M/s. Aditya Enterprises v. City Industrial and Development Corporation of Maharashtra Ltd.

15. Mr. Hegde would then contend that the price quoted by petitioners are far below the market range. That CIDCO has consulted expert agency and has taken a decision to cancel the tender process. He would submit that in fresh tender process to be initiated by CIDCO, lowest price suggested by Knight Frank would be considered as reserve price. In support of his contention Mr. Hegde would rely upon judgment of the Apex Court in Haryana Urban Development Authority (HUDA) & Ors. Vs. Orchid Infrastructure Developers Pvt. Ltd., (2017) 4 SCC 243 and Rishi Kiran Logistics Pvt. Ltd. Vs. Board of Trustees of Kandla Port Trust & Ors., (2014) All SCR 2640.

16. Rival contentions of the parties now fall for our consideration.

17. Petitioners are aggrieved by non-issuance of allotment letters in respect of plots, for which they have been adjudged highest bidders in the tender process. The tender process has been cancelled by CIDCO before its completion. Since allotment letters are not issued nor lease premium is paid by petitioners, the tender process was incomplete when the cancellation letters were issued. All that is paid by petitioners is only EMD along with their respective bids. It is common ground that the amounts of EMD paid by petitioners have been refunded by CIDCO to them.

18. In the light of this position, the issue that arises for our consideration is whether petitioners have acquired any right to seek issuance of allotment letters by CIDCO? Petitioners have termed the action of CIDCO in cancelling the tender process as arbitrary for the purpose of invoking jurisdiction of this court. It is contended that being an instrumentality of State, CIDCO is expected to act in a reasonable manner and that upon making out a demonstrable case of arbitrariness, this court would be justified in exercising power of judicial review. In support of this contention reliance is placed by petitioners on the Apex Court judgment in M. P. Power (supra). It is contended that even in case where the contract is yet to be awarded, this court would be justified in interfering with decision of the State especially when it deals with award of largesse by the state. In paragraph No.56 and 82.[4] of the judgment the Apex court has held as under.

19. Reliance is also placed by the petitioners on judgment of Apex Court in Kalu Ram Ahuja (supra) in which it is held by the Apex Court in paragraph No.5 as under.

20. Reliance is also placed on the judgment in Harminder Singh Arora (supra) in which the Apex Court has held in paragraph No.24 and 29 as under:

21. There can be no dispute to the proposition that where arbitrariness is demonstrated on the part of a State instrumentality, this court would be justified in interfering with its decision. However, in the present case, the tender process is cancelled even before the letter of allotment could be issued in favour of petitioners. It is not that Petitioners have erroneously been disqualified in the tender process or that any term of tender notice is violated.

CIDCO has cancelled the entire tender process under the hope of securing higher prices for lease of plots. In such a situation, whether this court would be justified in interfering with decision of the CIDCO is the issue that arises for our consideration.

22. In HUDA vs. Orchid Infrastructure (supra) the Apex Court has dealt with the issue of right of a bidder to seek completion of auction in its favour. The Apex Court has held in paragraph No.12, 13, 14, 15 and 16 as under:

15. This Court in Om Prakash Sharma case has held that in the absence of a concluded contract which takes place by issuance of allotment letter, suit could not be said to be maintainable as there is no vested right in the plaintiff without approval of the bid by the competent authority. Thus, in the wake of aforesaid decision, in the absence of a concluded contract, the suit could not have been decreed for mandatory injunction. It amounted to enforcing of contract in the absence thereof.

16. In the light of the aforesaid discussion, it is evident that in the absence of a concluded contract, i.e. in the absence of allotment letter and acceptance of highest bid, the suit by the plaintiff was wholly misconceived. Even if nonacceptance of the bid was by an incompetent authority, the court had no power to accept the bid and to direct the allotment letter to be issued. Merely on granting the declaration which was sought that rejection was illegal and arbitrary and by incompetent authority, further relief of mandatory injunction could not have been granted, on the basis of findings recorded, to issue the allotment letter, as it would then become necessary to forward the bid to competent authority – Chief Administrator - for its acceptance, if at all it was required.”

23. Faced with the problem of non-existence of any enforceable right in in absence of a completed contract, reliance is placed by petitioners on the judgment in M.P. Power (supra). However, in the judgment of the Apex Court it is held an auction would lie when the State purports to award any largesse and in auction process, court’s scrutiny is permitted even prior to execution of contract. There can be no debate about this proposition as judicial review by courts is not completely ousted in tender matters. In appropriate cases, involving non-adherence to proper procedure or violation of terms and conditions of tender document or existence of complete arbitrariness, courts would be justified in interfering in the tender process, even before execution of contract. However, the issue involved here is altogether different. Petitioners seek allotment of plots only because they are H-1. They are not questioning correctness of the tender process. They demand that tender process must be taken to its logical end by allotting plots to them. In a situation like this, the ration laid down in the judgment in M. P. Power (supra) would be inapplicable.

24. We therefore hold that no right is created in favour of petitioners to have plots allotted to them by CIDCO by mere reason of they being the highest bidders in the tender process.

25. Now we turn to the next issue as to whether action of CIDCO in canceling the tender process could be termed as arbitrary.

CIDCO has contended that the price quoted by petitioners are far less than prevailing market rates. It has relied upon report of Knight Frank to arrive at the said conclusion.

CIDCO has presented following chart in support of its contention of lower rates being quoted by petitioners: Sr. No. Such Sch. Lunched year Sector Plot No. Approx Area Base Price Bids Highest Bid (Rs) Highest Bidder Name Expert Agency’s Range 1 26 2021-22 17 37 3880.[8] 61925 6 1,19,925 Aditya Entrprise 140305 165,550 2 26 2021-22 17 38 3635.51 75999 4 1,31,999 Aditya Entrprise 148671 174,797 Sr. No. Such Sch. Lunched year Sector Plot No. Approx Area Base Price Bids Highest Bid (Rs) Highest Bidder Name Expert Agency’s Range Min. Max 1 26 2021-22 17 26 2030.01 61925 27 2,01,301 Shiv Developers 161,629 192,857 2 16 2021-22 17 32 4038.[8] 51,604 7 1,57,221 K T Infra 121,572 140,278 3 16 2021-22 17 32 4029.[3] 51,604 9 1,38,746 Varsha Buildcon 121,572 140,278 4 17 2021-22 17 35 3668.89 63,330 9 1,52,556 Neelkanth Infracon 123,069 141,933 5 26 2021-23 17 28 4646.46 61,925 6 1,11,925 Mahavir Superstruc ture 1,20,196 1,44,062

26. Petitioners have attempted to question the methodology adopted by Knight Frank in determining valuation of the plots. We are afraid, we are not experts in the field and cannot go into the correctness of methodology adopted by Knight Frank. Mr. Hegde has clarified that CIDCO will determine base price of respective plots in fresh auction process by taking into consideration minimum price indicated by Knight Frank. From the above chart it clearly appears that there is huge difference between the reserve price fixed by CIDCO in the earlier tender process and one that would be fixed by CIDCO in the fresh tender process. This is clear from following chart: Plot No. Earlier Reserve Base Price Revised Reserve Base Price 37 61,925/- 1,40,305/- 38 75,999/- 1,48,671/- 28 61,925/- 1,20,196/- True it is that the gap between rates quoted by petitioners and the proposed revised price by CIDCO may not be too wide. However what is now sought to be fixed by CIDCO is merely base price and CIDCO is likely to receive much higher offers than base price.

CIDCO is the custodian of public property and carries an obligation of securing maximum possible price while leasing out the plots. Funds received by CIDCO by lease of plots are to be utilized for providing public amenities in inter alia in Navi Mumbai and Navi Mumbai Airport Influence Notified Area (NAINA). It is therefore incumbent that CIDCO ensures highest possible lease premium for plots put on auction. We therefore do not see any element of arbitrariness in CIDCO’s proposed action of securing higher price for the plots. On the contrary CIDCO’s decision subserves public interest.

27. Reliance is placed by petitioners on judgment of the Apex Court in CIDCO Vs. Shishir Reality Pvt. Ltd. (supra) wherein it is held that when a contract is being evaluated, the mere possibility of more money in public offers does not itself serve public interest. The facts in the said case were however entirely different. There were allegations of irregularities in allotment of plots, sanctioning amalgamation, change of user, etc by CIDCO in favour of respondents therein and CIDCO had cancelled the allotment.

CIDCO had however executed lease deeds in favour of the allottees and the contracts were completed. In the meantime, the allottees applied for amalgamation / splitting the plots as well as change of user. The same were sanctioned by CIDCO and later CIDCO sought to cancel the allotment of plots. Thus, the issue before the Apex Court was not about cancellation of public auction with a view to secure higher price. The Apex Court held that after completion of tender process and receipt of money CIDCO, could not have backtracked on hypertechnical grounds. The Apex Court did not find any public interest in the action of CIDCO in seeking to cancellation lease deeds executed in favour of the allottees. The facts in CIDCO Vs. Shishir Reality Pvt. Ltd. are entirely different and the judgment has no application to the present case.

28. Reliance is also placed on judgment in Star Enterprises Vs.

CIDCO (supra) In that case, the highest offer was rejected without assigning any reasons. The Apex Court held that for rejecting highest offer reasons should be made available and ‘ordinarily’ same should be communicated to the concerned parties. The Apex Court however did not apply the said principle to the case before it. The Apex Court has also used the word ‘ordinarily’. In the present case reasons for cancellation of the tender process have been placed before us. We have not found any arbitrariness in decision of CIDCO. Since reasons are not communicated to petitioners and stated in the Affidavit, reliance is placed on judgment in Mohinder Singh Gill (supra) and JVPD Scheme Welfare Trust (supra). However, the Apex Court has held in Silppi Constructions Contractors Vs. Union of India, (2020) 16 SCC 489 that the tendering authority is not required to give reasons even if it is a state within the meaning of Article 12 of the constitution of India. That the decision of the tendering authority neither judicial nor quasi-judicial. It is held by the Apex Court in paragraph No.25 as under:

29. We are therefore of the view that the decision of CIDCO would not be vitiated merely by the reason of non-communication of reasons. For the same reason, reliance of petitioners on judgment in Kalu Ram Ahuja (supra) would be of no avail. In that case, Apart from absence of reasons for rejecting the highest bid in the cancellation order, no records were placed before the Court to demonstrate that the decision was based on rational and tangible reasons and that the decision was in public interest.

30. We are therefore of the considered view that neither any right is created in favour of petitioners to have the plots allotted to them nor there is any arbitrariness on the part of CIDCO in canceling tender process. In fact, Mr. Hegde has relied upon the judgment of the Apex Court in Rushi Kiran Logistic (supra) in which the Apex Court has held that even a concluded contract, if terminated in a bonafide manner, may amount to breach of the contract, but would not result in arbitrariness.

31. Resultantly we do not find any error in the impugned decision of CIDCO. We however record the statement made on behalf of CIDCO that in the fresh tender process, it shall fix the base price as the minimum price indicated in the report of Knight Frank. Petitions are devoid of merits. They are dismissed with no orders as to costs.

SANDEEP V. MARNE, J. S. V. GANGAPURWALA, ACJ