Anil Kumar Srivastava Vs.
State of U.P. & Another  Insc 473 (20
Ashok Bhan & S.H. Kapadia
[Arising out of SLP (C) No.7790 oF 2004] With Transferred Case No.54 of 2004.
Anil Kumar Srivastava Petitioner Versus State of U.P. & Another Respondents
Leave granted in SLP.
Anil Kumar Srivastava claiming to be a public spirited citizen residing in
Sector 14, Noida, U.P. moved Allahabad High Court in Civil Misc. Writ Petition
No.10137 of 2004 [Transferred Case No.54 of 2004 herein] challenging the Scheme
bearing No.2003-2004 (Commercial Hub) Sector 18 floated by New Okhla
Industrial Development Authority (NOIDA) for construction of a commercial hub
on a plot bearing no.M-3 in Sector 18, Noida as arbitrary and violative of
norms contained in the Board Resolution dated 10.7.2003 and the precedents with
regard to size and reserve price, resulting in the loss to the State exchequer
of Rs.340 crores. In the writ petition, it is alleged that the impugned Scheme
awards 54,320.18 sq. mtrs. of prime commercial land, without precedent, at
1/4th of the prevailing market price and by fixing the reserve price at
abysmally low, throw away, price; that the said Scheme is, therefore, arbitrary
and violative of Article 14 of the Constitution. In the writ petition, the
petitioner prayed for setting aside the Scheme. Pending hearing and final
disposal, the petitioner sought interim reliefs restraining NOIDA, respondent
no.2 herein, from giving effect to the said Scheme. By impugned order dated 12.3.2004,
the High Court refused the interim relief as prayed for. Aggrieved, the
original petitioner came to this Court by special leave. Vide order dated
28.4.2004, this Court stayed the operation of the impugned Scheme. By order
dated 9.7.2004, the Court presided by Hon'ble the Chief Justice, at the request
of respondent nos.2 and 3 herein, directed Writ Petition no.10137 of 2004
pending in the Allahabad High Court to be transferred to this Court under
Article 139A of the Constitution..
By order dated 23.7.2004, the Court presided by Hon'ble the Chief Justice,
on the joint prayer made by all the counsel, directed the matter to be listed
for final hearing and accordingly this matter has come for hearing.
As stated, the impugned Scheme is for development of plot no.M-3 admeasuring
54,320.18 sq. mtrs. in sector 18 by constructing thereon a commercial hub
consisting of a shopping mall, multiplexes, showrooms, retail outlets, hotels,
restaurants and offices with matching parking facility in order to decongest the
said sector which has now become a centre for small enterprises. That shopping
habits have changed resulting in a demand for shopping malls and entertainment
centres, which require bigger plots. That the object of the said Scheme was
integrated development of the sector. The salient features of the Scheme were :
30% ground cover; 150 floor area ratio (FAR) and provision for 2800 estimated
car spaces (ECS).
The reserve price was fixed at Rs.27,500/- per sq. mtr. The Scheme was kept
open from 18.2.2004 up to 9.3.2004. It was widely advertised in Times of India,
Hindustan Times, Economic Times, Business Standard and Amar Ujala. That nine
reputed developers including MGF, Unitech, Sun City, Sahara India and Omex
purchased the brochures. However, on the closing date i.e. 9.3.2004, only one
tender of M/s DLF Universal Ltd., respondent no.3 herein, was received and
evaluated by the technical committee on whose recommendation the financial
tender was opened on 12.3.2004.
Respondent no.3 quoted Rs.31,850/- per sq. mtr. in their financial tender,
which was 15.81% higher than the reserve price of Rs.27,500/- per sq. mtr.
Other developers like Unitech, Sahara India, Omex, MGF, Sun City etc. also
purchased the bid documents but they abstained from bidding. Since respondent
no.3 was the only bidder and since it had quoted the price which was higher
than the reserve price, its tender was accepted vide letter dated 12.4.2004
(hereinafter referred to as "the allotment letter"). In the meantime,
on 10.3.2004, the petitioner herein moved the Allahabad High Court as stated
By the allotment letter, respondent no.3 was informed that its bid stood
accepted; that the tender price was Rs.31,850.00 per square metre; that the
total premium was Rs.173,00,97,733.00; that earnest money to be deposited was
Rs.3 crores; that the allotment money to be deposited was Rs.43,25,24,433.25;
that the balance allotment money to be deposited by 26.4.2004 was
Rs.40,25,24,433.25 whereas balance premium amounting to Rs.129,75,73,299.75 had
to be deposited by 10.7.2004. It may be clarified that earnest money of Rs.3
crores was adjustible against allotment money of Rs.43,25,24,433.25. Till date,
respondent no.3 has deposited the earnest money of Rs.3 crores and
Rs.40,25,24,433.25 on 23.4.2004.
However, respondent no.3 has not deposited the balance premium payable on
10.7.2004 as the Scheme was stayed by this Court vide order dated 28.4.2004.
It is the case of the petitioner that respondent no.2 is the statutory
authority under U.P. Industrial Area Development Act, 1976; that it is
responsible for the development of the area in terms of the Master Plan for
Noida; that it has framed Building Regulations w.e.f. 1.2.1986 containing
guidelines of occupancy, building permits and floor area ratio. According to
the petitioner, the reserve price of Rs.27,500/- per sq. mtr. in the present
case for a plot admeasuring 54,320.18 sq. mtrs. was abysmally low, particularly
in view of the fact that under the Board Resolution dated 10.7.2003, the
reserve price of plots measuring 5001 or more square metres had to be fixed at
1= times the sector price which according to the petitioner was Rs.90,000/- per
sq. mtr. In this connection, the petitioner has relied upon earlier Schemes of
NOIDA for the year 2002 under which reserve price of plots admeasuring 6000 to
7000 sq. mtrs. in sector 18 was fixed at Rs.40,000/- to Rs.75,000/- [See:
Annexure P1]. That for plots in same sector-18 admeasuring 60 sq. mtrs. to 90
sq. mtrs., the reserve price was fixed at Rs.1,90,600/- (See: Annexure P2). It
has been further alleged that the tender price at the rate of Rs.31,850/- per
sq. mtr. is also undervalued. According to the petitioner, the said rate is
1/4th of the prevailing market rate. That such low rates would result in unjust
enrichment of the developer at the cost of the exchequer and consequently, the
Scheme needs to be set aside as arbitrary and violative of Article 14 of the
Constitution of India.
In reply, respondent no.2 has pointed out that the impugned Scheme was given
wide publicity; that the development of the plot admeasuring 54320.18 sq. mtrs.
became necessary to decongest sector-18 where car parking has become an acute
problem; that decongestion could be achieved by constructing shopping malls
with matching parking facility; that although the area of the plot in question
is 54,320.18 sq. mtrs., the FAR is restricted to 150 and ground cover is
restricted to 30% unlike the instances of plots submitted by the petitioner
where for a smaller plots of 6000 to 7000 sq. mtrs., the FAR is 150 and for
still smaller plots of 600 sq. mtrs, the FAR is 250 (See: Annexure P1). That by
offering the said plot admeasuring 54,320.18 sq. mtrs, the Authority is saving
on internal development for amenities, parking etc. That in the past, respondent
no.2 invited bids for plots admeasuring 7000 sq. mtrs. with 30% ground cover
and FAR of 150 with reserve price of Rs.40,000/- per sq. mtr., which failed. It
is further pointed out, that, the reserve price is not understated as alleged.
In this connection, it is pointed out that the developer has tendered the rate
of Rs.31,850/- per sq. mtr. which is the rate higher than the rate of
Rs.27,500/- per sq. mtr. That in addition to the reserve price, the tenderer
has to provide for 2800 cars parking space (minimum) in the basement level.
That if the cost of 2800 cars parking space is taken into account, it cannot be
said that reserve price is understated. That in the past, higher reserve
price(s) for comparatively smaller plots did not attract the developers. That
the petitioner has confused the sector rate with circle rate. The circle rate
is the notified rate. It is fixed by the Government for the guidance of the
Sub-Registrar. The circle rates are not fixed by respondent no.2. That under
the Board Resolution dated 10.7.2003, the reserve price of commercial plots
measuring 5001 sq. mtrs. and above is to be fixed at one and half times the
sector rates. That under the resolution, the reserve price for commercial plot
measuring 5001 sq. mtrs. and above should be fixed on the basis of average rate
of adjoining sectors. In this connection, it is pointed out that sector 18
abuts sectors 17 and 27 (residential) and sector 16A (institutional);
that average rate in these sectors is Rs.12000/- per sq. mtr. and on the basis
of 1= times the average rate of these sectors, the reserve price came to
Rs.18000/-. That even on the basis of the Highest Rate in sector-17, being
Rs.15,700/- per sq. mtr., the reserve price comes to Rs.23,050/- per sq. mtr.
In the circumstances, respondent no.2 has submitted that while fixing the
reserve price in the present case at Rs.27,500/- per sq. mtr., it has complied
with the principles embodied in the Board Resolution dated 10.7.2003. It is
further pointed out that relatively smaller commercial plots in sector-18 sold
in last six years indicate the prevailing price of Rs.22,500/- per sq. mtr.
(including escalation of 15% per annum). Lastly, it has been pointed out that
the impugned Scheme was kept open from 18.2.2004 to 9.3.2004; that it was widely
advertised; that on the closing date, only one tender was received; that
respondent no.3 quoted Rs.31,850/- per sq. mtr. in its financial tender which
was 15.81% higher than the reserve price of Rs.27,500/- and in the
circumstances, its tender was accepted. In the circumstances, respondent no.2
submitted that the reserve price was not understated and that the rate offered
by the tenderer at Rs.31850/- per sq. mtr. cannot be said to be under valued as
alleged. According to the petitioner, the current notified rate in sector 18
was Rs.90,000/- per sq. mtr. and consequently, the rate offered by the tenderer
and accepted by respondent no.2 at Rs.31,850/- per sq. mtr. was abysmally low.
In the counter, respondent no.2 has pointed out that there is no factual basis
on which the petitioner has alleged that the prevailing market rate is
Rs.90,000/- per sq. mtr. It is submitted that the petitioner has confused the
sector rate with the circle rate. That in the absence of sale instances and
valuation report, it cannot be alleged that the rate offered by respondent no.3
In the circumstances, it is submitted that the petition has no merit.
In its counter, respondent no.3 the developer has pointed out that urban
population today prefer shopping malls which are self contained in a closed
building vis-`-vis traditional markets; that the planning Authorities encourage
the construction of these malls as the administration is freed from maintaining
and servicing traditional market places for which it incurs huge expenditure.
As far as the impugned Scheme is concerned, it has been pointed that the
developer is put under obligation to construct a shopping mall with matching
car parking facilities in the basement and around the mall; that the cost of
providing this facility has to be added to the reserve price; that under the
impugned Scheme, NOIDA gets Rs.174 crores (approx.) within 90 days; that the
reserve price of smaller plots with different FARs and ground cover cannot be
relied upon for determining the reserve price under the impugned Scheme, which
applies to the plot measuring 54,320.18 sq. mtrs. with 30% ground cover and FAR
of 150. That in the earlier instances of sales of plots bearing nos.M-30, M-13,
K-1A and K-1B, auctions had failed in the past. That on the contrary, in case
of auction of two plots, L1 and L2 in sector-18, the reserve price was
Rs.22,500/- per sq. mtr. based on actual sales of adjoining plots in last six
years. That such reserve price of Rs.22,500/- per sq. mtr. was lower than the
impugned reserve price of Rs.27,500/- per sq. mtr. in the present Scheme. In
the circumstances, it has been urged in the counter filed on behalf of
respondent no.3 that the reserve price of Rs.27,500/- per sq. mtr. has been
fixed taking into account the previous experiences and the prices prevailing in
the adjoining sectors.
Mr. L. Nageshwar Rao, learned senior counsel appearing on behalf of the
petitioner submitted that the reserve price fixed by respondent no.2 at the
rate of Rs.27,500/- per sq. mtr. is contrary to clause 2 (e) of the Board
Resolution dated 10.7.2003; that under the said clause, the reserve rate of
commercial plots admeasuring 5001 sq.
mtrs. or more was one and half times the sector rate; that the sector rate
was Rs.90,000/- per sq. mtr.; that the reserve price of Rs.27,500/- per sq.
mtr. for the plot admeasuring 54,320.18 sq. mtrs., without sub- division, was
abysmally low and understated. That in the past, respondent no.2 had never
invited tenders for such a large sized plot with such low reserve price. It was
further urged that the impugned reserve price was not only contrary to the
Board Resolution, it was also contrary to the past precedents, both in terms of
area/size of the plot and the reserve price. In this connection, reliance was
placed on annexures 'P1' and 'P2' to show that for plots admeasuring 6000/7000
sq. mtrs., the reserve price fixed was in the range of Rs.40,000/-/Rs.75,000/-
per sq. mtr. It was submitted that transfer of the said plot admeasuring
54,320.18 sq. mtrs. at such a low reserve price of Rs.27,500/- per sq. mtr.
would result in causing huge loss of Rs.340 crores to the State exchequer. It
was next contended that even the tender price of Rs.31,850/- per sq. mtr. at
which the offer of respondent no.3 has been accepted is ridiculously low
particularly when the notified rate prevailing in sector 18 is Rs.90,000/- pr
to Rs.1,00,000/- per sq. mtr. Hence, it was submitted, that the reserve
price has been fixed arbitrarily and in breach of clause 2(e) of the resolution
dated 10.7.2003 as also in contravention of the precedents in relation to the
area of the plot and the reserve price. It was submitted that the fixation of
the impugned reserve price was arbitrary, unreasonable and violative of Article
14 of the Constitution.
On the above submissions, the central point which arises for determination
is : whether the tender price of Rs.31,850/- per sq. mtr.
is understated. In the present case, respondent no.2 invited offers for the
plot admeasuring 54,320.18 sq. mtrs. for the shopping mall with 2800 ECS in
order to decongest sector 18. Wide publicity was given.
Several reputed developers bought tender documents. However, at the end of
the day, there was only one bidder (respondent no.3) in the field. In the
present case, malafides have been alleged, but not pressed. Therefore, the
question before us is : whether respondent no.2's decision in accepting the bid
of respondent no.3 was arbitrary, unreasonable and in violation of the Board
Resolution dated 10.7.2003.
Before coming to the above challenge, we would like to examine the concepts
of 'valuation' and 'upset/reserve price'. In the case of McManus v. Fortescue
& another reported in [1907 Vol.II K.B. page 1] it has been held by Court
of Appeal that in a sale by auction, subject to reserve, every offer/bid and
its acceptance is conditional. That the public is informed by the fact, that
the sale is subject to a reserve, that the auctioneer has agreed to sell for
the amount which the bidder is prepared to give only in case that amount is
equal to or higher than the reserve. That the reserve puts a limit on the
authority of the auctioneer. He cannot accept a price below the upset/reserve
price. That he could refuse the bid which is below the upset price.
The aforestated ruling explains the meaning of the term 'reserve price'. It
indicates the object behind fixing the reserve price viz. to limit the
authority of the auctioneer. In the present case, the board resolution is meant
to guide the officers of the second respondent.
The resolution prescribes the guidelines for fixing the reserve price.
The concept of reserve price is not synonymous with 'valuation of the
property'. These two terms operate in different spheres. An invitation to
tender is not an offer. It is an attempt to ascertain whether an offer can be
obtained with a margin. [See: Pollock & Mulla on Indian Contract &
Specific Relief Acts (2001) 12th Edition. Page 50].
Valuation is a question of fact. This Court is reluctant to interfere where
valuation is based on relevant material. [See: Duncans Industries Ltd. v. State
of U.P. & others reported in (2000) 1 SCC 633]. The difference between
valuation and upset price has been explained in the case of B. Susila &
another v. Saraswathi Ammal & others reported in [AIR 1970 Madras 357] in
which it has been held that fixation of an upset price may be an indication of
the probable price which the land may fetch from the point of view of intending
bidders. However, notwithstanding the fixation of upset price and
notwithstanding the fact that a bidder has offered an amount higher than the
reserve/upset price, the sale is still open to challenge on the ground that the
property has not fetched the proper price and that the sale be set aside. That
the fixation of the reserve price does not affect the rights of the parties.
Similarly, in the case Dr. A. U. Natarajan & another v. Indian Bank, Madras
reported in [AIR 1981 Madras 151] it has been held that the expressions
"value of a property" and "upset price" are not synonymous
but have different meanings. That the term "upset price" means lowest
selling price or reserve price. That unfortunately in many cases the word
"value" has been used with reference to upset price. That the sale
has to commence at the higher price and in the absence of bidders, the price
will have to be progressively brought down till it reaches the upset price.
That the upset price is fixed to facilitate the conduct of the sale. That
fixation of upset price does not preclude the claimant from adducing proof that
the land is sold for a low price.
Applying the above tests to the facts of this case, we find that there is no
material on record to show that the tender price of Rs.31,850/- per sq. mtr. is
a low price. The entire edifice of the petition is based on the challenge to
the reserve price of Rs.27,500/- per sq. mtr. As stated above, fixation of the
reserve price is to facilitate the conduct of the sale. It was open to the
petitioner to challenge the tender price of Rs.31,850/- per sq. mtr. as
understated, notwithstanding the fixation of the reserve price. No comparative
sales instances, with similar parameters of ground cover of 30% and 150 FAR,
have been placed before us. No figures of cost of 2800 ECS have been placed
before us as such costs would increase the reserve price. On the other hand, we
find that the reserve price has been fixed by taking into several factors.
Firstly, in the past tenders invited for relatively smaller plots with higher
reserve price had failed. It is important to bear in mind that tender process
is an expensive exercise. To resort repeatedly to this exercise is a costly
affair. Secondly, in the present case, the reserve price is fixed by taking
into account the comparative offers/sales in the adjoining sectors. That the
average of such sales has been taken into account while fixing the reserve
price in terms of clause 4(c) of the Resolution dated 10.7.2003, which reads as
under: "4(C) In developed sectors where tenders have been received
earlier, fixation of rates is proposed to be on the basis of average price
arrived at prior to the scheme of fixation of reserve price, on the basis of
rate arrived on the above principle, whichever is more. In such a situation
average rate is proposed to be fixed as per the category and user mentioned in
the preceding paragraph." Thirdly, the developer/tenderer is obliged to
construct a matching car parking facility of 2800 ECS whose cost is required to
be added to the reserve price of Rs.27,500/- per sq. mtr. Lastly, in the present
case it has been submitted that under clause 2(e), reserve price had to be
fixed at 1= times the sector rate which according to the petitioner was
Rs.90,000/- per sq. mtr. Clause 2(e) reads as under: "2(e) Commercial
Plots measuring One and a half times 5001 sq. metres or more of sector
rates" Reading of the said clause indicates that the figure of Rs.90,000/-
is not mentioned. It is a figure alleged by the petitioner.
As stated above, there is a difference between the circle rate and the
sector rate. The petitioner has confused the two. The circle rate is notified
by the Government for the guidance of the sub-registrar.
They are notified for revenue purposes. There is nothing to show that
Rs.90,000/- per sq. mtr. was the sector rate. In the present case, we are
concerned with a larger plot of 54,320.18 sq. mtrs. with different variables of
30% ground cover and 150 FAR. Keeping in mind all these factors, the Authority
has fixed the reserve price. In the present case, undue importance has been
given to the fixation of the reserve price. As stated above, notwithstanding
the reserve price, the petitioner could have brought before the Court material,
if any, to show undervaluation. In the present case, the tender price is
Rs.31,850/- per sq. mtr. It is higher than the reserve price. There is no
material to show whether the tender price is understated. In the circumstances,
there is no merit in the contention of the petitioner that the land is sold at
abysmally low price.
In the case of Tata Cellular v. Union of India reported in [(1994) 6 SCC
651], it has been held, while discussing the scope of judicial review, that
Courts do not sit in appeal; that the Courts merely review the manner in which
the administrative decision was made;
that the Court cannot substitute its own decision as it has no expertise to
correct the decision. Applying the above test to the facts of this case, we
find that tender invitation was given wide publicity; that although nine
bidders bought the tender documents, only respondent no.3 offered its bid; that
the financial committee has recommended its acceptance keeping in mind the
prior experience and the terms and conditions of the Resolution dated 10.7.2003
in the matter of fixation of sector price and reserve price. Hence, there is no
merit in the above contentions.
Mr. L. Nageshwar Rao, learned senior counsel for the petitioner submitted
that under the impugned Scheme, two concessions have been given arbitrarily to
benefit the developer at the cost of the State exchequer. In this connection,
reliance is placed on clause 10(A)&(B) and clause 15 of the terms and
conditions of the Scheme. For the sake of convenience, we quote herein below
the aforestated clauses: "10. GROUND RENT/LEASE RENT:
In addition to tendered amount, the allottee/lessee shall have to pay yearly
ground rent/lease rent in the manner indicated below: (A) The ground rent/lease
rent shall be charged @ 2.5% p.a. of the total premium of the plot for the
first 10 years from the stipulated date of execution of lease deed. However,
the ground rent/lease rent shall be charged @ Rs.1/- per sq. mtr. per year for
the first three years from the stipulated date of execution of lease deed.
(B) The ground rent/lease rent shall be enhanced after expiry of 10 years
from the stipulated date of execution of lease deed. The enhancement will be
50% of lease rent/ground rent last thus fixed.
OR The allottee has the option to pay 11 years lease rent @ 2.5% p.a. of the
total premium as one time lease rent within first 10 years of allotment.
Thereafter, 11 times of the prevailing rate shall be payable as one time
lease rent. In such case, the allottee has to clear outstanding of lease rent
and interest first 15. TRANSFER:
The lessee can transfer the built-up premises over the plot with prior
permission of the Authority subject to the rules and regulations for transfer
and on payment of transfer charges prevailing at the time of such transfer.
No transfer charges shall be applicable in case of transfer of built up
commercial space during the first 2 years from the date of completion.
Thereafter, transfer charges shall be payable on pro-rata basis as applicable.
However, the purchaser shall be required to pay pro-rata lease rent as
applicable. The sub-lessee shall be required to make the built up space
functional with in one year from the date of sub-lease and submit the
prescribed documents to the Authority in proof thereof. Thereafter, extension
charges shall be payable, as applicable.
All the terms and conditions of the brochure/allotment/permission for grant
of transfer and lease deed shall be applicable on the
allottee/lessee/transferee." As can be seen from the above two clauses, in
addition to the tendered amount, the allottee is obliged to pay ground rent;
that the ground rent is payable at 2.5% of the total premium of Rs.173 crores
(approximately) during the first 10 years from the date of the lease.
However, for first three years, concession is given in payment of rent to
enable the developer to attract entrepreneurs to put up hotels, restaurants,
multiplexes etc. So also for the first two years, transfer charges are not
payable in cases of transfer of built up commercial spaces. We do not find any
merit in the argument of the petitioner that these concessions/incentives are
arbitrarily given as largesse to the tenderer. These concessions are a part of
terms and conditions of the Scheme, which was kept open for all eligible
bidders. Further, we do not have any figures to show the alleged loss to the
Further, when a Scheme is challenged, we have to look at it as an entire
package. We have to see the tender price, the cost of putting up amenities like
ECS, the cost-benefit ratio, the future projections in terms of increase in
revenue, employment etc. None of these facts have been brought out in the
petition. Hence, there is no merit in the contention that the above concessions
have been given arbitrarily to the developers.
For the foregoing reasons, we do not find any merit in the Civil Appeal No.
5402 of 2004, arising out of SLP (C) No.7790 of 2004, as well as in the
Transferred Case No.54 of 2004 [Writ Petition No.10137 of 2004 of Allahabad
High Court] and the same are accordingly dismissed, with no order as to costs.
We direct respondent no.3 to pay respondent no.2 the balance 75% of the premium
in terms of Item 12 of letter of allotment dated 12.4.2004 within one week from
the date of pronouncement of this judgment.