With wide ramification for the policy of liberalisation being followed by the government, the Supreme Court has ruled that if government sells country�s assets to private persons or players at a price lesser than their market value, such action amounts to cheating the country. A bench, comprising Justices Lokeshwar Singh Panta (since retd) and B Sudarshan Reddy, who set aside the judgment of the Allahabad High Court in Land Allotment dispute noted "it is well said a 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.
Supreme Court of India CIVIL APPELLATE JURISDICTION
Whenever the government or the authorities get less than the full value of the
asset, the country is being cheated
Supreme Court of India CIVIL APPELLATE 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
(Arising out of SLP (C) No.1602-1603 of 2008
Pawan Kumar Agarwal ...Appellant
Versus
Meerut Development Authority & Anr. ...Respondents
JUDGMENT
B.SUDERSHAN REDDY, J
Leave granted
2. Both 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
3. Association 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
educational institutions imparting education such as MBA MCA, Engineering etc., the details of which are not required to be noted
4. Meerut 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 reasons for the enactment was to tackle resolutely the problems of town planning and urban development in the State of Uttar Pardesh
FACTUAL MATTERS
5. On 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 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 sector rate
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 sector rate
6. MDA 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 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/ per sq.m. as quoted by us which is the same rate as we have already purchased the part of that land.
However, we are ready to purchase the same @ Rs.560/ per sq.m. as quoted by us which is the same rate as we have already purchased the part of that land.
7. MDA having considered the response of AMS vide its letter dated 27.11.2001 informed AMS that only 37,00 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
8. AMS 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 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
"The Chairman, Dated 04.3.2002
Meerut Developmetn Authority,
MEERUT
Subject :- ALLOTMENT OF LAND AT GANGA NAGAR
Hon'ble Sir
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
27.11.2001
27.11.2001
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.
Yours faithfully
(YOGESH MOHAN)
Chairman.
9. AMS 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
10. On 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 1
fit and proper in the circumstances of the case.
(v) To award cost of this petition to the petitioner
(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 1
fit and proper in the circumstances of the case.
(v) To award cost of this petition to the petitioner
11. The 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.
12. In 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 1 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
SUMMARY OF SUBMISSIONS
13. We 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
14. The principal objection of MDA is that the High Court was not justified in scrutinising its action and the tendering 1 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 1 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 MDA committed 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 1 These contentions are culled out from the storms of submissions made during the course of hearing of these appeals
ISSUES REQUIRING RESOLUTION
15. Shorn 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 infirmities
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 infirmities
16. Having 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 1
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
deal with the matter from the following four aspects
a) what is the nature of rights of a bidder
participating in the tender process 1
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 PROCESS
PARTICIPATING IN THE TENDER PROCESS
17. A 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 1
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 negotiations
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 1
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 negotiations
18. It 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 1
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
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 1
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
INFRINGED
19. A 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 1
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 the AMS
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 1
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 the AMS
20. Be 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 1
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 2
land admeasuring 20,000 sq.mts. and made a further
request to delete its offer in respect of the said land
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 1
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 2
land admeasuring 20,000 sq.mts. and made a further
request to delete its offer in respect of the said land
21. The 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 2
[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 Exports5, and Purvanchal Projects Ltd. vs. Hotel
Venues6.
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 2
[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 Exports5, and Purvanchal Projects Ltd. vs. Hotel
Venues6.
22. The 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 17.09.200
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 of AMS
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] 2
SCOPE OF JUDICIAL REVIEW IN CONTRACTUAL
MATTERS
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 17.09.200
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 of AMS
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] 2
SCOPE OF JUDICIAL REVIEW IN CONTRACTUAL
MATTERS
23. In 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 fairness
Any unfair action must be set right by judicial review.
"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 fairness
Any unfair action must be set right by judicial review.
24. In Chief Constable of North Wales Police Vs
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.
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] 2
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 persons
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
International Airport Authority of India8, Kasturi Lal
8
[1979 (3) SCC 489] 2
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) SCC 553] 2
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."1
14
Administrative Law, 9th Edition,H.W.R.Wade & C.F.Forsyth 2
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 2
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
"Where 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 2
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...
disclosed illegality, irrationality or procedural
impropriety.. could the decision be open to judicial
review.
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
Lord Scarman in Nottinghamshire Country Council Vs
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 2
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]
in support of the submission that even in contractual
matters the State or "other authorities" are bound to act
7
[(1982) 3 AIIER 141] 2
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 persons
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
International Airport Authority of India8, Kasturi Lal
8
[1979 (3) SCC 489] 2
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) SCC 553] 2
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."1
14
Administrative Law, 9th Edition,H.W.R.Wade & C.F.Forsyth 2
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 2
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
"Where 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 2
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...
disclosed illegality, irrationality or procedural
impropriety.. could the decision be open to judicial
review.
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
Lord Scarman in Nottinghamshire Country Council Vs
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 2
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
Justice Oliver Wendell Holmes in Lochner Vs. New
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)] 3
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 power
WHETHER THE DECISION OF THE AUTHORITY IS
VITIATED BY ANY ARBITRARINESS AND THEREFORE
HIT BY ARTICLE 14 OF THE CONSTITUTION OF
INDIA
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
Justice Oliver Wendell Holmes in Lochner Vs. New
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)] 3
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 power
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 3
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 3
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 profit
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.
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 3
Society's 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
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 3
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 3
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 profit
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 authoritiesthere is a simple transfer of wealth from the
get less than the full value of
the asset, the country is being
cheated;
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 3
Society's 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
Bangalore Medical Trust Vs. B.S. Muddappa18 in which
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 3
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
Bangalore Medical Trust Vs. B.S. Muddappa18 in which
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 3
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
29. In Padma Vs. Hiralal Motilal Desarda & Ors.,19 this
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 3
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 conditions
(i) a well considered decision at the highest level; and (ii) a
sale by public auction or by tenders after giving more wide 3
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 3
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 3
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 conditions
(i) a well considered decision at the highest level; and (ii) a
sale by public auction or by tenders after giving more wide 3
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 3
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 3
by entertaining such representations and entering into
avoidable correspondence with the AMS
CHANGE OF LAND USE
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 3
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 3
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 4
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 3
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 4
PUBLIC INTEREST
32. The learned senior counsel relied on the decisions of
this Court in Unni Krishnan, J.P. Vs. State of A.P.20 and
TMA Pai foundation Vs. State of Karnataka21 to
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 4
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 4
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 4
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 rate
this Court in Unni Krishnan, J.P. Vs. State of A.P.20 and
TMA Pai foundation Vs. State of Karnataka21 to
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 4
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 4
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 4
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 rate
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 4
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
The expression `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 4
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 4
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
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 4
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
The expression `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 4
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 4
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 by ourselves
Equity is not a one way street. The conduct of the AMS does
not entitle it to get any such relief in equity 4
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 by ourselves
Equity is not a one way street. The conduct of the AMS does
not entitle it to get any such relief in equity 4
35. For all the aforesaid reasons, we find it difficult to
sustain the impugned judgment
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
However, further 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 4
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
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
However, further 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 4
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 4
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
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 4
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 5
interfere with the order of cancellation passed by MDA on
14.5.2007
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 5
interfere with the order of cancellation passed by MDA on
14.5.2007
RESULT
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 `educational' use 5
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 `educational' use 5
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
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
..........................................J.
(Lokeshwar Singh Panta
..........................................J.
(B. Sudershan Reddy
New Delhi;
April 17, 2009
(Lokeshwar Singh Panta
..........................................J.
(B. Sudershan Reddy
New Delhi;
April 17, 2009
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