Vs. Association of Management Studies & ANR.  INSC 791 (17 April
JURISDICTION CIVIL APPEAL No. 2619 OF 2009 (Arising out of SLP (C) No.3215 of
2008) Meerut Development Authority ...Appellant Versus Association of
Management Studies & Anr. ...Respondents WITH CIVIL APPEAL Nos. 2620-2621
OF 2009 (Arising out of SLP (C) No.1602-1603 of 2008) Pawan Kumar Agarwal
...Appellant Versus Meerut Development Authority & Anr. ...Respondents
B.SUDERSHAN REDDY, J.
these appeals can be dealt with under a common judgment since one and the same
issue requires to be decided. The brief facts relevant for the purposes of
disposing of these appeals may be stated.
of Management Studies (for short `AMS') is a Society registered under the
provisions of the Societies Registration Act, 1860. It is stated to be managing
various educational institutions imparting education such as MBA, MCA,
Engineering etc., the details of which are not required to be noted.
Development Authority (for short `MDA') has been constituted as an Authority
called as the Development Authority by the U.P. State Government under Section
3 of the Uttar Pardesh Urban Planning and Development Act, 1973. The said Act,
has been enacted to provide for development of certain areas of Uttar Pardesh
according to plan and for matters ancillary thereto. The main object and 3
reasons for the enactment was to tackle resolutely the problems of town
planning and urban development in the State of Uttar Pardesh.
FACTUAL MATTERS :
12.05.2000, MDA allotted a plot of land admeasuring 20,000 sq.mts. situated in
Pocket `O' Ganga Nagar Residential Scheme at the rate of Rs.560/- per sq.m. to
AMS for construction of buildings meant to be utilised for educational
purposes. The reserved price has been fixed in terms of G.O. dated 19.04.1996
which provides that plots for educational institutions/engineering colleges
shall be sold at 50% of the sector rate. The AMS has requested to allot an
additional land of 20,000 sq mts. and 37,000 sq. mts. in Ganga Nagar
Residential Scheme for establishment of engineering college and other degree
colleges, e.g. masters' course such as MBA, MCA etc. It is noteworthy that the
land use of the above mentioned land in the Meerut 4 Master Plan 2001 has been
shown as `Residential medium Density'. The MDA having considered the request
and other relevant factors resolved to invite tenders from interested persons
to allot the land admeasuring 20,000 sq.mts. and another extent of land
admeasuring 37,000 sq. mts. located in the said residential scheme available to
be utilised for educational use. The reserved price has been fixed at Rs.690/-
per sq.m. for 20,000 sq.mts. and for the remaining extent of 37,000 sq. mts. of
land at Rs.500/- per sq.m.;
both being 50% of
issued advertisement inviting tenders in respect of several plots meant for
educational institutions within various residential schemes including the
aforesaid two plots in Ganga Nagar. The tenders were required to be submitted
on 18.08.2001. In response to the advertisement inviting tenders AMS submitted
its tender @ Rs.500/- for the plot of land admeasuring 37,000 sq. mts. and
Rs.560/- for the plot admeasuring 20,000 sq. mts. The MDA having considered 5
the tenders so submitted informed AMS vide letter dated 3rd September, 2001
that the commercial offer @ Rs.560/- per sq. m. was less than that of the
reserved rate of Rs.690/- per sq. m. in respect of 20,000 sq. mts. of land, out
of the reserved 57,000 sq mts. of land meant for the engineering colleges. AMS
was put on notice to give its consent within one week if it was desirous of
getting 20,000 sq.m. of land @ Rs.690/- per sq.m. MDA was willing to consider
the allotment of entire land admeasuring 57,000 sq.mts. for the establishment
of engineering colleges provided the institute was willing to pay the reserved
price @ 690/- per sq.m. in respect of 20,000 sq.m. of land. AMS in response to
the said letter requested the Authority to allot 37,000 sq.m. of land @
Rs.500/- per sq.m. offered by them in their tender.
It is noteworthy that
AMS in clear and categorical terms stated that the other land of 20,000 sq.m;
`may be deleted from ---- offer as the cost of that land is not viable for
However, we are ready
to purchase the same @ Rs.560/- 6 per sq.m. as quoted by us which is the same
rate as we have already purchased the part of that land.'
having considered the response of AMS vide its letter dated 27.11.2001 informed
AMS that only 37,000 sq.m. of land has been allotted for the establishment of
engineering college with the condition that the construction of the engineering
college is made in accordance with the norms of the A.I.C.T.I.; and deposit of
required amounts within the stipulated time. This was accepted by AMS and they
took the allotment of only 37,000 sq.mts. of land. In all fairness the matter
should have ended there. But it did not.
having accepted the offer of 37,000 sq.mts. of land, raised an objection
stating injustice has been done by the Authority in fixing the reserved price @
Rs.690/- per sq.m. even though adjoining plots were allotted @ Rs.500/- and
Rs.560/- per sq.m. MDA in its meeting held on 7 15.03.2002 has decided that
the disposal of the land be made through Open Tender-cum-Auction for
residential use after giving wide publicity. The Authority considered the offer
stated to have been made on behalf of the officer's Class Housing Society of
the Canal Colony to purchase the bulk of land admeasuring 20,000 sq.m. @
Rs.775/- per sq.m. and as well as the letter dated 04.03.2002 sent by AMS.
Since this letter reflects the attitude and conduct of AMS, it is required to
be noted in its entirety:
Dated 04.3.2002 Meerut Developmetn Authority, MEERUT.
Subject :- ALLOTMENT
OF LAND AT GANGA NAGAR.
Following facts are submitted for your honour's kind consideration:-
1. That M.D.A. on
19.9.2001 floated a tender for allotment of two pieces of land measuring 37,000
and 20,000 sqm bulk scale for Technical Institute after getting the approval of
rates from Board viz Rs.500/- and 690/- respectively.
2. We deposited 25%
of a sum as first installment for 37000 sqm of land as demanded on 27.11.2001.
3. That due to
paucity funds, we could not deposit the 25% of amount for 20,000 sqm land on
4. That now we are
ready to deposit the demanded amount and kindly condone the delay and oblige. With
Regards, Yours faithfully, (YOGESH MOHAN) Chairman."
vide its letter dated 27.03.2002 requested the Authority to allot the said land
@ Rs.690/- per sq.m. or in the alternative, the topography of the land be so
adjusted that both the 20,000 sq.m. of land and 37,000 sq.m. of land already
allotted to the Society may be made contiguous to each other so that the entire
land can be fruitfully utilised by it for educational purposes.
15.04.2002, MDA got issued fresh advertisement inviting applications in
newspapers for allotment of the aforementioned plot of land of 20,000 sq. m.
inviting bids from foreign direct investors, building developers etc. for
housing purposes with the reserved price of Rs.885/- per sq.m. and earnest
money of Rs.5.50 lakhs. AMS filed C.M.W.P.No.18578/02 in the High Court of
judicature at Allahabad on 01.05.2002 with the following prayers:
(i) to issue a Writ
Order or direction in the nature of certiorari quashing the advertisement dated
15.4.2002 issued in the newspaper Amar Ujala of the said date.
(ii) To issue a Writ,
Order or direction in the nature of mandamus restraining the respondent from
changing the use of the plot of land in question from being used for
Engineering college to residential purpose.
(iii) To issue a
Writ, Order or direction in the nature of mandamus directing the respondent to
allot the said plot of land to the petitioner society at the reserved price
fixed by it i.e. Rs.690/- per sq.metre and the interest till the payment of the
amount by the petitioner or in the alternative direct the respondent to
consolidate the two plots of land already demised in favour of the petitioner
society into one.
(iv) To issue any
other suitable writ, order or direction which the Hon'ble Court may deem 10
fit and proper in the circumstances of the case.
(v) To award cost of
this petition to the petitioner.
High Court vide its interim order dated 07.05.2002, permitted MDA to allot the
land in pursuance of the advertisement dated 15.04.2002 "but the allotment
shall be subject to the decision of this Writ Petition. It shall also be
mentioned in the allotment order, if issued by MDA to the allottee."
the auction Pawan Kumar Aggarwal, the appellant in C.A.Nos. 2620-2621/09
arising out of SLP ( C ) No. 1602-03/2008 became the highest bidder @ Rs.1365/-
per sq.m. and the bid was accepted. He has deposited only the earnest money of
Rs.5.50 lakhs. The balance consideration was required to be paid in
installments. But during the pendency of the Writ Petition, the MDA vide its
order dated 14.05.2007, cancelled the auction and the decision of allotment to
Pawan Kumar Aggarwal. He filed the Writ 11 Petition No.3007 of 2007
challenging the order of cancellation. The High Court by the impugned order
allowed the Writ Petition filed by AMS and dismissed the Writ Petition filed by
Pawan Kumar Aggarwal. Hence these appeals.
have heard the learned senior counsel Shri P.S. Patwalia for the appellant -
MDA, Shri Rakesh Dwivedi appearing on behalf of the appellant - Shri Pawan
Kumar Aggarwal and Shri Sunil Gupta, learned senior counsel appearing for AMS.
Elaborate submissions were made by the counsel for the respective parties. The
following is the summary of contentions urged by respective senior counsel
which are critical and crucial to decide the case.
principal objection of MDA is that the High Court was not justified in scrutinising
its action and the tendering 12 process in such great detail as if it was
hearing an appeal against its decision in the matter. The High Court virtually
acted as more than the appellate court and went into the merits in evaluating
the decision making process of the MDA. It was submitted that the High Court
practically converted itself into an Enquiry Commission and heard the Writ
Petition in such a way as if it was making an enquiry into the affairs of the
MDA which is impermissible in law. It was submitted MDA was left with no option
except to invite fresh bids after rejecting the offer made by AMS which was
less than that of the reserved price. Shri Rakesh Dewedi, learned senior
counsel appearing for appellant - Pawan Kumar Aggarwal submitted that MDA acted
fairly and it did not commit any error in not accepting the tender of AMS.
The decision making
process according to him does not suffer from any vice of illegality or
unconstitutionality. He, however submitted that the MDA was not justified in
cancelling the auction and its decision to allot land in favour of appellant -
Pawan Kumar Aggrwal. Shri Sunil Gupta, 13 learned senior counsel for the
respondent - AMS submitted that the decision of MDA in not allotting the land
was unreasonable, whimsical, capricious and violative of Article 14 of the
Constitution. The decision is not in public interest.
mistakes in the matter of depiction of rates in the notice inviting tenders as
is evident from their supplementary counter affidavit filed in the High Court.
There was some
confusion as regards reserved price in respect of disputed plot of land which
led AMS to offer bid at a lesser rate than the reserved price. It was further
submitted that MDA's decision to put the disputed plot of land to reauction in
spite of willingness on the part of AMS to pay the reserved price is
unsustainable in law. The decision to reauction the land by changing the land
use from that of `educational' to `residential' is motivated and inspired by
extraneous considerations. Public interest requires allotment of the said land
in favour of AMS which is catering the needs of public at large in imparting
education in engineering courses.
These contentions are
culled out from the storms of submissions made during the course of hearing of
of all the details and embellishments and notwithstanding the display of
forensic skills by the senior counsel, the substantial question that really
arises for our consideration in these appeals is whether the decision of MDA
dated 15.03.2002 resolving to invite fresh tenders and making the land
available for residential use suffers from any legal or constitutional
regard to the above submissions, we propose to deal with the matter from the
following four aspects:
a) what is the nature
of rights of a bidder participating in the tender process? 15 b) the scope of
judicial review in contractual matters;
c) whether the
decision of the Authority is vitiated by any arbitrariness and therefore hit by
Article 14 of the Constitution of India? and d) whether the decision is not in
public interest? WHAT IS THE NATURE OF RIGHTS OF A BIDDER PARTICIPATING IN THE
tender is an offer. It is something which invites and is communicated to notify
acceptance. Broadly stated it must be unconditional; must be in the proper
form, the person by whom tender is made must be able to and willing to perform
his obligations. The terms of the invitation to tender cannot be open to
judicial scrutiny because the invitation to tender is in the realm of contract.
However, a limited judicial review may be available in cases where it is
established that the terms of the invitation to tender were so tailor made to
suit the convenience of any particular 16 person with a view to eliminate all
others from participating in the biding process. The bidders participating 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 above stated 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
of right to insist the Authority inviting tenders to enter into further
negotiations unless the terms and conditions of notice so provided for such
is so well-settled in law and needs no restatement at our hands that disposal
of the public property by the State or its instrumentalities partakes the
character of a trust. The methods to be adopted for disposal of public property
must be fair and transparent providing an opportunity to all the interested
persons to participate in the process. The 17 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 representing the market price but there cannot be any doubt that the
Authority's action in accepting or refusing the bid must be free from
arbitrariness or favoritism.
WHETHER ANY RIGHT OF
AMS HAS BEEN INFRINGED ?
mere look at the tender notice in the present case makes it abundantly clear
that the two plots of land admeasuring 37,000 and 20,000 sq.mts. meant for
establishing engineering colleges were advertised as a single item, though the
specified reserved price was different. The reserved price of 20,000 sq. mts.
was expressly and clearly mentioned at Rs.690/- per sq.m.
There is no ambiguity
nor any confusion in this regard. AMS itself mentioned different and separate
bids in their tender and made a bid at Rs.560/- per sq.m. for 20,000 sq.mts
plot which was less than that of the reserved price. The Authority was not
under any legal or constitutional obligation to entertain the bid which was
much below the reserved price. The plea that there was some vagueness,
uncertainity and misunderstanding in the matter of depiction of rates is
clearly an after thought. AMS never sought any clarification whatsoever from
the Authority as regards the fixation of reserved price in respect of 20,000
sq. mts. of plot. This plea is not raised even in the Writ Petition filed by
that as it may, the MDA though not under any obligation, provided a further
opportunity to the Society and expressed its willingness to part away with the
land provided AMS agreed to pay the reserved rate of Rs.690/- per sq.m. AMS did
not avail this opportunity. Even at this stage AMS did not say that it was
under some confusion as regards the specified reserved price. No objections
were raised whatsoever in this regard. Instead it made a request that the two
plots be segregated and 37,000 sq.mts. be allotted to it while the other plot
of 20,000 sq.mts "may be deleted from ..........offer as the cost of that
land is not viable........" It expressed its desire to purchase the said
land @ Rs.560/- per sq.m. only. It is difficult to discern as to on what basis
AMS asserted its right and insisted that the Authority should part away with
its valuable land at a price lesser than that of the reserved price. AMS
proceeded on the assumption as if it has some unassailable right in respect of
the said plot of land merely because it had earlier got allotted adjoining plot
of land for the construction of its buildings. Had the Authority conceded to
the request so made by AMS it would have been an unfair and arbitrary decision
and the courts may have interfered with the same in exercise of judicial review
power. The tender process actually stood terminated with the letter of the MDA
dated 27.11.2001 allotting 37,000 sq.mts. of land alone. The rights of AMS, if
any came to an end when it informed the Authority - MDA that it was not
claiming any right over the land admeasuring 20,000 sq.mts. and made a further
request to delete its offer in respect of the said land.
subsequent letters sent by AMS at its own choice is of no consequence. The MDA
did not make any promise that the suggestion of AMS to allot the plot at
Rs.560/- per sq.m. was under its consideration. Many a letters including the
letter dated 03.01.2002 of the Society makes it clear that there was no
confusion whatsoever with regard to reserved price fixed at Rs.690/- per sq.m.
Once it is clear that there was no vagueness, uncertainty or any confusion with
regard to the reserved price there is no scope for any interference in the
matter by this court. The terms and conditions of tender were expressly clear
by which the authority as well as the bidders were bound and such conditions
are not open to judicial scrutiny unless the action of the tendering authority
is found to be malicious and misuse of its statutory powers.
21 [See: Tata
Cellular vs. UOI1, Air India Ltd. vs. Cochin International Airport Ltd.2,
Directorate of Education vs. Educomp Datamatic Ltd.3, Association of Registration
Plates vs. UOI , Global Energy Ltd. vs. Adani Exports, and Purvanchal Projects
Ltd. vs. Hotel Venues6.]
bids offered by AMS received their due attention in a fair and transparent
manner free from any bias at the hands of MDA. No rights of AMS have been
infringed by MDA in not giving opportunity to involve itself in lengthy
negotiations. The Authority was free to make its choice and to invite fresh
bids after the Society relinquished its claim in respect of the disputed plot
vide letter dated 17.09.2001 which was accepted by MDA. The decision of the
Authority was duly communicated to the AMS by MDA vide its letter dated
27.11.2001. The decision so taken by the MDA resolved in infringement of rights
1 [1994 (6) SCC 651],
2 [2000 (2) SCC 617], 3 [ 2004 (4) SCC 19], 4 [2005 (1) SCC 676] 5 [2005(4) SCC
435] 6 [2007(10) SCC 33].
SCOPE OF JUDICIAL
REVIEW IN CONTRACTUAL
Tata Cellular (supra) this Court observed that "Judicial quest in
administrative matters is to strike the just balance between the administrative
discretion to decide matters as per government policy, and the need of
Any unfair action
must be set right by judicial review."
Evans7, Lord Hailsham
stated: "The underlying object of judicial review is to ensure that the
authority does not abuse its power and the individual receives just and fair
treatment and not to ensure that the authority reaches a conclusion which is
correct in the eyes of the court."
25. Large numbers of
authorities have been cited before us in support of the submission that even in
contractual matters the State or "other authorities" are bound to act
7 [(1982) 3 AIIER 141], 23 within the legal limits and their actions are
required to be free from arbitrariness and favourtism. The proposition that a
decision even in the matter of awarding or refusing a contract must be arrived
at after taking into account all relevant considerations, eschewing all
irrelevant considerations cannot for a moment be doubted. The powers of the
State and other authorities are essentially different from those of private
The action or the
procedure adopted by the authorities which can be held to be State within the
meaning of Article 12, while awarding contracts in respect of properties
belonging to the State, can be judged and tested in the light of Article 14.
Once the State decides to grant any right or privilege to others, then there is
no escape from the rigour of Article 14. These principles are settled by the
judgments of this Court in the cases of Ramana Dayaram Shetty vs.
Authority of India8, Kasturi Lal 8 [1979 (3) SCC 489],
24 Lakshmi Reddy vs.
State of J & K9, Ram and Shyam Co. vs. State of Haryana10, Mahabir Auto
Stores vs. Indian Oil Corporation11, Sterling Computers Ltd. vs. M & N
Publications12 and A.B. International Exports vs. State Corporation of India.13
Executive does not have an absolute discretion, certain principles have to be
followed, the public interest being the paramount consideration.
It has been stated by
this Court in Kasturi Lal's case (supra):
"It must follow
as a necessary corollary from this proposition that the Government cannot act
in a manner which would benefit a private party at the cost of the State, such
an action would be both unreasonable and contrary to pubic interest. The
government, therefore, cannot, for example, give a contract or sale or lease
out its property for a consideration less than the highest that can be obtained
from it, unless of course, there are other considerations which render it
reasonable and in public interest to do so."
9 [1980 (4) SCC 1],
10 [1985 (3) SCC 267], 11 [1990 (3) SCC 752], 12 [1993(1) SCC 445] 13 [2000(3)
25 The law has been
succinctly stated by Wade in his treatise, Administrative Law:
"The powers of
public authorities are therefore essentially different from those of private
persons. A man making his will may, subject to any rights of his dependants,
dispose of his property just as he may wish. He may act out of malice or a
spirit of revenge, but in law this does not affect his exercise of his power.
In the same way a private person has an absolute power to allow whom he likes
to use his land, to release a debtor, or, where the law permits, to evict a
tenant, regardless of his motives. This is unfettered discretion. But a public
authority may do none of these things unless it acts reasonably and in good
faith and upon lawful and relevant grounds of public interest. So a city
council acted unlawfully when it refused unreasonably to let a local rugby
football club use the city's sports ground, though a private owner could of
course have refused with impunity. Nor may a local authority arbitrarily
release debtors, and if it evicts tenants, even though in accordance with a contract,
it must act reasonably and `within the limits of fair dealing'. The whole
conception of unfettered discretion is inappropriate to a public authority,
which possesses powers solely in order that it may use them for the public
good."14 14 Administrative Law, 9th Edition,H.W.R.Wade & C.F.Forsyth
26 There is no difficulty to hold that the authorities owe a duty to act fairly
but it is equally well settled in judicial review, the court is not concerned
with the merits or correctness of the decision, but with the manner in which
the decision is taken or the order is made. The Court cannot substitute its own
opinion for the opinion of the authority deciding the matter. The distinction
between appellate power and a judicial review is well known but needs reiteration.
By way of judicial
review, the court cannot examine the details of the terms of the contract which
have been entered into by the public bodies or the State. Courts have inherent
limitations on the scope of any such enquiry. If the contract has been entered
into without ignoring the procedure which can be said to be basic in nature and
after an objective consideration of different options available taking into
account the interest of the State and the public, then the court cannot act as
an appellate court by substituting its opinion in respect of selection made for
entering into such contract. But at the same time the courts can certainly
examine whether `decision making process' was reasonable, rational, not
arbitrary and violative of Article 14. [See: Sterling Computers Ltd. (supra)].
It may be worthwhile
to notice the leading judicial review case in relation to grant of licences, by
competitive tender reported in R. vs. Independent Television Commission, ex p.
TSW Broadcasting Limited.15 The leading speeches in the House of Lords were delivered
by Lord Templeman and Lord Goff. Lord Templeman stated:
Parliament has not provided for an appeal from a decision maker the courts must
not invent an appeal machinery. In the present case Parliament has conferred
powers and discretions and imposed duties on the ITC. Parliament has not
provided any appeal machinery. Even if the ITC make mistakes of fact or
mistakes of law, there is no appeal from their decision. The courts have
invented the remedies of judicial review not to provide the appeal machinery
but to ensure that the decision maker does not exceed or abuse his powers...
But the rules of natural justice do not 15 [1996 JR 185 and 1996 EMLR 291] 28
render a decision invalid because the decision maker or his advisers make a
mistake of fact or a mistake of law. Only if the reasons given by the ITC for
the decision to reject the application...
irrationality or procedural impropriety.. could the decision be open to
In the concluding
section of his speech, he added:
"Of course in
judicial review proceedings, as in any other proceedings, everything depends on
the facts. But judicial review should not be allowed to run riot. The practice
of delving through documents and conversations and extracting a few sentences
which enable a skilled advocate to produce doubt and confusion where none
exists should not be repeated."
One has to bear in
mind the caution administered by Secretary of State for the Environment16 that:
" `Judicial review' is a great weapon in the hands of the judges; but the
judges must observe the constitutional limits set by our parliamentary system
upon the exercise of this beneficial power." It is equally necessary that
the following 16 [ (1986) 1 AIIER 199] 29 observations of Benjamin Cardozo,
should always be kept in mind:
"The Judge, even
when he is free, is still not wholly free. He is not to innovate at pleasure.
He is not a knight-errant roaming at will in pursuit of his own ideal of beauty
or of goodness. He is to draw his inspiration from consecrated principles.
He is not to yield to
spasmodic sentiment, to vague and unregulated benevolence. He is to exercise a
discretion informed by tradition, methodized by analogy, disciplined by system,
and subordinated to `the primodical necessity of order in the social life'.
Wide enough in all conscience is the field of discretion that remains."
[The Nature of
Judicial Process, P. 141].
26. There cannot be
any disagreement that unjustified discriminations violate the Constitution and
unreasonable decisions are susceptible to be interfered with and corrected in
judicial review proceedings. But general propositions do not decide concrete
cases as has been famously put by York.17 It remains to be decided which acts
of discrimination are justified and which are not. It is for the court to
decide in the given facts and circumstances whether 17 [198 U.S. 45,76 (1995)].
30 the action
complained of is unreasonable? How to do that is always a complex and
complicated one. It would be unnecessary to burden this judgment of ours with
various precedents and super-precedents cited at the bar in support of the
general propositions that the authority's action must be free from
arbitrariness. It always depends upon the contextual facts. In law, context is
everything. We shall bear these parameters in mind and proceed to determine the
question whether the decision of the Authority is vitiated by any abuse of
WHETHER THE DECISION
OF THE AUTHORITY IS VITIATED BY ANY ARBITRARINESS AND THEREFORE HIT BY ARTICLE
14 OF THE CONSTITUTION OF INDIA :
27. It was submitted
on behalf of AMS that the decision of MDA dated 15.3.2002 undoing its earlier
decision dated 7.7.2002 and changing land use of the disputed plot from
`educational' to `housing' is unreasonable, unprincipled and capricious and
violative of Article 14 of the Constitution.
31 This was done for
making higher financial gain and profit and that too, at the instance of an
alleged unverified extraneous person overlooking the demands of public interest
as well as law and order problems that may arise on account of peculiar
location of the plot in the midst of existing higher education campuses
belonging to AMS. We find no merit in this submission. The claim of AMS, in our
considered opinion came to an end on 17.9.2001 when it had intimated the MDA to
delete its offer in respect of the disputed plot on the ground that the cost of
that land as stipulated is not a viable one. This was followed by its letter
dated 3.1.2002, once again stating that it was injustice to fix Rs. 690/- per
sq. meter for the disputed land while adjoining plots were allotted for Rs.
500/- per sq. meter and Rs. 560/- per sq. meter respectively. There were no
further negotiations and any response from MDA to the said letter dated 3.1.2002.
The letter dated 4.3.2002 from AMS to MDA indicating the acceptance of Rs.
690/- per sq. meter only after one Harpal Singh Chowdhary on behalf of the 32
Officer's Class Housing Society had mentioned a higher price of Rs. 775/- per
sq. meter in his representation. There is nothing on record to suggest that
impugned decision has been taken only for making higher financial gain and
But what is wrong
even if any such effort was made by MDA to augment its financial resources. We
are, however, of the opinion that the effort, if any, made by MDA to augment
its financial resources and revenue itself cannot be said to be unreasonable
decision. It is well said that the struggle to get for the State the full value
of its resources is particularly pronounced in the sale of State owned natural
assets to the private sector. Whenever the Government or the authorities get
less than the full value of the asset, the country is being cheated; there is a
simple transfer of wealth from the citizens as a whole to whoever gets the
assets `at a discount'. Most of the times the wealth of a State goes to the
individuals within the country rather than to multi- national corporations;
still, wealth slips away that ought to belong to the nation as a whole.
repeated representations are of no consequence and the MDA was not under any
legal obligation to reopen the tender process which otherwise stood terminated.
The MDA, in its meeting dated 15.3.2002 considered the request of the Society
as well as the alternative offer but neither of them was accepted. The MDA
after careful deliberation decided to dispose of the land through fresh
tender-cum-auction for residential use after giving wide publicity.
28. The learned
senior counsel relied upon the decision in this Court observed: "Financial
gain by a local authority at the cost of public welfare has never been
considered as legitimate purpose even if the objective is laudable. Sadly the
law was thrown to winds for a private purpose." The observations were made
in the context where this Court found the entire proceedings before the State
Government 18 [(1991) 4 SCC 54] 34 suffered from absence of jurisdiction. Even
the exercise of powers was vitiated and ultra vires. The orders of the
Government to convert the site reserved for public park to civic amenity and to
allot it for private nursing home was null, void and without jurisdiction and
when the same was sought to be justified on the ground of financial gain; the
court made the observations in that context. The impugned action of the
authority in the present case did not suffer from absence of jurisdiction nor
was vitiated and ultra vires.
Financial gain was
not at the cost of any social welfare.
Court found that
CIDCO's decision to part with the chunk of developable land was obviously in
departure from the policy of serving on "no-profit-no-loss" basis to
such people as were craving for a roof over their heads. It is in that context
the Court observed; the land acquired and entrusted to CIDCO cannot just be permitted
to be parted with guided by the sole consideration of money making. CIDCO is
not a 19 [(2002) 7 SCC 564] 35 commercial concern whose performance is to be
assessed by the amount it earns. Its performance would be better assessed by
finding out the number of needy persons who have been able to secure shelter
through CIDCO and by the beauty of the township and the quality of life for the
people achieved by CIDCO through its planned development schemes. It was in
that context the court observed; there should have been no hurry on the part of
CIDCO in disposing of the balance land and that too guided by the sole
consideration of earning more money. The allotment of the land in favour of
various organizations and individuals was found to be without following any
procedure and almost in secrecy. The court further observed even that object of
raising revenue has not been achieved since at the end it has parted with land
at a price less than Rs.1500/- per sq.m. - the reserved price. "Even if a
sale of left over land was felt necessity it should satisfy at least two
(i) a well considered
decision at the highest level; and (ii) a sale by public auction or by tenders
after giving more wide 36 publicity than what was done so as to attract a
larger number of bidders". The observations so made in those given
circumstances cannot be torned out of context to be applied to the fact
situation in hand. On the other hand, the ratio of judgment fully supports the
decision taken by the MDA in the present case. The MDA having considered the
representation made by an individual to allot the land for residential purpose
at the rate of Rs.775/- per sq.m. and as well as a proposal/request of AMS to
allot the land @ Rs.690/- per sq.m. rejected both the suggestions and invited
tenders after giving wide publicity. We fail to appreciate as to how the
decision of MDA could be characterized as an unreasonable one. In our
considered opinion that was the only course left open to the Authority.
The money to be
realised by the sale of public auction is required to be applied towards
meeting the expenses incurred by the Authority in the administration of the Act
which mainly includes securing the development of the development area.
37 30. The
expression `arbitrary and capricious' etc.
employed by the
learned senior counsel for the AMS to characterise the decision of the MDA does
not carry any special significance. The real question is whether the decision
measures up to the legal standard of reasonableness? The meaning of all such
expressions as arbitrary and capricious, frivolous or vexatious is necessarily
the same, since the true question must always be whether the statutory powers
have been abused? In refusing to accept the tender of the AMS on the ground
that the offer made by it was lower than that of the reserved price is legal,
valid and by no stretch of imagination can be characterised as an illegal one.
In fact, there was no option available to the MDA but to reject the tender of
the AMS as the offer made was much below than the reserved price. In fairness,
the matter should have rested at that but for the unwarranted repeated
representations by the AMS without any lawful claim; the MDA if at all
committed an error it was 38 by entertaining such representations and entering
into avoidable correspondence with the AMS.
CHANGE OF LAND USE :
31. Now, we proceed
to deal with the question whether the decision to change the land use is
unreasonable? It was submitted that the decision of the MDA on 15.3.2002 to
upturn the decision of 7.7.2001 and change the land use of the disputed plot
from educational to housing and not to allot the same to AMS is ex facie
arbitrary and unreasonable. We find no merit in this submission. The disputed
land in the Master Plan is reserved for `Residential' purpose. The residential
category of use is a category in contrast with industrial, agricultural,
commercial, recreational, green belt, or institutional category in use. It does
not mean exclusive use for housing on every inch of the land. The expression
residential use in the Master Plan means that the land can be used for housing,
various other kinds of uses such as institutional, commercial etc. At any 39
rate this argument need not detain us any further since a categorical statement
is made during the course of the hearing of this appeal on behalf of the MDA
that the land shall still be made available for educational use and as well as
residential. The MDA had earlier relaxed the use and made it for `educational'
purpose though it is earmarked for residential use in the Master Plan. There is
nothing unreasonable in changing the land use and earmarking it again for
`Residential' use. It was submitted that MDA never gave any reason for change
of land use in its resolution dated 15.3.2002 nor any reasons were
communicated. Once it is clear that the land in the Master Plan was reserved
for residential use where educational institutions could also be permitted
within that area, it cannot be said that there has been a change of land use as
such. At any rate in view of the statement made there is no further controversy
that the land in question can be put to both residential and educational use.
40 PUBLIC INTEREST:
32. The learned
senior counsel relied on the decisions of highlight the importance of private
educational institutions and their entitlement to get assistance from the State
or other authorities in the form of various concessions. The allotment of land
at a reasonable rate according to the learned senior counsel subserves public
interest. We find no relevance of those judgments to decide the case on hand.
AMS may have
established Engineering Colleges to impart education and may have a role to
play in providing education in engineering courses; but it cannot insist the
MDA to provide land at the rate chosen by it for itself.
The object of the Act
under which MDA is constituted was to provide for development of certain areas
according to 20 [(1993) 1 SCC 645] 21 [ (2002) 8 SCC 481] 41 plan and for
matters ancillary thereto. It is mainly concerned with an orderly development of
the areas and balanced use of the available land within the development area.
The Authority in law is not entitled to gift or freely make available any land
or at a rate lesser than that of reserved price.
The MDA in terms of
the directions of the Government vide G.O. dated 19.04.1996 has already decided
to make the lands available to the institutions imparting education in
engineering at a concessional rate i.e. to say 50% of the sector rate and
accordingly fixed reserve price @ Rs. 690/- per sq. meter. The public interest
parameters have been duly taken into consideration by the Government itself in
directing MDA to make the lands available to educational institutions at a
concessional rate. It is difficult to appreciate as to what more the AMS
expects from the Authority. The Society in fact availed that assistance from
MDA on an earlier occasion but failed to avail the facility this 42 time for
which the AMS has to blame itself. The AMS having failed to offer at least the
reserved price cannot be permitted to turn round and ask for a mandamus to
allot the land in its favour based on self-serving representations. The AMS
indulged to say the least in speculative litigation. We accordingly find no
merit in the submission of the AMS placing reliance upon the Directive
Principles of State Policy and more particularly, Article 41 of the
Constitution of India which says that the State shall, within the limits of its
economic capacity and development, make effective provision for securing the
right to work, to education and public assistance in cases of unemployment, old
age, sickness and disablement and in other cases of undeserved want. The State
had already made effective provision for securing right to education by
resolving to make the land available at concessional rate to educational
institutions imparting education in engineering courses. Obviously, such a
decision was taken only with the view to give effect to the Directive
Principles of State Policy enshrined under Article 43 41 of the Constitution
of India. The AMS has no legal or constitutional right to make any perpetual
demands and dictate terms to the MDA to allot any particular land at the chosen
33. It was lastly
contended on behalf of the AMS the relief in the present case needs to be moulded
with two aspects in mind: (a) Public interest & (b) Equity. Reliance has
been placed by the learned senior counsel for the AMS on the findings of the
High Court in this regard. The High Court recorded the findings including that
AMS is performing public service by providing higher education, has established
different technical institutes by constructing huge buildings on adjoining
plots in which Engineering, Computer Science, Business Administration are
already running; as 6,000 students are studying; facilities for students such
as hostel, library, parking, open space etc.
are required; the
sandwiched location of the plot between pre-existing educational campuses would
make housing use 44 of the plot detrimental to the interest of the students as
well as the prospective residents. The High Court also found that MDA has not
pleaded or proved such surplusage of educational need or such acute shortage of
accommodation in Meerut that even the disputed plot cannot be spared.
`public interest' if it is employed in a given statute is to be understood and
interpreted in the light of the entire scheme, purpose and object of the
enactment but in the absence of the same it cannot be pressed into service to
confer any right upon a person who otherwise does not possess any such right in
law. In what manner this Court has to arrive at any conclusion that MDA's
decision in calling for fresh tender from the interested persons for making the
land available for residential use is not in public interest? Repeated attempts
were made before us to say that providing the land in question for educational
use will be more appropriate and sub-serve public interest than making it
available for residential use. Public interest floats in a vast, deep-ocean of
ideas, and "imagined experiences".
It would seem to us
wise for the courts not to venture into this unchartered minefield. We are not
exercising our will.
We cannot impose our
own values on society. Any such effort would mean to make value judgments.
The impugned judgment
illustrates "the danger of judges wrongly though unconsciously
substituting their own views for the views of the decision maker who alone is
charged and authorized by law to exercise discretion." With respect, we
find that the High Court virtually converted the judicial review proceedings
into an inquisitorial one. The way proceedings went on before the High court
suggest as if the High Court was virtually making an inquiry into the conduct
and affairs of the MDA in a case where the court was merely concerned with the
decision making process of the MDA in not accepting the offer/tender of the AMS
in respect of the disputed plot on the ground that the offer so made was less
than that of the reserve price fixed by the MDA. We express our reservation in
the manner in which the High Court dealt with the matter. The High Court went
to the extent of holding that there was a concluded contract between MDA and
AMS. Of course, learned senior counsel Shri Sunil Gupta, did not support the
findings so recorded by the High Court.
34. Finally, it was
submitted that equity requires the allotment of land to AMS as the disputed
land can be put to most beneficial use and for a public purpose for imparting
education in engineering courses. The AMS expressed its willingness to pay such
reasonable price as may be fixed by this Court. It is brought to our notice
that the prices of the land in the vicinity of area have gone up many times and
as at present prevailing rates are very high. We do not propose to indulge in
any guess work and direct allotment of land to the AMS by fixing the land price
Equity is not a one
way street. The conduct of the AMS does not entitle it to get any such relief
35. For all the
aforesaid reasons, we find it difficult to sustain the impugned judgment.
36. Civil Appeal Nos.
2620-2621/09 arising out of SLP (c) Nos. 1602-1603 of 2008 preferred by Pawan
Kumar Agarwal :
On 15.4.2002, MDA got
fresh advertisement issued inviting bids to acquire the land for housing
purposes at the reserve price Rs. 885/- per sq. meter. The auction was held on
2.8.2002. Pawan Kumar's bid of Rs. 1365/- per sq.
meter was the
highest. He deposited a sum of Rs. 5,50,000/- towards earnest money. The
highest bid was approved by the MDA by its letter dated 17.8.2002.
amounts were not accepted as the matter was pending in the High Court. Be it
noted, the High Court never issued any orders restraining MDA from accepting
the bid amount. The only restraint was that the auction would be subject to
further orders to be passed in the writ petition.
The fact remains
there was no demand from MDA requiring 48 the appellant to pay any amount nor
did the appellant on his own deposited any amount towards installments except
requesting the MDA to initiate proceedings for transferring the land. The MDA
informed the appellant that it was making efforts to get the writ petition
decided and the letter of allotment would be issued only after the disposal of
the writ petition.
37. AMS challenged
the fresh advertisement in which the appellant was the highest bidder but
without impleading the appellant. Number of affidavits and supplementary
affidavits were exchanged between the parties in the High Court. On 2.4.2007,
the High Court allowed impleadment application of the appellant-Pawan Kumar
Agarwal. During the course of hearing, the High Court on 8.5.2007 directed the
Vice- Chairman, MDA to file additional affidavit inter alia explaining as to
why allotment in favour of appellant-Pawan Kumar Agarwal was not cancelled when
it has deposited only earnest money and not the balance of total consideration
and whether the earnest money could be forfeited by MDA? MDA, obviously was
reeling under the pressure and took decision to cancel the auction of the plot
by its order dated 14.5.2007 on the grounds stated therein.
Thereafter, MDA filed
supplementary affidavit mentioning about cancellation of auction. The
appellant-Pawan Kumar Agarwal filed Writ Petition No. 30074 of 2007 challenging
the cancellation of auction. The High Court vide common impugned judgment
dismissed the appellant-Pawan Kumar Agarwal's writ petition.
38. We find some
merit in the submission made by learned senior counsel Shri Rakesh Dwivedi that
the cancellation of the auction was not tenable. But the fact remains the
appellant deposited only an amount of Rs. 5,50,000/- towards earnest money out
of huge amount of total consideration. Having regard to the totality of the
facts and circumstances, we are not inclined to exercise our jurisdiction under
Article 136 of the Constitution of India and 50 interfere with the order of
cancellation passed by MDA on 14.5.2007.
39. It is needless to
observe that the MDA shall be at liberty to call for fresh tenders in
accordance with law but duly notifying the land use for both `educational' and
`residential' and invite bids accordingly. It shall permit AMS and other
educational institutions intending to participate in the auction. In view of
the undertaking given by MDA to this Court it shall not raise any objection for
the use of the land for educational purposes in case if any educational
institution is found to be the successful bidder. The bids shall obviously be
invited from the intending bidders duly notifying the `residential' and
40. In the result,
Civil Appeal No. 2619/09 arising out of SLP (c) No. 3215 of 2008 preferred by
MDA is allowed with costs. Advocate's fee quantified at Rs. 50,000/-.
Civil Appeal Nos.
2620-2621/09 arising out of SLP (c) Nos. 1602-1603/08 shall stand dismissed but
without any order as to costs.
(Lokeshwar Singh Panta)
(B. Sudershan Reddy)
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