H.P. Housing & Urban Dev. Authority vs Universal Estate & Anr

3. The Chief Executive Officer invited sealed bids from the general public for allotment of 4 institutional/industrial/school plots at Atal Shiksha Kunj, Kallujhanda (Baddi), Bhatolikalan (Baddi) and Basal at Solan and two commercial sites at Parwanoo, one measuring 475.40 square meters and the other measuring 9947 square meters on leasehold basis for 99 years. The reserve price of both the sites was shown as Rs.9,000/- per square meter. Later on, the same was reduced to Rs.6,000/- per square meter.

4. Respondent No.1 gave bids for both the commercial sites. One, Chunni Lal Chauhan, who was partner of respondent No.1 (averments to this effect have been made in paragraphs 3(i) and 4 of the rejoinder affidavit filed by the appellant to the counter affidavit of the respondents) also gave bid for the site measuring 475.40 square meters. The address disclosed in the bids given by respondent No.1 and Chunni Lal Chauhan was the same (an averment to this effect is contained in paragraphs 11 and 12 of the reply filed by the appellants to the writ petition of respondent No.1). Three other 3 persons gave bids for the site measuring 9947 square meters. The rates quoted by four bidders were as under:

5. All the bids were opened on 8.2.2010 and it was found that bid of Rs.25,299/- per square meter given by Chunni Lal Chauhan for the site measuring 475.40 square meters was highest. However, instead of depositing 10% of the bid money as per the requirement of clause 5(2) of the Himachal Pradesh Housing and Urban Development Authority (Allotment, Sale of Houses, Flats and Plots) Regulations, 2004 (for short, `the Regulations'), Chunni Lal Chauhan withdrew his bid on that very day. As a 4 consequence, participation money of all other bidders including respondent No.1, who had offered to pay Rs.20,335.00 per square meter was refunded. In respect of the second site, the bid of Rs.6,551/- per square meter given by respondent No.1 was found to be highest. The representative of respondent No.1 who had already deposited Rs.60 lacs as participation money, deposited another sum of Rs.8,50,000/- to comply with the requirement of Clause 5(2) of the Regulations. However, before the bid could be accepted by the Chief Executive Officer, the State Government intervened in the matter because it had received information that the second commercial site was being disposed of at a low price and vide letter dated 10.2.2010, the Additional Chief Secretary (Housing) directed the Chief Executive Officer not to accept the bids and also give clarification on the following points:

6. The Chief Executive Officer sent reply dated 17.2.2010 and justified disposal of various sites/plots by inviting sealed bids, but after two days he 5 decided to reject the bid of respondent No.1 on the ground that the rate offered by it was lower than the rate quoted for the other site. This was communicated to respondent No.1 in the form of order dated 24.2.2010.

7. Respondent No.1 challenged rejection of bid by filing a petition under Articles 226 and 227 of the Constitution of India mainly on the ground that the decision of the Chief Executive Officer was not only contrary to the statutory provisions but was totally arbitrary and unjustified. In the affidavit filed by respondent No.2, it was averred that even though the bid of respondent No.1 was highest and it had deposited 10% of the bid amount, the Chief Executive Officer arbitrarily cancelled the bid. In the reply affidavit filed on behalf of the appellant, an objection was taken to the very maintainability of the writ petition on the ground that an effective alternative remedy is available by way of arbitration. On merits, it was pleaded that the highest bid of respondent No.1 was rejected because the rate offered by it were on lower side as compared to other commercial site.

8. The Division Bench of the High Court allowed the writ petition and quashed order dated 24.2.2010 by observing that in view of clause 11 of the Regulations, the lease will be deemed to have taken effect from the date of 6 acceptance of bid and as soon as 10% amount approved by the Presiding Officer was deposited, the bid of respondent No.1 stood accepted. The High Court further observed that after acceptance of 25% or 10% of the bid money, the Chief Executive Officer had no right to reject the bid.

If the answers are in the negative, there should be no interference under Article 226. Cases involving blacklisting or imposition of penal consequences on a tenderer/contractor or distribution of State largesse (allotment of sites/shops, grant of licences, dealerships and franchises) stand on a different footing as they may require a higher degree of fairness in action." Meerut Development Authority v. Association of Management Studies (2009) 6 SCC 171 is a case arising out of the demand of the respondent for allotment of land. Initially, the respondent had given tender for allotment of plot measuring 37,000 square meters at the rate of Rs.500 per square meter. The appellant offered the plot at the rate of Rs.690 per square meter because other parties were prepared to take the land at that price. Later on, the Authority decided to issue open tender-cum-auction notice. Officer's Class Housing Society of the Canal Colony offered to pay Rs.775 per square meter. At that stage, the respondent indicated its willingness to purchase the land at Rs.690 per square meter. The appellant did not accept the respondent's prayer for transfer of land at that rate. Thereupon, the 19 respondent filed writ petition for issue of a direction to the appellant to allot land at the rate of Rs.690 per square meter. By an interim order dated 7.5.2002, the High Court allowed the appellant to allot the land pursuant to advertisement dated 15.4.2002 but made it subject to the decision of the writ petition. Shri Pawan Kumar Agarwal gave an offer of Rs.1365 per square meter. This was accepted by the appellant. But, after some time, the allotment made in favour of Pawan Kumar Agarwal was cancelled. The High Court allowed the writ petition filed by the respondent and dismissed the one filed by Pawan Kumar Agarwal. This Court allowed the appeal and reversed the order of the High Court insofar as it related to the respondent and observed that the decision taken by the appellant was neither arbitrary nor vitiated due to mala fides and the respondent did not have any right to be allotted land. The Bench relied on the principles laid down in several decisions and reiterated the following observations in Kasturi Lal Lakshmi Reddy v. State of J&K (1980) 4 SCC 1:

(3) Every applicant shall deposit the earnest money in the office of the Authority and shall enclose with his application the receipt obtained in token of such deposit. The earnest money shall be refunded to the applicant at any time without interest and after deduction of administrative charges if he requests in writing for the refund. If he is allotted house or plot, the earnest money shall be adjustable against cost."

OR Whether the process adopted or decision made is so arbitrary and irrational that the court can say: "the decision is such that no responsible authority acting reasonably and in accordance with relevant law could have reached";

(ii) Whether public interest is affected.

19. In the result, the appeal is allowed, the impugned order is set aside and the writ petition filed by the respondents is dismissed. The parties are left to bear their own costs. If respondent No.1 has so far not taken the refund of Rs.68,50,000/-, then the appellant shall refund the amount within one month from today.