Date of judgement:
2nd March, 2022
Bench:
Justices Ajay Rastogi and Abhay S. Oka
Parties:
Plaintiffs – State of Punjab
Defendants – Mehar Din
SUBJECT
An appeal was filed against the order of the Punjab and Haryana High Court which set aside the order of the Financial Commissioner Revenue. The Commission had cancelled the bid of the subject property and ordered re-auction. However, the High Court set aside this order and asked the authorities to confirm the sale to the highest bid.
OVERVIEW
- Chapter III of the Punjab Package Deal Properties (Disposal) Rules, 1976 (hereafter "the Rules") provide the procedure for the public auction of sub urban properties.
- The appellants issued the notice of the public auction of the subject property and ensured that the notice got sufficient publicity.
- Three bidders participated in the auction with the respondent being the highest bidder. The respondent also submitted ⅕ of the bid in order to confirm the sale.
- However, the Sales Commissioner was of the opinion that the auction was not properly publicized and hence cancelled the bid and ordered re-auction.
- The order of the Sales Commissioner was upheld by the Chief Sales Commissioner. The order of the Chief Sales Commissioner was challenged before the Divisional Commissioner.
- The Divisional Commissioner cancelled the order of the Chief Sales Commissioner and the order of the Divisional Commissioner was challenged before the Financial Commissioner Revenue who set aside the order of the Divisional Commissioner and ordered re-auction.
- Subsequently, the respondents filed a writ petition before the High Court challenging the order.
- The High Court set aside the order of the Financial Commissioner and ordered the authorities to confirm the same as per the bid.
ISSUES RAISED
- Whether the highest bidder has an inherent right to have the auction concluded in his favour?
RELEVANT PROVSIONS
Punjab Package Deal Properties (Disposal) Rules, 1976
- Rule 8 of the Rules: Procedure for sale by public auction.
ANALYSIS
- The Court observed that the Sales Commissioner, while canceling the bid, had observed that the bid was low when compared to the location of the subject property and the lack of publicity was the reason for this low bid.
- The Court observed that the highest bid is provisional and no right is accurate to the highest bidder till the issue of confirmation letter.
- Furthermore, the Court observed that the State is not bound to accept the highest bidder's tender.
- The Court further held that where there are allegations of illegality or where arbitrariness or favouritism is apparent, the Court can review government contracts.
- The Superior Courts shall intervene only if there is apparent mala fide or unreasonableness. However, the Courts must also exercise utmost restraint when intervening in matters of government contracts.
- The Court noted that it is a settled law that the highest bidder does not have any legal right to get the auction concluded in his favour and the High Court must have intervened only if there was complete arbitrariness or unreasonableness.
- However, in the present case, it was never the case of the respondent that the decision of the Commissioner was arbitrary.
CONCLUSION
In light of the observations made by the Court, it was concluded that the High Court's decision was unsustainable in law. Hence, the Court set aside the judgment of the High Court and ordered that the 1/5th amount of the bid that had been deposited by the respondent must be refunded along with an interest of 12% per annum.
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