HARYANA URBAN DEVELOPMENT AUTHORITY & ORS. versus ORCHID INFRASTRUCTURE DEVELOPERS P. LTD.
[2017] 1 S.C.R. 847, Supreme Court of India, 2017
Outcome: Appeal(s) allowed (Granted)
Segment: Ratio
[2017] l S.C.R. 847 
HARYANA URBAN DEVELOPMENT AUTHORITY & ORS. 
A 
v. 
ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
(Civil Appeal No. I 016 of2017) 
JANUARY 27, 2017 
[ARUN MISHRA AND AMITAVA ROY, JJ.] 
Auction - Tender - Rejection uf highest bid - Bid re/wing to 
co1nn1ttr1.:ial rorl'er on over nine ut.:rt1S uf lund in Gurgaon - Rejection 
of highest bid of Rs. I I I. 75 crores of a firm for the commercial tower 
by the Development Authority - Denial of formal letter of allotment 
pertaining to the property in favour of the firm - Correctness of -
Held: There was no right acquired and no vested right accrued in 
favuur of the firm merely because his bid amount was highest and 
had deposited I 0% of 1he bid amuunl - Allo1ment feller was never 
been issued to the petitioner in view of non-acceptance of the bid -
Thus, 1here was no concluded contr&ct - Jn view thereof suit for 
mandatory injunction by the firm wholly misconceived - There had 
been delegation of power by HUDA to the Administrator with respect 
to the power to accept the auction bids for commercial/residential/ 
industrial sites - The firm suppressed the said order of HUDA -
Administrator had the power to reject the bid as per the delegation 
- He had rejected the bids on sufficient ground, duly considering 
the materials on record, thus, the rejection of the bid was proper -
Huge property was saved from being plundered - Hwyana Urban 
Development Authority Act, 1977 - ss. 15(2), 51(4) - Haryana 
Urban Development
(Disposal of Land and Buildings) Regulations, 
1978. 
Allowing the appeal, the Court 
HELD: 1.1 Merely by declaration that rejection of the bid 
by the Administrator was ilkgai, the plaintiff could not have 
become entitled to consequential relief of issuance of allotment 
letter. The suit, was not maintainable for relief sought in view of 
the faci that there was no concluded contract in the absence of 
allotment letter being issued to the plaintiff, which was a sine qu11 
11011 for filing the civil suit. [Para 13] [859-E-H] 
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1.2 The highest bidder has no vested right to have the 
auction concluded in his favour. The Government or its authority 
could validly retain power to accept or reject the highest bid in 
the interest of public revenue. There was no right acquired and 
no vested right accrued in favour of the plaintiff merely 'because 
his bid amount was highest and had deposited 10% of the bid 
amount. As per Regulation 6(2) of the Haryana Urban 
Development (Disposal of Land and Buildings) Regulations 1978, 
allotment letter has to be issued on acceptance of the bid by the 
Chief Administrator and within 30 days thereof, the successful 
bidder has to deposit another 15% of the bid amount. In the instant 
case, allotment letter has never been issued to the petitioner as 
per Regulation 6(2) in view of non-acceptance of the bid. Thus 
there was no concluded contract. [Para 14] [860-B-C] 
1.3 It is evident that in the absence of a concluded 
contract, i.e. in the absence of allotment letter and acceptance of 
highest bid, the suit by the plaintiff was wholly misconceived. 
The suit could not have been desfred for mandatory injunction. 
It amounted to enforcing of contract in the absence thereof. Even 
if non-acceptance of the bid was by an incompetent authority, the 
court had no power to accept the bid and to direct the allotment 
letter to be iss'ued. Merely on granting the declaration which 
was sought that rejection was
illegal and arbitrary and by 
incompetent authority, further relief of mandatory injunction could 
not have been granted, on the basis of findings recorded, to issue 
the allotment letter, as it would then become necessary to forward 
the bid to competent authority-Chief Administrator-for its· 
acceptance, if at an it was required. [Para 16] [862-G-H; 863-A) 
Jitender Singh v. Haryana Urban Development 
Auth?rity High Court Of Punjab & Hmyana in CWP 
No. 12753/2010; Uttar Pradesh Avas Evam Vikas 
Parishad & Ors. v. Om Prakash Sharma [2013) 6 
SCR 199 : (2013) 5 SCC 182 - relied on. 
2.1 It is apparent that there had been delegation of power 
by HUDA to the Administrator with respect to the power to accept 
the auction bids for commercial/residential/industrial sites 
provided the highest bid is more than the reserve. price and
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
minimum of three bids have been received. The Administrator 
has also the power if ~he site is not sold in 3 attempts, to revise 
the price downwards up to a maximum of 10% of the reserve 
price. Thus, plaintiff has not come to the court with clean hands 
and has suppressed for the reasons best known to it, the said 
order of HUDA by which delegation of power has been made. 
The decision to confirm or otherwise of a bid, should be taken 
only by a ·competent authority whose order is appealable. 
Therefore, bids should be considered by the competent authority 
and as the Administrator is the competent authority to take the 
follow-up action, the Headquarters be apprised of the decision 
taken. Thereafter, the Administrator had taken the decision not 
to confirm the seven bids of seven properties. It is apparent from 
the order dated 21.9.2004 that the Administrator after examining 
the relevant aspects and the report, had decided to reject the. 
seven bids mentioned therein. [Para 18] [864-H; 865-A-B, E-F) 
2.2 The Administrator also mentioned in his letter that 
there was delegation of power to him. The letter from the Chief 
Administrator also indicated that the Administrator was armed 
with the power. That apart, the terms and condition No.4 of the 
tender notice subject to which auction was held is seen. 
Admittedly, the Presiding Officer was the Administrator, HUDA. 
Thus, as per the terms of the auction also,
the.Administrator was 
having the power to accept or reject the bid. That the bid was 
more than the reserve price and there were more than 3 bidders. 
Thus, the Administrator ,had the power to reject the bid as per 
the delegation made to him on 13.9.1989. [Para 19, 20) [866-H; 
867-A-B) 
2.3 As delegation had been made by HUDA under section 
51(1), it was incumbent upon the plaintiff to question it and assail 
the same. However, the plaintiff had feigned ignorance .as to 
delegation on its part which does nilt inspire confidence as the 
line of arguments advanced on its behalf that no delegation was 
there u/s. 51(4) was clearly grounded upon the fact that the 
delegation made under section 51(1) was in fact to the knowledge 
of the plaintiff that is why the said argument had been advanced 
and unfortunately the counsel for HUDA also conceded that there 
was no delegation of power made by the State Government under 
section 51( 4). This was done by overlooking the delegation dated 
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13.9.1989, the factum whereof has not been controverted by the 
counsel appearing on behalf of the respondent in any manner 
whatsoever. In the absence of having questioned delegation made 
by RUDA under section 51(1), plaintiff could not have succeeded 
in the suit. [Para 21] [867-D-FJ 
2.4 The plaintiff did not question the delegation of power 
before the courts below in any manner whatsoever. In the absence 
of challenge to legality of delegation order dated 13.9.1989, the 
plaintiff being guilty of suppressio veri, it is not entitled to urge 
the said submission so as to invalidate the statutory delegation 
of power made by RUDA u/s. 51(1 ). In view of the said 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 No.4 of auction but otherwise also he had the power. 
Thus, the decision of the High Court in setting aside the auction 
on the said ground cannot be said to be legally sustainable. [Paras 
22, 23] (867-G-H; 868-A-BJ 
3.1 The order passed by the Administrator is apparent 
from the communication of the Administrator made to Estate 
Officer, RUDA. It is apparent from the rejection order that the 
reports submitted were considered and decision was taken not 
to accept the bids with respect to auction of seven properties. It 
was not a case of singular rejection of the bid made by the plaintiff
alone. Six other bids were also not accepted. The reason for 
rejection has been made clear in the written statement filed by 
RUDA. Thus, it is apparent that the report and recommendations 
of the Auction Committee consisting of 5 members, was not to 
accept the bids of big commercial sites as the prices fetched were 
on lower side which was examined by the Government at the 
Headquarters level. Considering the auction trends and also 
taking into consideration the higher prices fetched at other cities, 
it was decided to reject the seven bids. Thus, there was due 
application of mind. The rejection of the bid by the Administrator 
was absolutely proper and justified and was beyond the pale of 
judicial scrutiny. The Administrator had the right to reject the 
bids and he had rejected it on sufficient ground, duly considering 
the materials on record. In the interest of the public, revenue of 
the State and in the interest of RUDA and the huge property was
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LfD. 
saved from being plundered. [Paras 24, 25 and 26] [868-E-F; 869-
E-F] 
3.2 With respect to reserve price also, there was a hitch 
to fix and approve it right from the word go. It was a case of 
auction of big commercial tower having a huge area of9.527 acres. 
Only the reserve price of the same was forwarded for fixation to 
the Chief Administrator, whereas the reserve prices of other 
properties were fixed by the Administrator. When the bids were 
received, the Administrator considering the huge stakes involved, 
forwarded the matter to the Chief Administrator. However, the 
Chief Administrator washed off his hands and did not decide it 
and sent the matter back to the Administrator, clearly indicating 
that the Administrator was delegated with the power to decide 
the bids. Thus, under compelling circumstances and duly 
considering the reports, the Administrator had taken the decision 
to reject the bids not only,of the plaintiff but also six others. For 
the first time in the history of State of Haryana, such big properties 
were put to hammer ori the prices indicated. The hitch in fixing 
the reserve price also indicates that the reserve price was not 
determined in a fair manner. Not only the plaintiff but HUDA also 
did not place the delegation of power on record of the courts 
below. None of the officials of HUDA had been examined. Only 
an Assistant-a junior ranking person had been examined who was 
not posted there
when the auction was held and came only in 
2008. As the property was a commercial tower with huge 
commercial complex, the first appellate court was right in 
dismissing the suit. [Para 33] (874-H; 875-A-D] 
3.3 Plaintiff came to the court for mandatory injunction, 
for issuance of allotment letter without payment of court fee also. 
It was incumbent upon the plaintiff to pay the ad valorem court 
fee as prevailing and the valuation of the suit should not have 
been less than the bid amount of Rs.111.75 crores. The plaintiff 
is directed to pay the ad valorem court fee not only before the 
trial court but also before the High Court. The plaintiff is directed 
to deposit the court fee within the stipulated period. [Para 34] 
[875-E-F] 
3.4 The judgment and decree passed by the High Court is 
set aside and that of the first appellate court is restored. In the 
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A . facts and circumstances of the case, costs of Rs.5 lakhs is imposed 
on the respondent to be deposited in the Advocates' Welfare. 
Fund and in the Supreme Court Employees' Welfare Fund within 
the stipulated period. [Para 35] [875-G] 
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Uttar Pradesh Avas Evam Vikas Parishad & Ors. v. 
Om Prakash Sharma [2013] 6 SCR 199 : (2013) 5 
sec 182 - relied on. 
Mis. Star Enterprises & Ors. v. City and Industrial 
Development Corporation of Maharashtra Ltd. & Ors. 
[1990] 2 SCR 826 : (1990) 3 SCC 280; Mohinder 
Singh Gill & Anr. v. The Chief Election Commissioner, 
New Delhi & Ors. AIR 1978 SC 851 : [1978] 2 SCR 
272; Kalu Ram Ahuja & Anr. v. Delhi Development 
Authority & Anr. (2008) 10 SCC 696; State of Uttar 
Pradesh & Ors. v. Vijay Sahadur Singh & Ors. (1982) 
2 SCC 365; Laxmikant & Ors. v. Satyawan & Ors. 
[1996] 3 SCR 532 : (1996) 4 SCC 208; Meerut 
Development Authority v. Association of Management 
Studies & Anr. [2009] 6 SCR 663 : (2009) 6 SCC 171; 
Mis. Star Enterprises & Ors. v. City and Industrial 
Development Corporation of Maharashtra Ltd. & Ors. 
[1990] 2 SCR 826 : (1990) 3 SCC 280; Kalu Ram 
Ahuju & Anr. v. Delhi Development Authority & Anr. 
(2008) 10 SCC 696; Mohinder Singh Gill & Anr. v. 
The Chief Election Commissioner, New Delhi & Ors. 
[1978] 2 SCR 272 : (1978) 1 SCC 405 - referred to. 
Case Law Reference 
[1990] 2 SCR 826 
referred to 
Para 12 
[1978] 2 SCR 272 
referred to 
Para 12 
(2008)
10 sec 696 
referred to 
Para 12 
[2013] 6 SCR 199 
relied on 
Para 15 
(1982) 2 sec 365 
referred to 
Para 27 
[1996] 3 SCR 532 
referred to 
Para 28 
[2009] 6 SCR 663 
referred to 
Para 29
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
853 
[1~90] 2 SCR 826 
(2008) 10 sec 696 
[19781 2 SCR 272 
referred to 
referred to 
referred to 
Para 30 
Para 31 
Para 32 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1016 
A 
of2017. 
B 
From the Judgment and Order dated 17.01.2011 of the High Court 
of Punjab & Haryana at Chandigarh in R. S. A. No. 14 of 2011. 
Anish Kumar Gupta, Anil Grover, AA Gs, Shyam Divan, Sr. Adv, 
Uday Banerjee, Sanjay Kumar Visen, Chandra Shekhar Suman, 
R. K. Rajwanshi, Ms. Deepshikha Bharati, Ms. Nupur Choudhary, 
C 
H. S. Sachdeva, Advs. for the Appellants. 
Dr. Abhishek Manu Singhvi, Raju Ramachandran, Sr. Advs., Raja 
Chatterjee, Ms. Runa Bhuyan, Ms. Maithili Vijay KumarThallam, Piyush, 
Satish Kumar, Ad vs. for the Respondent. 
The Judgment of the Court was delivered by 
ARUN. MISHRA, J. I. Leave granted. 
2. The appeal arises out of judgment and order dated 17. I .2011 
passed by the High Court of Punjab & Haryana at Chandigarh thereby 
setting aside the judgment and decree of District Judge dated 29.11.20 I 0 
and restoring the judgment and decree of Civil Judge passed on· 
14.10.2010. The plaintiff Bhudeep Builders and Exporters Pvt. Ltd. were 
later renamed as Mis. Orchid Infrastructure. Developers P. Ltd. The 
. plaintiff-respondent filed a suit for declaration with consequential relief 
as against the appellants with regard to rejection of bid relating to the 
commercial tower situated in Sector 29, Urban Estate, Gurgaon, in area
admeasuring 9.527 acres. The bid submitted by the plaintiff was the 
highest of Rs. ll, 17,50,000/-. The reserve price was Rs. I 06.65 crores. 
The main terms and conditions of the auction were as under: 
(i) I 0% of the bid amount to be tendered on the spot at fall of 
hammer. 
(ii) 15% of the bid money to be deposited within 30 days from 
the date of issuance of allotment letter. 
(iii) 75% of the amount to be paid within 60 days from issuance 
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[2017] l S.C.R 
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of allotment letter as one time interest free payment or with interest ;n 
the manner prescribed. 
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(iv) The Presiding Officer (Administrative Officer) reserved the 
right to withdraw any property from the auction or reject any bid without 
assigning any reason. 
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 I 0% 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 HU DA were dragging 
their feet over the issue without any rhyme or reason. 
Plaintiff ultimately received memo dated 24.9.2004 purporting 
to refund I 0% amount Rs. I I, 17,50,000 deposited by the plaintiff at the 
time of auction held on 24.5 .2004 on the ground that the bid had not been 
accepted. 
4. Plaintiff questioned the rejection of the bid on the ground of its 
being illegal, unlawful, mala fide,
arbitrary. discriminatory and violative 
of principles of natural justice. The bid for the commercial tower was 
adequate and above the reserved price. The plaintiff relied upon 
Regulation 6 regarding issuance ofallotment letter by Chief Administrator. 
The rejection of the bid is without any rhyme or reason. The order is 
non-speaking. There was no material available with the defendant to 
conclude that auction of property in question was made at a lower rate 
or that the same would fetch a higher price in the event of re-auction. 
The Chief Administrator alone was competent to decide about the bid 
and no delegation of power to Administrator has been shown to the 
plaintiff. Mere baseless apprehension harboured by the defendant that 
the auction could fetch a higher rate, could not be said to be in public 
interest. If such action is permitted, auction process shall be a never 
ending exercise. The plaintiff valued the suit for declaration and 
consequential reliefof mandatory injunction at Rs.400 and paid the court
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
rARUN MISHRA, J.l 
fee of Rs.55. Plaintiff has prayed for a declaration that memo dated 
24.9.2004 rejecting the bid of the plaintiff to be void ab initio, non est and 
illegal, and that plaintiff is successful bidder of commercial tower 
measuring 9.527 acres situated in Sector 29, Urban Estate, Gurgaon. 
Plaintiff further prayed for mandatory i11junction directing the defendants 
to issue formal letter of allotment pertaining to the suit property in favour 
of the plaintiff and to complete requisite formalities ofallotment including 
delivery of possession and sanction of site plan. Plaint.iff further prayed 
for an injunction restraining defendants from re-auctioning the suit property 
and from creating any third party interest of any nature in respect of the 
suit property. 
5. The defendant HUDA in its written statement raised 
preliminary objection that the civil court has no jurisdiction to entertain 
the present suit in view of section 15(2) ofHaryana Urban Development 
Authority Act, 1977 (hereinafter referred to as 'the Act'). It was also 
submitted that the suit was not maintainable in the present form, that the 
plaintiff has no cause of action to file the suit and has not come to court 
with clean hands, suit is liable to be rejected under Order 7 Rule 11 of 
the C.P.C., plaintiff is liable to pay ad. valorem court fee on the sale 
consideration ofRs.1 l l .75 crores of the commercial site in question, the
suit.is barred under section 41 (h) of the Specific Relief Act. The plaintiff 
has not availed the remedy of arbitration as per the mies, regulations 
and bye-laws of HUDA. There is no concluded contract between the 
parties. Pl.aintiffhas accepted the terms and conditions of the auction.in 
which it was mentioned that the competent authority is entitled to.accept 
or reject the bid without assigning any reason. The auction was presided. 
over by the Administrator, HUDA. After auction in question was held 
complaints were received regarding intimidation and threatening of 
bidders. The bid was not accepted for the reason that the price ofurban 
estates at other places like Faridabad, Panipat, Panchkula etc. for similar 
kind of property was higher. The bid in question was not acceptable as 
per prevalent market price of the similar property in Gurgaon. The 
Presiding Officer i.e. Administrator is fully competentto refuse or accept 
the bid. Competent authority after going through the individual reports/ 
comments/opinion of the members of the Auction Committee comprising 
of Estate Officer, HUDA, Gurgaon, Senior Accounts Officer, District 
Town Planner and District Revenue Officer (representative of the Deputy 
Commissioner, Gurgaon) as members under the Chairmanship of 
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'Administrator, HUDA. Administrator thoroughly examined the 
observations and recommendations of the members of the Auction 
Committee regarding not to accept the bid prices of big commercial 
sites since these prices being apparently on the lower side which was 
also examined by the Government at the Headquarters level. The records 
of the entire auction proceedings including opinion of the Estate Officer, 
Gurga~n, other members of the Auction Committee, Deputy 
Commissioner and also after studying the reserve price and auction price 
trends, a decision was taken by the competent authority not to accept 
the bid prices vide their written report. 
It was further contended by HUDA that Administrator is the 
competent authority. Power to accept bid has been delegated to him by 
the competent authority. 
6. In view of the written statement the plaintiff filed a rejoinder. 
It was denied that the civil court has no jurisdiction and bid price was not 
inadequate. It also denied the delegation of power to Administrator, 
HUDA, Gurgaon. 
7. The trial court-Civil Judge, Junior Division, Gurgaon decreed 
the suit vide judgment and decree dated 14. l 0.2010. Three witnesses 
were examined by the plaintiff and on behalfof 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, HU DA. 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 fwther 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 ofrequisite 
formalities within two months.
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
fARUN MISHRA, J.l 
8. On first appeal being preferred in the court of District Judge, 
Gurgaon the same was allowed vide judgment and decree dated 
29.11.2010. The suit was dismissed by the first appellate court. The first 
appellate court has opined that the power of Chief Administrator has 
been delegated to Administrator, HUDA. As is apparent from the letter 
written by Chief Administrator to the Administrator. No legal and vested 
right accrued in favour of the plaintiff by submission of the highest bid 
and 10% of the amount on fall of hammer. Bid has not been finally 
accepted. The plaintiff ought to have paid ad-valorem court fee. The 
first appellate court also observed that no responsible officer ofHUDA 
has entered the witness box and only a junior ranking Assistant has been 
examined who was not present when the auction was held. He was 
posted at Gurgaon on 2.10.2008. The first appellate court has observed 
as under: 
"However, the defendants have not produced any document 
whatsoever to prove the above averment and nor has any 
responsible officer, including defendants No.2 and 3, cared to 
step in the witness box to substantiate the above referred plea 
and instead only one witness, and that too an Assistant named 
P.K. Ramanan from the office of HUDA. Gurgaon who is a 
junior ranking official was examined as OW I who was admittedly 
not even present at the time of the impugned auction because he 
has admitted
during his cross-examination that he came to be 
posted at Gurgaon only w.e.f. 8.8.2008. Non-appearance of 
any responsible official of HUDA thus indicates some sort of 
unholy news between certain quarters for which reason a copy 
of this Judgment is ordered to be forwarded to the Chief Secretary 
to the Government of Haryana for getting conducted an enquiry 
as to why such course of conduct was adopted despite huge 
stakes running into several crores. Was it intended to benefit 
the plaintiff by default. The Chief Secretary to Government of 
Haryana be requested to acknowledge receipt of the copy of 
the judgment." 
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 I 7.1.2011 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 
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Administrator was inconsequential and was not a valid decision in the 
absence ofirregularity in auction the bid ought to have been accepted by 
the Chief Administrator, HUDA and letter conveying acceptance ougk 
to have been issued in favourofthe plaintiff. In view of Regulation 6(2) 
the Chief Administrator was compete.nt authority to take a final decision 
on the bid. No notification has been issued by the State Government 
under se.:tion 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. 
· 
10. The judgment and decree of High Court has been questioned 
by filing the appeal in this Court. An application has also been filed on 
behalf of the appellant to take additional documents on record. HUDA 
for the firsttime has filed notification dated 13 .9.1989 issued by it under 
section 51 of the Act, delegating the functions in favour of various officers 
indicating that the power has been delegated to the Administrator to 
acce'pt the auction bids for comm.ercial/residential/industrial sites. Apart 
from that, a judgment of Division Bench of the High Court of Punjab & 
Haryana in CWP No.1275312010-Jitender Singh v. Haryana Urban 
Development Authority has been placed on record in which the impugned 
decision of the High Court in the present appeal has been held to be not 
laying down a good law and has been overruled. 
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. 
12. Shri Abhishek Manu Singhvi and Shri Raju Ramchandran, 
' 
learned senior counsel appearing for the respondent strenuously 
contended that the Administrator had forwarded the bid to the Chief
~ 
l{l)DA v. ORCHIQ INFRASTRUCTURE DEVELOPERS P. LTD. 
859 
; 
[ARUN MISHRA, J.] 
.; • 
Administrator for acceptance. However, the Chief Administrator wrote 
A 
back to the Administrator that the Administrator should decide about the 
bid as power was delegated to him. As per Regulation 6(2) the Chief 
Administrator was required to decide about the acceptance or rejection 
of the bid. The rejection of bid is not only arbitrary, unreasoned and no 
report has bee? placed on record by. HUDA as to why bid ha~ been 
B 
rejected. The bid was above reserve pnce and there were several bidders. 
There being no better bid as such the bid of the plaintiff ought to have 
been accepted. Rejection of the bid without any reason cannot be said 
to be valid for which reliance has been placed on Mis. Star Enterprises 
& Ors. v. City· and Industrial Development Corporation of 
Maharashtra Ltd. & Ors. (1990) 3 SCC 280, Mohinder Singh Gill & 
C 
Anr. v. The Chief Election Commissioner. New Delhi & Ors. AIR 
1978 SC 851, and Kalu Ram Ahuja & Anr. v. Delhi Development 
Authority &Anr. (2008) I 0 sec 696. In the absence of any notification 
being issued by the State Government under section 51(4) of the Act, 
the power of the Chief Administrator could not have been delegated to 
D 
the Administrator. Thus rejection of the bid by the Administrator was 
unauthorised. The delegation of power by HU.DA was made under 
·.section 51(1) whereas delegation was required under section 51(4). 
In re :
Maintainability of suit in absence of concluded contract: 
13. Firstly, we examine the question whether there being no 
E 
concluded contract in the absence of acceptance of bid and issuance of 
allotment letter, the suit could be said to be maintainable forthe declaratory 
relief and mandatory injunction sought by the plaintiff. The plaintiff has 
prayed for a declaration that rejection of the bid was illegal. Merely by 
that, plaintiff could not have become entitled for consequential mandatory 
injunction for issuance of formal letter of allotment. Court while exercising 
F 
iu.dicial review could not have accepted the bid. The bid had never been 
accepted by concerned authorities. It was not a case of cancellation of 
bid after being accepted. Thus even assuming as per plaintiff's case 
that the Administrator was not equipped with the power and the Chief 
· Administrator had the power to accept or refuse the bid, there had been 
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no decision by the Chief Administrator. Thus, merely by declaration that 
rejection of the bid by the Administrator was illegal, the plaintiff could 
not have become entitled to consequential relief of issuance of allotment 
letter. Thus the suit, in the form it was filed, was notmaintainable for 
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relief sought in view of the fact that there was no concluded contract in 
the absence of allotment letter being issued to the plaintiff, which was a 
sine qua non for filing the civil suit. 
14. It is a settled law that the highest bidder has no vested right 
to have the auction concluded in his favour. The Government or its 
authority could validly retain power to accept or reject the highest bid in 
the interest of public revenue. We are of the considered opinion that 
there was no right acquired and no vested right accrued in favour of the 
plaintiff merely because his bid amount was highest and had deposited 
I 0% of the bid amount. As per Regulation 6(2) of the Regulations of 
1978, allotment letter has to be issued on acceptance of the bid by the 
Chief Administrator and within 30 days thereof, the successful bidder 
has to deposit another 15% of the bid amount. In the instant case allotment 
letter has never been issued to the petitioner as per Regulation 6(2) in 
view of non-acceptance of the bid. Thus there was no concluded 
contract. Regulation 6 of the Regulations of 1978 is extracted hereunder: 
"6. Sale of lease of land or building by auction.- (I) 
In the case of sale or lease by auction, the price/premium to be 
charged shall be such reserve price/premium as may be 
determined taking into consideration the various factors as 
indicated in sub-regulation (I) of Regulation 4 or any higher
amount determined as a result of bidding in open auction. 
(2) I 0 per cent of the highest bid shall be paid on the spot 
by the highest bidder in cash or by means of a 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 'C-11' 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 I 0 per cant amount already deposited shall stand 
forfeited to the Authority and the successful bidder shall have no 
claim to the land or building auctioned. 
(3) The payment of balance of the price/premium, rate of 
interest chargeable and the recovery of interest shall be in the 
same manner as provided in sub-regulations (6) and (7) of 
Regulation 5.
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
861 
fARUN MISHRA, J.l 
(4) The general terms and conditions of the auction shall be 
A 
such as may be framed by tbe Chief Administrator from time to 
tome and announced to the public before auction on the spot.'' 
15. We are fortified in our view by a decision of this Court in 
Uttar Pradesh Avas Evam Vikas Parishad & Ors. v. Om Prakash 
Sharma (2013) 5 SCC 182, the questions arose for its consideration 
that: whether there is any ves!cd right upon the plaintiff/bidder until the 
bid is accepted by the competent authority in relation to the property in 
question? Merely because the plaintiff is the highest bidder by depositing 
20% of the bid amount without there being approval of the same by the 
competent authority and it amounts to a concluded contract in relation to 
the plot in question; and whether the plaintiff could have maintained the 
suit in the absence of a concluded contract? Considering the aforesaid 
questions, this Court has discussed the matter thus: 
• 
"30. In support of the said proposition, the learned Senior Counsel 
for the defendant, Mr Rakesh Dwivedi has also placed reliance 
upon another decision of this Court in State of UP v. Vijay 
Bahadur Singh (1982) 2 SCC 365. The learned Senior Counsel 
has rightly placed reliance upon the judgment of this Cow1 in 
Rajasthan Housing Board case (2007) 1 SCC 477 which reads 
as under: (SCC p. 483, para 9) 
"9. This being the settled legal position, the
respondent 
acquired no right to claim that the auction be concluded in its 
favour and the High Court clearly erred in entertaining the 
writ petition and in not only issuing a direction for 
consideration of the representation but also issuing a further 
direction to the appellant to issue a demand note of the 
balance amount. The direction relating to issuance of the 
demand note for balance amount virtually amounted to 
confirmation of the auction in favour of the respondent which 
was not the function of the High Court." 
x x x x x In State of Orissa v. Harinarayan Jaiswa/ ( 1972) 2 
SCC 36 case, relevant paragraph of which reads as under: (SCC 
pp. 44-45, para 13) 
"13. xx xx x There is no concluded contract till the bid is 
accepted. Before there was a concluded contract, it was 
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open to the bidders to withdraw their bids (see Union of 
India v. Bhim SenWalaiti Ram (1969) 3 SCC 146). By 
merely giving bids, the bidders had not acquired any 
vested rights . ... " (emphasis supplied) 
xxxxx 
31. In view of the law laid down by this Court in the aforesaid 
decisions, the learned Senior Counsel Mr Rakesh Dwivedi has 
rightly placed reliance upon the same in support of the case of 
the first defendant, which would clearly go to show that the 
plaintiff had not acquired any right and no vested right has 
been accrued in his favour in respect of the plot in question 
merely because his bid amount is highest and he had 
deposited 20% of the highest bid amount along with the 
earnest money with the Board. Jn the absence of acceptance 
of bid offered by the plaintiff to the competent authority of 
the first defendant, there is no concluded contract in respect 
· of tfle plot' in question, which is evident from letters dated 26-
5-1977 and 8-7-1977 wherein the third defendant had rejected 
the bid amount deposited by the plaintiff and the same was 
refunded to him by way of demand draft, which is an undisputed 
fact and it is also not his case that the then Assistant Housing 
Commissioner who has conducted the public auction had 
accepted the bid of the plaintiff." 
(emphasis supplied). 
This Court has held that in the absence of a concluded contract 
which takes place by issuance of allotment
letter, suit could not be said 
to be maintainable as there is no vested right in the plaintiff without 
approval of the bid by the competent authority. Thus, in the wake of 
aforesaid decision, in the absence of a concluded contract, the suit could 
not have been decreed for mandatory injunction.1! amounted to enforcing 
of contract in the absence thereof. 
16. In the light of the aforesaid discussion, it is evident that in the 
absence of a concluded contract, i.e. in the absence of allotment letter 
and acceptance of highest bid, the suit by the plaintiff was wholly 
misconceived. Even if non-acceptance of the bid was by an incompetent 
authority, the court had no power to accept the bid and to direct the 
allotment letter to be issued.'Merely on granting the declaration which 
was sought that rejection was illegal and arbitrary and by incompetent
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
863 
rARUN MISHRA, J.l 
authority, further relief of mandatory injunction could not have been 
A 
granted, on the basis of findings recorded, to issue the allotment letter, as 
it would then become necessary to forward the bid to competent authority 
- Chief Administrator - for its acceptance, if at all it was required. 
In re : Competency of Administrator to accept/reject bid : 
17. The plaintiff has come to the Court with the case that there 
was no delegation of power to the Administrator. No doubt about it that 
the delegation .of power made by HUDA under section 51 of the Act 
has not been placed on record before the courts below. It has been filed 
for the first time in this Court. However, HUDA has placed on record 
delegation of power to the Administrator by it as is apparent from the 
order dated 13.9.1989 issued by the Chief Administrator of HUDA in 
which it is mentioned that in exercise of power conferred under section 
51 of the Act, for the sake of efficiency, speedy development and with a 
view to decentralize the powers/functions the delegation atAnnexure A 
were made by HUDA in its meeting held on 3.1.1989 in favourofvarious 
officials/officers of HUD A. The relevant portion of delegation made in 
order dated 13.9.1989 along with Index is extracted hereunder: 
"HARYANA URBAN DEVEL.OPMENT AUTHORITY 
MANIMAJRA (UT), CHANDIGARH 
ORDER. 
In exercise powers conferred under section 51 of the Haryana 
Urban
Development Authority Act, 1977, in the interest of 
efficiency, speedy development and with a view of decentralise 
the powers/functions, the delegations at Annexure 'A' (Pages 1-
16) are hereby made in favour of various Officers of HUDA by 
the Haryana Urban Development Authority in its meeting held 
on 03.01.1989. 
Dated, Manimajra, the 
13'h Sep. 1989. 
R.K. SINGH 
CHIEF ADMINISTRATOR 
HARYANA URBAN DEV. AUTHORITY" 
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"INDEX 
DELEGATION OF FUNCTIONS/POWERS OF AUTHORITY 
AS INCORPORATED IN HARYANA URBAN 
DEVELOPMENT AUTHORITY ACT, 1977. 
"Delegation of Administrative and Financial powers made 
under Section 51 of HUDA Act, 1977 on behalf of the Haryana 
Urban Development Authority:-
Sr. 
Sr.No. of 
Nature of 
Authority to 
Extent of power 
No. 
item in 
power: 
who delegated 
delegated 
Annexure 
II of the 
proposal 
I 
2 
3 
4 
5 
XX.'( 
xxx 
xxx 
xxx 
60 
70 
Powers to 
Chief 
Full Powers. 
accept the 
Administrator 
auction 
bids 
for 
commercial 
Administrator 
Full 
powers 
I residential 
provided 
the 
I industrial 
highest 
bid 
IS 
sites 
1nore 
than 
the 
reserve price and 
11111u1nu1n 
of 
3 
bids have 
been 
received. 
If a 
site is 
not sold 
even after three 
attempts at a price 
higher 
than the 
reserve 
price the 
administrators 
may 
revise 
the 
pnce downwards 
upto maximmn of 
I 0% of the reserve 
price. 
18. It is apparent that there had been delegation of power by 
HUDA to the Administrator with respect to the power to accept the
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
[ARUN MISHRA, J.] 
auction bids for commercial/residential/industrial sites provided the highest 
bid is more than the reserve price and minimum of three bids have been 
received. The Administrator has also the power if the site is not sold in 3 
attempts, to revise the price downwards up to a maximum of I 0% of the 
reserve price. Thus plaintiff has not come to the court with clean hands 
and has suppressed for the reasons best known to it, the aforesaid order 
of HUDA by which delegation of power has been made. The fact that 
there was delegation of power is also crystal clear from the 
communication exchanged between the Administrator and the Chief 
Administrator. As the Administrator was reluctant to accept the bid, as 
was the case in the case of fixation of reserve price also, the Administrator 
considering the huge property, said that the auction involved prime and 
big commercial sites, huge revenue is involved and such a big auction 
has been carried out for the first time in the State of Haryana, therefore, 
all the record pertaining to the auction was sentto the Chief Administrator 
for scrutiny and approval at the level of Chief Administrator, HUDA, 
Gurgaon. However, the Chief Administrator also washed off his hands. 
He wrote back to the Administrator on 28.7 .2004. The decision to confirm 
or otherwise of a bid, should be taken only by a competent authority 
whose order is appealable. Therefore, bids should be
considered by the 
competent authority and as the Administrator is the competent authority 
to take the follow-up action, the Headquarters be apprised of the decision 
taken. Thereafter, the Administrator had taken the decision not to confirm 
the seven bids of seven prop~rties. It is apparent from the order dated 
21.9.2004 that the Administrator after examining the relevant aspects 
and the report, had decided to reject the seven bids mentioned therein. 
The said letter of the Administrator is extracted hereunder: 
"From 
To 
Administrator 
HUDA, Gurgaon 
The Estate Officer 
HUDA, Gurgacn 
Memo no. 709 
Dated: 21.9.04 
Sub: 
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. 
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Ref: 
Your letter No. 11592 dated 28.6.2004 and the comments 
submitted by your office in the case files. 
After examining the relevant aspects and reports submitted by 
your office as well as keeping in view the contents of the letter No. 
26559 dated 28.7.2004 received from Chief Administrator, HUDA, 
8 
Panchkula, this office exercising the powers delegated by the Authority 
has decided to reject the following bids of Commercial Sites for which 
auction was held on 24.5.2004:-
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Sr. 
Sector Particulars 
Sr.No. 
Area 
Reserve 
Highest 
lernarks 
of site 
in Sq. 
Price (in 
Bid (In 
Mtr. 
rupees) 
rupees) 
I. 
29 
:::on11nercial :::01nmercial 9.527 
106.65 Cr. 111.IOCr. Highest 
Tower 
rrower 
Acre 
bid 
ejected 
2. 
29 
Shopping 
~djoining 
16500 ?8.78 Cr. 
30.15Cr. 
-do-
Mall 
!Leisure 
~alley 
IP ark 
3. 
29 
-do-
C-5A 
~865.60 10.12. Cr. 
10.61 Cr. 
-do-
4. 
29 
-do-
C-9 
7820.80 14.84 Cr. 
15.46Cr. 
-do-
Corner 
5. 
29 
-do-
C-10 
820.80 14.84 Cr. 
15.51 Cr. 
-do-
Comer 
6. 
5-56 
-do-
--
850.00 o.72 Cr. 
~. 15 Cr. 
-do-
7. 
29 
Multiplex 
--
700.00 fl.69 Cr. 
5.07 Cr. 
-do-
Bid sheets for the above mentioned sites as received from your 
office are returned herewith. 
Sci/-
Administrator, 
HUDA, Gurgaon" 
19. The Administrator had also mentioned in his letter that there 
was delegation of power to him. The letter from the Chief Administrator 
also indicated that the Administrator was armed with the power.
That 
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apart, when we see the terms and condition No.4 of the tender notice,
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
867 
fARUN MISHRA, J.l 
subject to which auction was held, provided thus: 
A 
"4. The presiding officer reserves the right. to' withdraw any 
property from the auction or reject any bid without assigning any 
reason." 
20. Admittedly, the Presiding Officer was the Administrator, 
HUDA. Thus, as per the terms of the auction also, the Administrator 
was having the power to accept or reject the bid. That the bid was more 
than the reserve price and there were more than 3 bidders, is not disputed. 
Thus, in ouropinion, the Administrator had the power to reject the bid as 
per the delegation made to him on 13.9.J 989. 
. 
. 
21. The learned counsel representing the plaintiff-respondent 
vehemently, .contended that there was no delegation of power under 
section 51(4) and it was the State Government only who could have 
delegated the power of the Chief Administrator as found by the High 
Court. As delegation had been made by HUDA under section 5 I (I) of 
the Act of 1977; it was incumbent upon the plaintiff to question it and 
assail the same. However, the plaintiff had feigned ignorance as to 
delegation on its part which does not inspire confidence as the line of 
arguments advanced on its behalf that no delegation was there under 
section 5 I ( 4) was clearly grounded upon the fact that the delegation 
made under section 51(1) was in fact to the knowledge of the plaintiff 
that is why the aforesaid argument had been advanced and
unfortunately 
learned counsel for HUDA also conceded that there was no delegation 
of power made by the State Government under section 5 I (4). This was 
done by overlooking the delegation dated I 3.9.1989, the factum whereof 
has not been controverted by the learned counsel appearing on behalf of 
the respondent in any manner whatsoever. In the absence of having 
questioned delegation made by HUDA under section 51(1) of the Act, 
plaintiff could not have succeeded in the suit. 
22: The plaintiffhas not questioned the delegation of power before 
the courts below in any manner whatsoever. We decline to examine the 
submission raised by learned counsel for the plaintiff in this Court that 
there is no delegation of power under section 5 I ( 4) and the power of the 
Chief Administrator could have been delegated only by the State 
Government not by HUDA under section 5 I (1) as per its order dated 
I 3 .9. I 989. In the absence of challenge to legality of delegation order 
dated 13.9.1989, and the plaintiff being guilty of suppressio veri, it is not 
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entitled to urge the aforesaid submission so as to invalidate the statutory 
delegation of power made by I-JUDA under section 51 ( 1 ). 
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 
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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. 
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In re : Legality of rejection of bid : 
24. Coming to the question whether the Administrator had rejected 
the bid in an illegal or arbitrary manner, the learned counsel for the plaintiff 
has submitted that the bid had been rejected by an unreasoned order, as 
such it was an arbitrary rejection. Learned counsel has drawn our 
attention to the communication dated 24.9.2004 which has been 
communicated by the Estate Officer to the plaintiff in which it has been 
mentioned that the bid has not been accepted, hence earnest money had 
been refunded. However. this communication of the decision reflects 
only the return of the cheque pursuant to the decision of the Administrator. 
The order passed by the Administrator is apparent from the 
communication of the Administrator made to Estate Officer, I-JUDA on 
21.9.2004 which has been extracted above. It is apparent from the 
rejection order that
the reports submitted were considered and decision 
was taken not to accept the bids with respect to auction of seven 
properties. It was not a case of singular rejection of the bid made by the 
plaintiff alone. Six other bids were also not accepted. The reason for 
rejection has been made clear in para 15 of the written statement filed 
by I-JUDA. The relevant po1tion is extracted hereunder: 
"The action of not accepting the bid is very much sustainable in 
the eyes oflaw as the prices fetched by the auction was not in 
consonance with the prices fetched in other urban estates like 
Faridabad and Panchkula for similar kind of property. The bid 
prices received for the above said site was also not on the rising 
trend as per the prevalent market prices of the similar property 
in Gurgaon. The judicial view had been taken by the competent 
authority to safeguard the revenue interest ofHUDA. The price 
of the site in question fetched in Gurgaon was on lower side as 
compared to the prices fetched in Panchkula, Faridabad and 
Panipat. The statistical date for analysing the trend of price
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
fARUN MISHRA, J.l 
rising and revenue fetched was considered by the competent 
authority and it was revealed that the price fetched by the said 
auction was on lower side. Remaining para to the contrary is 
wrong and denied. xx xx x 
The competent authority after going through the individual report/ 
comments/opinion of the Members of the Auction Constituted 
Committee, comprising of Estate Officer, HUDA, Gurgaon, 
Senior Accounts Officer, District Town Planner and District 
Revenue Officer (Representative of the Deputy Commissioner, 
Gurgaon) as Members under the Chairmanship of Administrator, 
HUDA, Gurgaon, thoroughly examined the observations and 
recommendations of the Member of the Auction Committee 
regarding not to accept the bid prices of big commercial site, 
since these prices being on apparently lower side which was 
examined by the Government at the Headquarters level. The 
entire records of the entire auction proceedings, including the 
opinion of the Estate Officer, Gurgaon, other members of the 
Auction Committee and Deputy Commissioner, Gurgaon's report 
and also after studying the reserve price and auction price trends, 
decision was taken by the competent authority not to accept the 
bid prices vide their detailed report. Remaining para to the 
contrary is wrong and hence denied." 
25. Thus, it is apparent that the report and recommendations of 
the Auction Committee consisting of 5 members, was not to
accept the 
bids of big commercial sites as the prices fetched were on lower side 
which was examined by the Government at the Headquarters level. 
Considering the auction trends and also taking into consideration the 
higher prices fetched at Panipat, Panchkula and Faridabad, it was decided 
to reject the seven bids. Thus, there was due application of mind. 
26. Jn our opinion when it is apparent from the communication 
that the reports were considered and what was contained in the report 
was very much pleaded in the written statement, mere non-production 
ofreport was not of any significance in the instant case. We are satisfied 
that the rejection of the bid by the Administrator was absolutely proper 
and justified and was beyond the pale of judicial scrutiny. The 
Administrator had the right to reject the bids and he had rejected it on 
sufficient ground, duly considering the materials on record as is apparent 
from the communication dated 21.9.2004. In the interest of the public, 
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revenue of the State and in the interest of HUD A the huge property was 
saved f,om being plundered. 
27. This Court in the case of State of Uttar P.radesh & Ors. v. 
Vijay Bahadur Singh & Ors. (1982) 2 SCC 365 has laid down that 
there is no obligation to accept the highest bid. The Government is entitled 
even to change its policy from time to time according to the demands of 
the time. It was observed thus : 
"3. It appears to us that the High Court had clearly misdirected 
itself. The Conditions of Auction made it perfectly clear that the 
Government was under no obligation to accept the highest bid 
and that no rights accrued to the bidder merely because his bid 
happened to be the highest. Under Condition I 0 it was expressly 
provided that the acceptance of bid at the time of auction was 
entirely provisional and was subject to ratification by the 
competent authority, namely, the State.Government. Therefore, 
the Government had the right, for good and sufficient reason, 
we may say, not to accept the highest bid but even to prefer a 
tendererotherthan the highest bidder. The High Court was clearly 
in error in holding that the Government could not refuse to accept 
the highest bid except on the ground of inadequacy of the bid. 
Condition I 0 does not so restrict the power of the Government 
not to accept the bid. There is no reason why the power vested 
in the Government to refuse to accept the
highest bid should be 
confined to inadequacy of bid only. There may be a variety of 
good and sufficient reasons, apart from inadequacy of bids, which 
may impel the Government not to accept the highest bid. In fact, 
to give an antithetic illustration, the very enormity ofa bid may 
make it suspect. It may lead the Government to realise that no 
bona fide bidde.r could possibly offer such a bid ifhe meant to do 
honest business. Again the Government may change or refuse 
its policy from time to time and we see no reason why change of 
policy by the Government, subsequent to the auction but before 
its confirmation, may not be a sufficient justification forthe refusal 
to accept the highest bid. It cannot be disputed that the 
Government has the right to change its policy from time to time, 
according to the demands of the time and situation and in the 
public interest. If the Government has the power to accept or 
not to accept the highest bid and if the Government has also the 
power to change its policy from time to time, it must follow that
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
[ARUN MISHRA, J.] 
a change or revision of policy subsequent to the provisional 
acceptance of the bid but before its final acceptance is a sound 
enough reason for the Government's refusal to accept the highest 
bid at an auction ... " 
28. In Laxmikant & Ors. v. Satyawan & Ors. ( 1996) 4 SCC 
208, this Court has laid down that in the absence of completed contract 
when the public auction had not culminated to its logical end before 
confirmation of the bid, no right accrued to the highest bidder. This Court 
has laid down as under : 
"4. Apart from that the High Court overlooked the conditions 
of auction which had been notified and on basis of which the 
aforesaid public auction was held. Condition No. 3 clearly said 
that after the auction of the plot was over, the highest bidder had 
to remit 1/10 of the amount of the highest bid and the balance of 
the premium amount was to be remitted to the trust office within 
thirty days "from the date of the letter informing confirmation of 
the auction bid in the name of the person concerned". Admittedly, 
no such confirmation letter was issued to the respondent. 
Conditions Nos. 5, 6 and 7 are relevant: 
"5. The acceptance of the highest bid shall depend on the 
Board of Trustees. 
6. The Trust shall reserve to itself the right to reject the 
highest or any bid. 
7. The person making the highest bid shall have no right to 
take back his bid. The decision of the Chairman of the
Board 
of Trustees regarding acceptance or rejection of the bid shall 
be binding on the said person. Before taking the decision as 
above and informing the same to the individual concerned, if 
the said individual takes back his bid, the entire amount 
remitted as deposit towards the amount of bid shall be 
forfeited by the Trust." 
From a bare reference to the aforesaid conditions, it is apparent 
and explicit that even ifthe public auction had been completed 
and the respondent was the highest bidder, no right had accrued 
to him till the confirmation letter had been issued to him. The 
conditions of the auction clearly conceived and contemplated 
that the acceptance of the highest bid by the Board of Trustees 
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was a must and the Trust reserved the right to itself to reject the 
highest or any bid. This Court has examined the right of the 
highest bidder at public auctions in the cases of Tri/ochan Mishra 
v. State of Orissa (1971) 3 SCC 153, State of Orissa v. 
Harinarayan Jaiswal (1972) 2 SCC 36, Union of India v. 
Bhim Sen Walaiti Ram (1969) 3 SCC 146 and State of UP. v. 
Vipy Bahadur Singh (1.982) 2 SCC 365. It has been repeatedly 
pointed out 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 tender or bid. The acceptance of the 
highest bid is subject to the conditions ofholdingthe public auction 
and the right of the highest bidder has to be examined in context 
with the different conditions under which such auction has been 
held. In the present case no right had accrue.ct to the respondent 
either on the basis of the statutory provision under Rule 4(3) or 
under the conditions of the sale which had been notified before 
the public auction was held." 
29. In Meerut Development Authority v. Association of 
Management Studies & Anr. (2009) 6 SCC 171, this Court has laid 
down that a bidder has no right in the matter of bid except of fair treatment 
in the matter and cannot insist for further negotiation. The Authority has 
a right to reject the highest bid. This Court has laid down thus : 
"27. The bidders
pai1icipating in the tender process have no other 
right except the right to equality and fair treatment in the matter 
of evaluation of competitive bids offered by interested persons 
in response to notice inviting tenders in a transparent manner 
and free from hidden agenda. One cannot challenge the terms 
and conditions of the tender except on the abovestated ground, 
the reason being the terms of the invitation to tender are in the 
realm of the contract. No bidder is entitled as a matter ofright to 
insist the authority inviting tenders to enter into further negotiations 
unless the te1ms and conditions of notice so provided for such 
negotiations. 
xxxxx 
29. The Authority has the right not to accept the highest bid and 
even to prefer a tender other than the highest bidder, if there 
exist good and sufficient reasons, such as, the highest bid not 
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HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. . 873 
fARUN MISHRA, J.l 
the Authority's action in accepting or refusing the bid must be 
free from arbitrariness or favouritism." 
30. Reliance has been placed on behalf of the respondent on a 
decision of this Court in Mis. Star Enterprises & Ors. v. City and 
Industrial Development Corporation of Maharashtra Ltd. & Ors. 
(1990) 3 SCC 280. The relied upon portion is extracted hereunder: 
"I 0. In recent times, judicial review of administrative action 
has become expansive and is becoming wider day by day. The 
traditional limitations have been vanishing and the sphere of judicial 
scrutiny is being expanded. State activity too is becoming fast 
pervasive. As the State has descended into the commercial field 
and giant public sector undertakings have grown up, the stake of 
the public exchequer is also large justifying larger social audit, 
judicial control and review by opening of the public gaze; these 
necessitate recordingofreasons for executive actions including 
cases of rejection of highest offers. That very often involves 
large stakes and availability ofreasons for actions on the record 
assures credibility to the action; disciplines public conduct and 
improves the culture of accountability. Looking for reasons in 
support of such action provides an opportunity for an objective 
review in appropriate cases both by the administrative superior 
and by the judicial process. The submission of Mr Dwivedi, 
therefore,
commends itself to our acceptance, namely, that when 
highest offers of the type in question are rejected reasons 
sufficient to indicate the stand of the appropriate authority should 
be made available and ordinarily the same should be 
communicated to the concerned parties unless there be any 
specific justification not to do so." 
No doubt about it that there have to be some reasons for rejection 
of the bid which are adequately present in the instant case as discussed. · 
hereinabove. The decision is of no help to espouse the cause of the 
plaintiff. 
3 L Reliance has also been placed on a decision of this Court in 
Kalu Ram Ahuja & Anr. v. Delhi Development Authority & Anr. 
(2008) 1.0 SCC 696 in which this Court bas laid down that the highest bid 
was rejected without assigning any reason and there was no record 
showing that the decision was based on rational and tangible reasons 
and was in public interest. In the instant case we are satisfied from the 
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SUPREME COURT REPORTS 
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order that the reports were considered and what were the reports, has 
been made clear in the reply filed by the respondents which has not 
been controverted. In the instant case merely the bid being above the 
reserve price, was not a safe criteria to accept the same. 
32. Jn Mohinder Singh Gill & Am'. v. The Chief Election 
Commi.cioner, New Delhi & Ors. ( 1978) I SCC 405, this Court has 
laid down that when a statutory functionary makes an order, its validity 
must be judged by the reasons so mentioned and cannot be supplemented 
by fresh reasons in the shape of affidavit or otherwise. This Court has 
held thus: 
"8. The second equally relevant matter is that when a 
statutory functionary makes an order based on certain grounds, 
its validity must be judged by the reasons so mentioned and cannot 
be supplemented by fresh reasons in the shape of affidavit or 
otherwise. Otherwise, an order bad in the beginning may, by the 
time it comes to court on account of a challenge, get validated 
by additional grounds later brought out. We may here draw 
attention to the observations of Bose, J. in Gordhandas Bhanji 
AIR 1952 SC I 6 : 
"Public orders, publicly made, in exercise of a statutory 
authority cannot be construed in the light of explanations 
subsequently given by the officer making the order of what he 
meant, or of what was in his mind, or what he intended to do. 
Public orders made by public
authorities are meant to have public 
effect and are intended to affect the actings and conduct of 
those to whom they are addressed and must be construed 
objectively with reference to the language used in the order itself. 
Orders are not like old wine becoming better as they grow older." 
There is no dispute from the aforesaid proposition. However, in 
the instant case reasons have been mentioned in the rejection order and 
the nature of reports has also been sufficiently explained. Thus the rejection 
ofseven different bids in the auction reflects thatthere was due application 
of mind by the concerned authority and rejection could not be said to be 
illegal, arbitrary or sans of reason. 
33. We are constrained to observe in the instant case that with 
respect to reserve price also, there was a hitch to fix and approve it right 
from the word go. It was a case of auction of big commercial tower
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 
fARUN MISHRA. J.l 
having a huge area of9.527 acres. Only the reserve price of the same 
was forwarded for fixation to the Chief Administrator, whereas the 
reserve prices of other properties were fixed by the Administrator. When 
the bids were received, the Administrator considering the huge stakes 
involved, forwarded the matter to the Chief Administrator. However, 
the Chief Administrator washed off his hands and did not decide it and 
sent the matter back to the Administrator, clearly indicating that the 
Administrator was delegated with the power to decide the bids. Thus, 
under compelling circumstances and duly considering the reports, the 
Administrator had taken the decision to reject the bids not only of the 
plaintiff but also six others. For the first time in the history of State of 
Haryana, such big properties were put to hammer on the prices indicated. 
The hitch in fixing the reserve price also indicates that the reserve price 
was not determined in a fair manner in the instant case. Not only the 
plaintiff but HUDA also did not place the delegation of power on record 
of the courts below. None of the officials of HUDA had been examined. 
Only an Assistant - a junior ranking person had been examined who 
was not posted there when the auction was held and came only in 2008. 
As the property was a commercial tower in Sector 29, Gurgaon, with 
huge commercial complex, the first appellate court was right in
dismissing 
the suit. 
34. Plaintiff came to the court for mandatory injunction, for 
issuance of allotment letter without payment of court fee also. It was 
incumbent upon the plaintiff to pay the ad valorem court fee as prevailing 
and the valuation of the suit should not have been less than the bid amount 
ofRs.111.75 crores, as rightly held by the first appellate court. The plaintiff 
is directed to pay the ad valorem court fee not only before the trial court 
but also before the High Court. Plaintiff is directed to deposit the court 
fee within two months from today, as payable. 
35. Resultantly, the appeal is allowed. The judgment and decree 
passed by the High Court is set aside and that of the first appellate court 
is restored. In the facts and circumstances of the case, we impose costs 
of Rs.5 lakhs on the plaintiff/respondent to be deposited as : Rs.2.5 
lakhs in the Advocates' Welfare Fund and Rs.2.5 Jakhs in the Supreme 
Court Employees' Welfare Fund within a period of two months from 
today. 
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Appeal allowed. 
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