Haryana Urban Dev. Authority & Ors vs Orchid Infrastructure Developers ...

3. It is further averred in the plaint that the auction held on 24.5.2004 was presided over by the Administrator, Haryana Urban Development Authority (for short ‘HUDA’). Reserve price had been approved by Chief Administrator, HUDA. Though the reserved price for the other sites were approved by the Administrator. In the plaint it was further averred that 27 persons deposited the security amount of Rs.50 lakhs for bidding and various bidders actively participated in the bids. Ultimately the bid of the plaintiff amounting to Rs.111.75 crores being highest was accepted. Petitioner deposited 10% amount by various drafts on the fall of hammer. Formal letter of allotment was not issued inspite of efforts made by the plaintiff. Officials of HUDA were dragging their feet over the issue without any rhyme or reason.

7. The trial court – Civil Judge, Junior Division, Gurgaon decreed the suit vide judgment and decree dated 14.10.2010. Three witnesses were examined by the plaintiff and on behalf of defendant HUDA. Shri P.K.Ramanand, Assistant was examined. The trial court held that Administrator, HUDA was not competent to reject the bid of the plaintiff. As per Regulation 6 of Haryana Urban Development (Disposal of Land and Buildings) Regulations, 1978 (hereinafter referred to as ‘the Regulations of 1978’), the authority to accept or reject a bid was vested with Chief Administrator, HUDA and delegation of power to Chief Administrator can only be made by the State Government vide notification as per section 51(4) of the Act. No notification has been placed on record to prove that the power of Chief Administrator has been delegated to Administrator, HUDA. The report on the basis of which bid had been rejected was not placed on record. The trial court held that the plaintiff is entitled to mandatory injunction for issuance of formal letter of acceptance of bid. The trial court further held that the suit is maintainable. The payment of court fee by the plaintiff was adequate as the suit was not for specific performance of contract. The trial court further directed the defendants to issue formal letter of allotment on completion of requisite formalities within two months.

9. On the second appeal being preferred on 2.1.2011 in the High Court as against the judgment and decree, the same has been allowed on 17.1.2011 within 15 days of it being filed. The High Court has restored the judgment and decree of the trial court on the ground that there is no delegation of power to the Administrator. The rejection by the Administrator was inconsequential and was not a valid decision in the absence of irregularity in auction the bid ought to have been accepted by the Chief Administrator, HUDA and letter conveying acceptance ought to have been issued in favour of the plaintiff. In view of Regulation 6(2) the Chief Administrator was competent authority to take a final decision on the bid. No notification has been issued by the State Government under section 51(4) of the Act. The suit has been held to be maintainable. It has been rightly valued and adequate court fee has been paid.

11. It was urged by Shri Shyam Divan, learned senior counsel appearing on behalf of the appellant that Administrator was Presiding Officer, thus, had the authority to accept or to refuse the bid not only as per terms and condition No.4 of the tender notice but also as per the delegation made by HUDA on 13.9.1989 under section 51 of the Act. Since the letter of allotment has not been issued, there was no concluded contract between the parties. Thus suit was not maintainable in the absence of concluded contract for its enforcement. No allotment order was issued by the Chief Administrator as per Regulation 6(2). Chief Administrator was only required to issue allotment letter. Once bid has been rejected, there was no occasion for the court to issue mandatory injunction. The rejection of the bid was fully justified as prices fetched of 7 items were not adequate, and no right accrued on the basis of submitting the highest bid.

23. In view of the aforesaid fact-situation, it is apparent that the Administrator had the power to reject a bid, not only being the Presiding Officer as per terms and condition N0.4 of auction but otherwise also he had the power, as discussed above. Thus, the decision of the High Court in setting aside the auction on the aforesaid ground cannot be said to be legally sustainable.