# l S.C.R. 847 HARYANA URBAN DEVELOPMENT AUTHORITY & ORS v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD

- **Citation:** [2017] 1 S.C.R. 847
- **Court:** Supreme Court of India
- **Decided:** 2017-01-27
- **Case number:** Civil Appeal No. I 016 of2017
- **Bench:** Arun Mishra, Amitava Roy
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/l-s-c-r-847-haryana-urban-development-authority-ors-v-orchid-infrastructure-31711
- **Pages:** 29

## Headnote

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

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[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 factsituation, 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; 869E-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
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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
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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
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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
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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
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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
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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 265-1977 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
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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 116) 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.