Regular Second Appeal No. 14 of 2011 (O & M). challenged the order which has not been passed by the competent authority whereby bid of the plaintiff in respect of the suit property has been rejected and has sought consequential relief of decree for mandatory injunction directing the defendants to issue letter of allotment in its (plaintiff's) favour and is, as such, maintainable in the form it has been filed. For the aforesaid reasons, this appeal succeeds. The same is accordingly accepted by setting aside the judgment and decree passed by the lower appellate Court and restoring the judgment and decree passed by the trial Court. There shall be no order as to costs. ( MOHINDER PAL ) January 17, 2011. JUDGE ak