Holding

A highest bidder acquires no vested right and no contract is formed until the bid is accepted by the competent authority; the Administrator, duly delegated power under Section 51(1) of the HUDA Act, validly rejected the bid, rendering the suit for mandatory injunction untenable.

Summary

The Haryana Urban Development Authority (HUDA) conducted an auction of a 9.527‑acre commercial tower in Gurgaon, where Orchid Infrastructure Developers (formerly Bhudeep Builders) submitted the highest bid of Rs 111.75 crore and deposited 10% on the spot. HUDA, through its Administrator, rejected the bid on the ground that the price was below market trends, and no allotment letter was issued. Orchid filed a suit seeking a declaration that the rejection was illegal and a mandatory injunction directing issuance of the allotment letter. The Supreme Court held that a highest bidder acquires no vested right or concluded contract until the bid is accepted by the competent authority, and that the Administrator, empowered by a delegation under Section 51(1) of the HUDA Act, validly rejected the bid. Consequently, the suit for mandatory injunction was not maintainable. The Court allowed HUDA’s appeal, set aside the High Court’s judgment and restored the lower court’s decision dismissing the suit.

Issues considered

The existence of any vested right or concluded contract in favor of the highest bidder absent an allotment letter.
Whether the Administrator had authority, via delegation under Section 51 of the Haryana Urban Development Authority Act, to accept or reject auction bids.
Whether the rejection of the bid was illegal, arbitrary, or without sufficient reason, warranting a mandatory injunction.
Whether the suit was maintainable under the Specific Relief Act and CPC, including the requirement of ad valorem court fee.

Legislation cited

Code of Civil Procedure, 1908s. Order 7 Rule 11
Haryana Urban Development Authority Act, 1977s. 15(2), s. 51(1), s. 51(4)
Haryana Urban Development (Disposal of Land and Buildings) Regulations, 1978s. Regulation 6(2)
Specific Relief Acts. 41(h)

Subjects

auctionbid rejectionvested rightdelegation of powermandatory injunctionSpecific Relief Actpublic procurementcontract formationHUDA

Judgment

[2017] l S.C.R. 847

HARYANA URBAN DEVELOPMENT AUTHORITY & ORS. A
v.
ORCHID INFRASTRUCTURE DEVELOPERS P. LTD.
(Civil Appeal No. I 016 of2017)
JANUARY 27, 2017 B

[ARUN MISHRA AND AMITAVA ROY, JJ.]
Auction - Tender - Rejection uf highest bid - Bid re/wing to
co1nn1ttr1.:ial rorl'er on over nine ut.:rt1S uf lund in Gurgaon - Rejection
of highest bid of Rs. I I I. 75 crores of a firm for the commercial tower
by the Development Authority - Denial offormal letter of allotment
c
pertaining to the property in favour of the firm - Correctness of -
Held: There was no right acquired and no vested right accrued in
favuur of the firm merely because his bid amount was highest and
had deposited I 0% of 1he bid amuunl - Allo1ment feller was never
been issued to the petitioner in view of non-acceptance of the bid - D
Thus, 1here was no concluded contr&ct - Jn view thereof suit for
mandatory injunction by the firm wholly misconceived - There had
been delegation ofpower by HUDA to the Administrator with respect
to the power to accept the auction bids for commercial/residential/
industrial sites - The firm suppressed the said order of HUDA -
E
Administrator had the power to reject the bid as per the delegation
- He had rejected the bids on sufficient ground, duly considering
the materials on record, thus, the rejection of the bid was proper -
Huge property was saved from being plundered - Hwyana Urban
Development Authority Act, 1977 - ss. 15(2), 51(4) - Haryana
Urban Development (Disposal of Land and Buildings) Regulations, F
1978.
Allowing the appeal, the Court
HELD: 1.1 Merely by declaration that rejection of the bid
by the Administrator was ilkgai, the plaintiff could not have
become entitled to consequential relief of issuance of allotment G
letter. The suit, was not maintainable for relief sought in view of
the faci that there was no concluded contract in the absence of
allotment letter being issued to the plaintiff, which was a sine qu11
11011 for filing the civil suit. [Para 13] [859-E-H]

H
S47
848 SUPREME COURT REPORTS (2017} I S.C.R.

A 1.2 The highest bidder has no vested right to have the
auction concluded in his favour. The Government or its authority
could validly retain power to accept or reject the highest bid in
the interest of public revenue. There was no right acquired and
no vested right accrued in favour of the plaintiff merely 'because
his bid amount was highest and had deposited 10% of the bid
B
amount. As per Regulation 6(2) of the Haryana Urban
Development (Disposal of Land and Buildings) Regulations 1978,
allotment letter has to be issued on acceptance of the bid by the
Chief Administrator and within 30 days thereof, the successful
bidder has to deposit another 15% of the bid amount. In the instant
c case, allotment letter has never been issued to the petitioner as
per Regulation 6(2) in view of non-acceptance of the bid. Thus
there was no concluded contract. [Para 14] [860-B-C]
1.3 It is evident that in the absence of a concluded
contract, i.e. in the absence of allotment letter and acceptance of
D highest bid, the suit by the plaintiff was wholly misconceived.
The suit could not have been desfred for mandatory injunction.
It amounted to enforcing of contract in the absence thereof. Even
if non-acceptance 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 iss'ued. Merely on granting the declaration which
E
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·
F acceptance, if at an it was required. [Para 16] [862-G-H; 863-A)
Jitender Singh v. Haryana Urban Development
Auth?rity High Court Of Punjab & Hmyana in CWP
No. 12753/2010; Uttar Pradesh Avas Evam Vikas
Parishad & Ors. v. Om Prakash Sharma [2013) 6
G SCR 199 : (2013) 5 SCC 182 - relied on.
2.1 It is apparent that there had been delegation of power
by HUDA to the Administrator with respect to the power to accept
the auction bids for commercial/residential/industrial sites
provided the highest bid is more than the reserve. price and
H
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 849

minimum of three bids have been received. The Administrator A
has also the power if ~he site is not sold in 3 attempts, to revise
the price downwards up to a maximum of 10% of the reserve
price. Thus, plaintiff has not come to the court with clean hands
and has suppressed for the reasons best known to it, the said
order of HUDA by which delegation of power has been made.
B
The decision to confirm or otherwise of a bid, should be taken
only by a ·competent authority whose order is appealable.
Therefore, bids should be considered by the competent authority
and as the Administrator is the competent authority to take the
follow-up action, the Headquarters be apprised of the decision
taken. Thereafter, the Administrator had taken the decision not c
to confirm the seven bids of seven properties. It is apparent from
the order dated 21.9.2004 that the Administrator after examining
the relevant aspects and the report, had decided to reject the.
seven bids mentioned therein. [Para 18] [864-H; 865-A-B, E-F)
2.2 The Administrator also mentioned in his letter that D
there was delegation of power to him. The letter from the Chief
Administrator also indicated that the Administrator was armed
with the power. That apart, the terms and condition No.4 of the
tender notice subject to which auction was held is seen.
Admittedly, the Presiding Officer was the Administrator, HUDA.
Thus, as per the terms of the auction also, the.Administrator was E
having the power to accept or reject the bid. That the bid was
more than the reserve price and there were more than 3 bidders.
Thus, the Administrator ,had the power to reject the bid as per
the delegation made to him on 13.9.1989. [Para 19, 20) [866-H;
867-A-B)
F
2.3 As delegation had been made by HUDA under section
51(1), it was incumbent upon the plaintiff to question it and assail
the same. However, the plaintiff had feigned ignorance .as to
delegation on its part which does nilt inspire confidence as the
line of arguments advanced on its behalf that no delegation was
G
there u/s. 51(4) was clearly grounded upon the fact that the
delegation made under section 51(1) was in fact to the knowledge
of the plaintiff that is why the said argument had been advanced
and unfortunately the counsel for HUDA also conceded that there
was no delegation of power made by the State Government under
section 51( 4). This was done by overlooking the delegation dated H
~50 SUPREME COURT REPORTS [2017] I S.C.R.

A 13.9.1989, the factum whereof has not been controverted by the
counsel appearing on behalf of the respondent in any manner
whatsoever. In the absence of having questioned delegation made
by RUDA under section 51(1), plaintiff could not have succeeded
in the suit. [Para 21] [867-D-FJ
D 2.4 The plaintiff did not question the delegation of power
before the courts below in any manner whatsoever. In the absence
of challenge to legality of delegation order dated 13.9.1989, the
plaintiff being guilty of suppressio veri, it is not entitled to urge
the said submission so as to invalidate the statutory delegation
c of power made by RUDA u/s. 51(1 ). In view of the said fact-
situation, it is apparent that the Administrator had the power to
reject a bid, not only being the Presiding Officer as per terms
and condition No.4 of auction but otherwise also he had the power.
Thus, the decision of the High Court in setting aside the auction
on the said ground cannot be said to be legally sustainable. [Paras
D 22, 23] (867-G-H; 868-A-BJ
3.1 The order passed by the Administrator is apparent
from the communication of the Administrator made to Estate
Officer, RUDA. It is apparent from the rejection order that the
reports submitted were considered and decision was taken not
E to accept the bids with respect to auction of seven properties. It
was not a case of singular rejection of the bid made by the plaintiff
alone. Six other bids were also not accepted. The reason for
rejection has been made clear in the written statement filed by
RUDA. Thus, it is apparent that the report and recommendations
F
of the Auction Committee consisting of 5 members, was not to
accept the bids of big commercial sites as the prices fetched were
on lower side which was examined by the Government at the
Headquarters level. Considering the auction trends and also
taking into consideration the higher prices fetched at other cities,
it was decided to reject the seven bids. Thus, there was due
G application of mind. The rejection of the bid by the Administrator
was absolutely proper and justified and was beyond the pale of
judicial scrutiny. The Administrator had the right to reject the
bids and he had rejected it on sufficient ground, duly considering
the materials on record. In the interest of the public, revenue of
the State and in the interest of RUDA and the huge property was
H
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LfD. 851

saved from being plundered. [Paras 24, 25 and 26] [868-E-F; 869- A
E-F]
3.2 With respect to reserve price also, there was a hitch
to fix and approve it right from the word go. It was a case of
auction of big commercial tower having a huge area of9.527 acres.
Only the reserve price of the same was forwarded for fixation to B
the Chief Administrator, whereas the reserve prices of other
properties were fixed by the Administrator. When the bids were
received, the Administrator considering the huge stakes involved,
forwarded the matter to the Chief Administrator. However, the
Chief Administrator washed off his hands and did not decide it
and sent the matter back to the Administrator, clearly indicating c
that the Administrator was delegated with the power to decide
the bids. Thus, under compelling circumstances and duly
considering the reports, the Administrator had taken the decision
to reject the bids not only,of the plaintiff but also six others. For
the first time in the history of State of Haryana, such big properties D
were put to hammer ori the prices indicated. The hitch in fixing
the reserve price also indicates that the reserve price was not
determined in a fair manner. Not only the plaintiff but HUDA also
did not place the delegation of power on record of the courts
below. None of the officials of HUDA had been examined. Only
an Assistant-a junior ranking person had been examined who was E
not posted there when the auction was held and came only in
2008. As the property was a commercial tower with huge
commercial complex, the first appellate court was right in
dismissing the suit. [Para 33] (874-H; 875-A-D]
3.3 Plaintiff came to the court for mandatory injunction, F
for issuance of allotment letter without payment of court fee also.
It was incumbent upon the plaintiff to pay the ad valorem court
fee as prevailing and the valuation of the suit should not have
been less than the bid amount of Rs.111.75 crores. The plaintiff
is directed to pay the ad valorem court fee not only before the G
trial court but also before the High Court. The plaintiff is directed
to deposit the court fee within the stipulated period. [Para 34]
[875-E-F]
3.4 The judgment and decree passed by the High Court is
set aside and that of the first appellate court is restored. In the
H
852 SUPREME COURT REPORTS [20 I 7] J S.C.R.

A . facts and circumstances of the case, costs of Rs.5 lakhs is imposed
on the respondent to be deposited in the Advocates' Welfare.
Fund and in the Supreme Court Employees' Welfare Fund within
the stipulated period. [Para 35] [875-G]
Uttar Pradesh Avas Evam Vikas Parishad & Ors. v.
B Om Prakash Sharma [2013] 6 SCR 199 : (2013) 5
sec 182 - relied on.
Mis. Star Enterprises & Ors. v. City and Industrial
Development Corporation of Maharashtra Ltd. & Ors.
[1990] 2 SCR 826 : (1990) 3 SCC 280; Mohinder
c Singh Gill & Anr. v. The Chief Election Commissioner,
New Delhi & Ors. AIR 1978 SC 851 : [1978] 2 SCR
272; Kalu Ram Ahuja & Anr. v. Delhi Development
Authority & Anr. (2008) 10 SCC 696; State of Uttar
Pradesh & Ors. v. Vijay Sahadur Singh & Ors. (1982)
2 SCC 365; Laxmikant & Ors. v. Satyawan & Ors.
D [1996] 3 SCR 532 : (1996) 4 SCC 208; Meerut
Development Authority v. Association of Management
Studies & Anr. [2009] 6 SCR 663 : (2009) 6 SCC 171;
Mis. Star Enterprises & Ors. v. City and Industrial
Development Corporation of Maharashtra Ltd. & Ors.
E [1990] 2 SCR 826 : (1990) 3 SCC 280; Kalu Ram
Ahuju & Anr. v. Delhi Development Authority & Anr.
(2008) 10 SCC 696; Mohinder Singh Gill & Anr. v.
The Chief Election Commissioner, New Delhi & Ors.
[1978] 2 SCR 272 : (1978) 1 SCC 405 - referred to.

F Case Law Reference
[1990] 2 SCR 826 referred to Para 12
[1978] 2 SCR 272 referred to Para 12
(2008) 10 sec 696 referred to Para 12
G [2013] 6 SCR 199 relied on Para 15
(1982) 2 sec 365 referred to Para 27
[1996] 3 SCR 532 referred to Para 28
[2009] 6 SCR 663 referred to Para 29
H
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 853

[1~90] 2 SCR 826 referred to Para 30 A
(2008) 10 sec 696 referred to Para 31
[19781 2 SCR 272 referred to Para 32
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1016
of2017. B
From the Judgment and Order dated 17.01.2011 of the High Court
of Punjab & Haryana at Chandigarh in R. S. A. No. 14 of 2011.
Anish Kumar Gupta, Anil Grover, AA Gs, Shyam Divan, Sr. Adv,
Uday Banerjee, Sanjay Kumar Visen, Chandra Shekhar Suman,
R. K. Rajwanshi, Ms. Deepshikha Bharati, Ms. Nupur Choudhary, C
H. S. Sachdeva, Advs. for the Appellants.
Dr. Abhishek Manu Singhvi, Raju Ramachandran, Sr. Advs., Raja
Chatterjee, Ms. Runa Bhuyan, Ms. Maithili Vijay KumarThallam, Piyush,
Satish Kumar, Ad vs. for the Respondent.
D
The Judgment of the Court was delivered by
ARUN. MISHRA, J. I. Leave granted.
2. The appeal arises out of judgment and order dated 17. I .2011
passed by the High Court of Punjab & Haryana at Chandigarh thereby
setting aside the judgment and decree of District Judge dated 29.11.20 I 0 E
and restoring the judgment and decree of Civil Judge passed on·
14.10.2010. The plaintiff Bhudeep Builders and Exporters Pvt. Ltd. were
later renamed as Mis. Orchid Infrastructure. Developers P. Ltd. The
. plaintiff-respondent filed a suit for declaration with consequential relief
as against the appellants with regard to rejection of bid relating to the
commercial tower situated in Sector 29, Urban Estate, Gurgaon, in area F
admeasuring 9.527 acres. The bid submitted by the plaintiff was the
highest of Rs. ll, 17,50,000/-. The reserve price was Rs. I 06.65 crores.
The main terms and conditions of the auction were as under:
(i) I 0% of the bid amount to be tendered on the spot at fall of
hammer. G

(ii) 15% of the bid money to be deposited within 30 days from
the date of issuance of allotment letter.
(iii) 75% of the amount to be paid within 60 days from issuance
H
854 SUPREME COURT REPORTS [2017] l S.C.R

A of allotment letter as one time interest free payment or with interest ;n
the manner prescribed.
(iv) The Presiding Officer (Administrative Officer) reserved the
right to withdraw any property from the auction or reject any bid without
assigning any reason.
B 3. It is further averred in the plaint that the auction held on
24.5.2004 was presided over by the Administrator, Haryana Urban
Development Authority (for short 'HUDA'). Reserve price had been
approved by Chief Administrator, HUDA. Though the reserved price
for the other sites were approved by the Administrator. In the plaint it
c was further averred that 27 persons deposited the security amount of
Rs.50 lakhs for bidding and various bidders actively participated in the
bids. Ultimately the bid of the plaintiff amounting to Rs.111.75 crores
being highest was accepted. Petitioner deposited I 0% amount by various
drafts on the fall of hammer. Formal letter of allotment was not issued
inspite of efforts made by the plaintiff. Officials of HU DA were dragging
D their feet over the issue without any rhyme or reason.
Plaintiff ultimately received memo dated 24.9.2004 purporting
to refund I 0% amount Rs. I I, 17,50,000 deposited by the plaintiff at the
time of auction held on 24.5 .2004 on the ground that the bid had not been
accepted.
E
4. Plaintiff questioned the rejection of the bid on the ground of its
being illegal, unlawful, mala fide, arbitrary. discriminatory and violative
of principles of natural justice. The bid for the commercial tower was
adequate and above the reserved price. The plaintiff relied upon
Regulation 6 regarding issuance ofallotment letter by ChiefAdministrator.
F The rejection of the bid is without any rhyme or reason. The order is
non-speaking. There was no material available with the defendant to
conclude that auction of property in question was made at a lower rate
or that the same would fetch a higher price in the event of re-auction.
The Chief Administrator alone was competent to decide about the bid
G
and no delegation of power to Administrator has been shown to the
plaintiff. Mere baseless apprehension harboured by the defendant that
the auction could fetch a higher rate, could not be said to be in public
interest. If such action is permitted, auction process shall be a never
ending exercise. The plaintiff valued the suit for declaration and
consequential reliefof mandatory injunction at Rs.400 and paid the court
H
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 855
rARUN MISHRA, J.l

fee of Rs.55. Plaintiff has prayed for a declaration that memo dated A
24.9.2004 rejecting the bid of the plaintiff to be void ab initio, non est and
illegal, and that plaintiff is successful bidder of commercial tower
measuring 9.527 acres situated in Sector 29, Urban Estate, Gurgaon.
Plaintiff further prayed for mandatory i11junction directing the defendants
to issue formal letter of allotment pertaining to the suit property in favour
B
ofthe plaintiff and to complete requisite formalities ofallotment including
delivery of possession and sanction of site plan. Plaint.iff further prayed
for an injunction restraining defendants from re-auctioning the suit property
and from creating any third party interest of any nature in respect of the
suit property.
5. The defendant HUDA in its written statement raised
c
preliminary objection that the civil court has no jurisdiction to entertain
the present suit in view of section 15(2) ofHaryana Urban Development
Authority Act, 1977 (hereinafter referred to as 'the Act'). It was also
submitted that the suit was not maintainable in the present form, that the
plaintiff has no cause of action to file the suit and has not come to court D
with clean hands, suit is liable to be rejected under Order 7 Rule 11 of
the C.P.C., plaintiff is liable to pay ad. valorem court fee on the sale
consideration ofRs.1 l l .75 crores of the commercial site in question, the
suit.is barred under section 41 (h) of the Specific ReliefAct. The plaintiff
has not availed the remedy of arbitration as per the mies, regulations
and bye-laws of HUDA. There is no concluded contract between the E
parties. Pl.aintiffhas accepted the terms and conditions of the auction.in
which it was mentioned that the competent authority is entitled to.accept
or reject the bid without assigning any reason. The auction was presided.
over by the Administrator, HUDA. After auction in question was held
complaints were received regarding intimidation and threatening of F
bidders. The bid was not accepted for the reason that the price ofurban
estates at other places like Faridabad, Panipat, Panchkula etc. for similar
kind of property was higher. The bid in question was not acceptable as
per prevalent market price of the similar property in Gurgaon. The
Presiding Officer i.e. Administrator is fully competentto refuse or accept
the bid. Competent authority after going through the individual reports/ G
comments/opinion of the members of the Auction Committee comprising
of Estate Officer, HUDA, Gurgaon, Senior Accounts Officer, District
Town Planner and District Revenue Officer (representative of the Deputy
Commissioner, Gurgaon) as members under the Chairmanship of
H
856 SUPREME COURT REPORTS [201 7] 1 S.C.R.

A 'Administrator, HUDA. Administrator thoroughly examined the
observations and recommendations of the members of the Auction
Committee regarding not to accept the bid prices of big commercial
sites since these prices being apparently on the lower side which was
also examined by the Government at the Headquarters level. The records
of the entire auction proceedings including opinion of the Estate Officer,
B
Gurga~n, other members of the Auction Committee, Deputy
Commissioner and also after studying the reserve price and auction price
trends, a decision was taken by the competent authority not to accept
the bid prices vide their written report.
It was further contended by HUDA that Administrator is the
c competent authority. Power to accept bid has been delegated to him by
the competent authority.
6. In view of the written statement the plaintiff filed a rejoinder.
It was denied that the civil court has no jurisdiction and bid price was not
inadequate. It also denied the delegation of power to Administrator,
D HUDA, Gurgaon.
7. The trial court-Civil Judge, Junior Division, Gurgaon decreed
the suit vide judgment and decree dated 14. l 0.2010. Three witnesses
were examined by the plaintiff and on behalfof defendant HUDA. Shri
P.K.Ramanand, Assistant was examined. The trial court held that
E Administrator, HUDA was not competent to reject the bid of the plaintiff.
As per Regulation 6 of Haryana Urban Development (Disposal of Land
and Buildings) Regulations, 1978 (hereinafter referred to as 'the
Regulations of 1978'), the authority to accept or reject a bid was vested
with Chief Administrator, HUDA and delegation of power to Chief
F Administrator can only be made by the State Government vide notification
as per section 51 (4) of the Act. No notification has been placed on
record to prove that the power of ChiefAdministrator has been delegated
to Administrator, HU DA. The report on the basis of which bid had been
rejected was not placed on record. The trial court held that the plaintiff
is entitled to mandatory injunction for issuance of formal letter of
G acceptance of bid. The trial court fwther held that the suit is maintainable.
The payment of court fee by the plaintiff was adequate as the suit was
not for specific performance of contract. The trial court further directed
the defendants to issue formal letter of allotment on completion ofrequisite
formalities within two months.
H
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 857
fARUN MISHRA, J.l

8. On first appeal being preferred in the court of District Judge, A
Gurgaon the same was allowed vide judgment and decree dated
29.11.2010. The suit was dismissed by the first appellate court. The first
appellate court has opined that the power of Chief Administrator has
been delegated to Administrator, HUDA. As is apparent from the letter
written by ChiefAdministrator to the Administrator. No legal and vested
B
right accrued in favour of the plaintiff by submission of the highest bid
and 10% of the amount on fall of hammer. Bid has not been finally
accepted. The plaintiff ought to have paid ad-valorem court fee. The
first appellate court also observed that no responsible officer ofHUDA
has entered the witness box and only a junior ranking Assistant has been
examined who was not present when the auction was held. He was c
posted at Gurgaon on 2.10.2008. The first appellate court has observed
as under:
"However, the defendants have not produced any document
whatsoever to prove the above averment and nor has any
responsible officer, including defendants No.2 and 3, cared to D
step in the witness box to substantiate the above referred plea
and instead only one witness, and that too an Assistant named
P.K. Ramanan from the office of HUDA. Gurgaon who is a
junior ranking official was examined as OW I who was admittedly
not even present at the time of the impugned auction because he
has admitted during his cross-examination that he came to be E
posted at Gurgaon only w.e.f. 8.8.2008. Non-appearance of
any responsible official of HUDA thus indicates some sort of
unholy news between certain quarters for which reason a copy
of this Judgment is ordered to be forwarded to the Chief Secretary
to the Government of Haryana for getting conducted an enquiry F
as to why such course of conduct was adopted despite huge
stakes running into several crores. Was it intended to benefit
the plaintiff by default. The Chief Secretary to Government of
Haryana be requested to acknowledge receipt of the copy of
the judgment."
G
9. On the second appeal being preferred on 2.1.2011 in the High
Court as against the judgment and decree, the same has been allowed
on I 7.1.2011 within 15 days of it being filed. The High Court has restored
the judgment and decree of the trial court on the ground that there is no
delegation of power to the Administrator. The rejection by the
H
~~

l{l)DA v. ORCHIQ INFRASTRUCTURE DEVELOPERS P. LTD. 859
; [ARUN MISHRA, J.]
858 SUPREME COURT REPORTS [2017) I S.C.R. .;
•. •
Administrator for acceptance. However, the Chief Administrator wrote A
back to the Administrator that the Administrator should decide about the
A Administrator was inconsequential and was not a valid decision in the bid as power was delegated to him. As per Regulation 6(2) the Chief
absence ofirregularity in auction the bid ought to have been accepted by Administrator was required to decide about the acceptance or rejection
the Chief Administrator, HUDA and letter conveying acceptance ougk of the bid. The rejection of bid is not only arbitrary, unreasoned and no
to have been issued in favourofthe plaintiff. In view of Regulation 6(2) report has bee? placed on record by. HUDA as to why bid ha~ been B
the ChiefAdministrator was compete.nt authority to take a final decision rejected. The bid was above reserve pnce and there were several bidders.
on the bid. No notification has been issued by the State Government There being no better bid as such the bid of the plaintiff ought to have
B
under se.:tion 51(4) of the Act. The suit has been held to be maintainable~ been accepted. Rejection of the bid without any reason cannot be said
It has been rightly valued and adequate court fee has been paid. · to be valid for which reliance has been placed on Mis. Star Enterprises
10. The judgment and decree of High Court has been questioned & Ors. v. City· and Industrial Development Corporation of
by filing the appeal in this Court. An application has also been filed on Maharashtra Ltd. & Ors. (1990) 3 SCC 280, Mohinder Singh Gill & C
I behalf of the appellant to take additional documents on record. HUDA Anr. v. The Chief Election Commissioner. New Delhi & Ors. AIR
I c for the firsttime has filed notification dated 13 .9.1989 issued by it under 1978 SC 851, and Kalu Ram Ahuja & Anr. v. Delhi Development
! section 51 of the Act, delegating the functions in favour of various officers Authority &Anr. (2008) I 0 sec 696. In the absence of any notification
i indicating that the power has been delegated to the Administrator to being issued by the State Government under section 51(4) of the Act,
acce'pt the auction bids for comm.ercial/residential/industrial sites. Apart the power of the Chief Administrator could not have been delegated to D
from that, a judgment of Division Bench of the High Court of Punjab & the Administrator. Thus rejection of the bid by the Administrator was
D Haryana in CWP No.1275312010-Jitender Singh v. Haryana Urban unauthorised. The delegation of power by HU.DA was made under
Development Authority has been placed on record in which the impugned ·.section 51(1) whereas delegation was required under section 51(4).
I l
decision of the High Court in the present appeal has been held to be not In re : Maintainability of suit in absence of concluded contract:
i:
I
laying down a good law and has been overruled.
l 13. Firstly, we examine the question whether there being no E
11. It was urged by Shri Shyam Divan, learned senior counsel concluded contract in the absence of acceptance of bid and issuance of
E appearing on behalf of the appellant that Administrator was Presiding allotment letter, the suit could be said to be maintainable forthe declaratory
I
! •
Officer, thus, had the authority to accept or to refuse the bid not only as
per terms and condition No.4 of the tender notice but also as per the
relief and mandatory injunction sought by the plaintiff. The plaintiff has
prayed for a declaration that rejection of the bid was illegal. Merely by
!:
delegation made by HUDA on 13.9.1989 under section 51 of the Act. that, plaintiff could not have become entitled for consequential mandatory
Since the letter of allotment has not been issued, there was no concluded injunction for issuance of formal letter of allotment. Court while exercising F
I contract between the parties. Thus suit was not maintainable in the iu.dicial review could not have accepted the bid. The bid had never been
F absence of concluded contract for its enforcement. No allotment order accepted by concerned authorities. It was not a case of cancellation of
was issued by the Chief Administrator as per Regulation 6(2). Chief bid after being accepted. Thus even assuming as per plaintiff's case
Administrator was only required to issue allotment letter. Once bid has that the Administrator was not equipped with the power and the Chief
been rejected, there was no occasion for the court to issue mandatory · Administrator had the power to accept or refuse the bid, there had been G
injunction. The rejection of the bid was fully justified as prices fetched no decision by the ChiefAdministrator. Thus, merely by declaration that
G of 7 items were not adequate, and no right accrued on the basis of rejection of the bid by the Administrator was illegal, the plaintiff could
submitting the highest bid. not have become entitled to consequential relief of issuance of allotment
12. Shri Abhishek Manu Singhvi and Shri Raju Ramchandran, ' letter. Thus the suit, in the form it was filed, was notmaintainable for
learned senior counsel appearing for the respondent strenuously H
contended that the Administrator had forwarded the bid to the Chief
H
!!
~~

l{l)DA v. ORCHIQ INFRASTRUCTURE DEVELOPERS P. LTD. 859
; [ARUN MISHRA, J.]
858 SUPREME COURT REPORTS [2017) I S.C.R. .;
•. •
Administrator for acceptance. However, the Chief Administrator wrote A
back to the Administrator that the Administrator should decide about the
A Administrator was inconsequential and was not a valid decision in the bid as power was delegated to him. As per Regulation 6(2) the Chief
absence ofirregularity in auction the bid ought to have been accepted by Administrator was required to decide about the acceptance or rejection
the Chief Administrator, HUDA and letter conveying acceptance ougk of the bid. The rejection of bid is not only arbitrary, unreasoned and no
to have been issued in favourofthe plaintiff. In view of Regulation 6(2) report has bee? placed on record by. HUDA as to why bid ha~ been B
the ChiefAdministrator was compete.nt authority to take a final decision rejected. The bid was above reserve pnce and there were several bidders.
on the bid. No notification has been issued by the State Government There being no better bid as such the bid of the plaintiff ought to have
B
under se.:tion 51(4) of the Act. The suit has been held to be maintainable~ been accepted. Rejection of the bid without any reason cannot be said
It has been rightly valued and adequate court fee has been paid. · to be valid for which reliance has been placed on Mis. Star Enterprises
10. The judgment and decree of High Court has been questioned & Ors. v. City· and Industrial Development Corporation of
by filing the appeal in this Court. An application has also been filed on Maharashtra Ltd. & Ors. (1990) 3 SCC 280, Mohinder Singh Gill & C
I behalf of the appellant to take additional documents on record. HUDA Anr. v. The Chief Election Commissioner. New Delhi & Ors. AIR
I c for the firsttime has filed notification dated 13 .9.1989 issued by it under 1978 SC 851, and Kalu Ram Ahuja & Anr. v. Delhi Development
! section 51 of the Act, delegating the functions in favour of various officers Authority &Anr. (2008) I 0 sec 696. In the absence of any notification
i indicating that the power has been delegated to the Administrator to being issued by the State Government under section 51(4) of the Act,
acce'pt the auction bids for comm.ercial/residential/industrial sites. Apart the power of the Chief Administrator could not have been delegated to D
from that, a judgment of Division Bench of the High Court of Punjab & the Administrator. Thus rejection of the bid by the Administrator was
D Haryana in CWP No.1275312010-Jitender Singh v. Haryana Urban unauthorised. The delegation of power by HU.DA was made under
Development Authority has been placed on record in which the impugned ·.section 51(1) whereas delegation was required under section 51(4).
I l
decision of the High Court in the present appeal has been held to be not In re : Maintainability of suit in absence of concluded contract:
i:
I
laying down a good law and has been overruled.
l 13. Firstly, we examine the question whether there being no E
11. It was urged by Shri Shyam Divan, learned senior counsel concluded contract in the absence of acceptance of bid and issuance of
E appearing on behalf of the appellant that Administrator was Presiding allotment letter, the suit could be said to be maintainable forthe declaratory
I
! •
Officer, thus, had the authority to accept or to refuse the bid not only as
per terms and condition No.4 of the tender notice but also as per the
relief and mandatory injunction sought by the plaintiff. The plaintiff has
prayed for a declaration that rejection of the bid was illegal. Merely by
!:
delegation made by HUDA on 13.9.1989 under section 51 of the Act. that, plaintiff could not have become entitled for consequential mandatory
Since the letter of allotment has not been issued, there was no concluded injunction for issuance of formal letter of allotment. Court while exercising F
I contract between the parties. Thus suit was not maintainable in the iu.dicial review could not have accepted the bid. The bid had never been
F absence of concluded contract for its enforcement. No allotment order accepted by concerned authorities. It was not a case of cancellation of
was issued by the Chief Administrator as per Regulation 6(2). Chief bid after being accepted. Thus even assuming as per plaintiff's case
Administrator was only required to issue allotment letter. Once bid has that the Administrator was not equipped with the power and the Chief
been rejected, there was no occasion for the court to issue mandatory · Administrator had the power to accept or refuse the bid, there had been G
injunction. The rejection of the bid was fully justified as prices fetched no decision by the ChiefAdministrator. Thus, merely by declaration that
G of 7 items were not adequate, and no right accrued on the basis of rejection of the bid by the Administrator was illegal, the plaintiff could
submitting the highest bid. not have become entitled to consequential relief of issuance of allotment
12. Shri Abhishek Manu Singhvi and Shri Raju Ramchandran, ' letter. Thus the suit, in the form it was filed, was notmaintainable for
learned senior counsel appearing for the respondent strenuously H
contended that the Administrator had forwarded the bid to the Chief
H
!!
860 SUPREME COURT REPORTS [2017) I S.C.R.

A relief sought in view of the fact that there was no concluded contract in
the absence of allotment letter being issued to the plaintiff, which was a
sine qua non for filing the civil suit.
14. It is a settled law that the highest bidder has no vested right
to have the auction concluded in his favour. The Government or its
authority could validly retain power to accept or reject the highest bid in
the interest of public revenue. We are of the considered opinion that
there was no right acquired and no vested right accrued in favour of the
plaintiff merely because his bid amount was highest and had deposited
I 0% of the bid amount. As per Regulation 6(2) of the Regulations of
1978, allotment letter has to be issued on acceptance of the bid by the
c Chief Administrator and within 30 days thereof, the successful bidder
has to deposit another 15% of the bid amount. In the instant case allotment
letter has never been issued to the petitioner as per Regulation 6(2) in
view of non-acceptance of the bid. Thus there was no concluded
contract. Regulation 6 of the Regulations of 1978 is extracted hereunder:
D "6. Sale of lease of land or building by auction.- (I)
In the case of sale or lease by auction, the price/premium to be
charged shall be such reserve price/premium as may be
determined taking into consideration the various factors as
indicated in sub-regulation (I) of Regulation 4 or any higher
E amount determined as a result of bidding in open auction.
(2) I 0 per cent of the highest bid shall be paid on the spot
by the highest bidder in cash or by means of a demand draft in
the manner specified in sub-regulation (2) of Regulation 5. The
successful bidder shall be issued allotment letter in Form 'CC'
F or 'C-11' by registered post and another 15 per cent of the bid
accepted shall be payable by the successful bidder, in the manner
indicated, within thirty days of the date of allotment letter
conveying acceptance of the bid by the Chief Administrator;
failing which the I 0 per cant amount already deposited shall stand
forfeited to the Authority and the successful bidder shall have no
G claim to the land or building auctioned.
(3) The payment of balance of the price/premium, rate of
interest chargeable and the recovery of interest shall be in the
same manner as provided in sub-regulations (6) and (7) of
Regulation 5.
11
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 861
fARUN MISHRA, J.l

(4) The general terms and conditions of the auction shall be A
such as may be framed by tbe Chief Administrator from time to
tome and announced to the public before auction on the spot.''
15. We are fortified in our view by a decision of this Court in
Uttar Pradesh Avas Evam Vikas Parishad & Ors. v. Om Prakash
Sharma (2013) 5 SCC 182, the questions arose for its consideration B
that: whether there is any ves!cd right upon the plaintiff/bidder until the
bid is accepted by the competent authority in relation to the property in
question? Merely because the plaintiff is the highest bidder by depositing
20% of the bid amount without there being approval of the same by the
competent authority and it amounts to a concluded contract in relation to
the plot in question; and whether the plaintiff could have maintained the c
suit in the absence of a concluded contract? Considering the aforesaid
questions, this Court has discussed the matter thus:
"30. In support of the said proposition, the learned Senior Counsel
for the defendant, Mr Rakesh Dwivedi has also placed reliance
upon another decision of this Court in State of UP v. Vijay D
Bahadur Singh (1982) 2 SCC 365. The learned Senior Counsel
has rightly placed reliance upon the judgment of this Cow1 in
Rajasthan Housing Board case (2007) 1 SCC 477 which reads
as under: (SCC p. 483, para 9)
"9. This being the settled legal position, the respondent E
acquired no right to claim that the auction be concluded in its
favour and the High Court clearly erred in entertaining the
• writ petition and in not only issuing a direction for
consideration of the representation but also issuing a further
direction to the appellant to issue a demand note of the F
balance amount. The direction relating to issuance of the
demand note for balance amount virtually amounted to
confirmation of the auction in favour of the respondent which
was not the function of the High Court."
x x x x x In State of Orissa v. Harinarayan Jaiswa/ ( 1972) 2
G
SCC 36 case, relevant paragraph of which reads as under: (SCC
pp. 44-45, para 13)
"13. xx xx x There is no concluded contract till the bid is
accepted. Before there was a concluded contract, it was
H
862 SUPREME COURT REPORTS [2017] 1 S.C.R.

A open to the bidders to withdraw their bids (see Union of
India v. Bhim SenWalaiti Ram (1969) 3 SCC 146). By
merely giving bids, the bidders had not acquired any
vested rights. ..." (emphasis supplied)
xxxxx
B 31. In view of the law laid down by this Court in the aforesaid
decisions, the learned Senior Counsel Mr Rakesh Dwivedi has
rightly placed reliance upon the same in support of the case of
the first defendant, which would clearly go to show that the
plaintiff had not acquired any right and no vested right has
c been accrued in his favour in respect of the plot in question
merely because his bid amount is highest and he had
deposited 20% of the highest bid amount along with the
earnest money with the Board. Jn the absence of acceptance
of bid offered by the plaintiff to the competent authority of
the first defendant, there is no concluded contract in respect
D · of tfle plot' in question, which is evident from letters dated 26-
5-1977 and 8-7-1977 wherein the third defendant had rejected
the bid amount deposited by the plaintiff and the same was
refunded to him by way of demand draft, which is an undisputed
fact and it is also not his case that the then Assistant Housing
E Commissioner who has conducted the public auction had
accepted the bid of the plaintiff." (emphasis supplied).
This Court 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
F 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.1! amounted to enforcing
of contract in the absence thereof.
16. In the light of the aforesaid discussion, it is evident that in the
G
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 non-acceptance 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
H
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 863
rARUN MISHRA, J.l

authority, further relief of mandatory injunction could not have been A
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.
In re : Competency of Administrator to accept/reject bid :
17. The plaintiff has come to the Court with the case that there B
was no delegation of power to the Administrator. No doubt about it that
the delegation .of power made by HUDA under section 51 of the Act
has not been placed on record before the courts below. It has been filed
for the first time in this Court. However, HUDA has placed on record
delegation of power to the Administrator by it as is apparent from the c
order dated 13.9.1989 issued by the Chief Administrator of HUDA in
which it is mentioned that in exercise of power conferred under section
51 of the Act, for the sake of efficiency, speedy development and with a
view to decentralize the powers/functions the delegation atAnnexure A
were made by HUDA in its meeting held on 3.1.1989 in favourofvarious
officials/officers of HUD A. The relevant portion of delegation made in D
order dated 13.9.1989 along with Index is extracted hereunder:

"HARYANA URBAN DEVEL.OPMENT AUTHORITY
MANIMAJRA (UT), CHANDIGARH
ORDER. E

In exercise powers conferred under section 51 of the Haryana
Urban Development Authority Act, 1977, in the interest of
efficiency, speedy development and with a view of decentralise
the powers/functions, the delegations at Annexure 'A' (Pages 1- F
16) are hereby made in favour of various Officers of HUDA by
the Haryana Urban Development Authority in its meeting held
on 03.01.1989.

Dated, Manimajra, the G
13'h Sep. 1989.
R.K. SINGH
CHIEF ADMINISTRATOR
HARYANA URBAN DEV. AUTHORITY"

H
864 SUPREME COURT REPORTS [20 I 7] I S.C.R.

A "INDEX
DELEGATION OF FUNCTIONS/POWERS OF AUTHORITY
AS INCORPORATED IN HARYANA URBAN
DEVELOPMENT AUTHORITY ACT, 1977.
"Delegation of Administrative and Financial powers made
B under Section 51 of HUDA Act, 1977 on behalf of the Haryana
Urban Development Authority:-
Sr. Sr.No. of Nature of Authority to Extent of power
No. item in power: who delegated delegated
Annexure
c II of the
proposal
I 2 3 4 5
XX.'( xxx xxx xxx
60 70 Powers to Chief Full Powers.
accept the Administrator
D auction
bids for
commercial Administrator Full powers
I residential provided the
I industrial highest bid IS
sites 1nore than the
E reserve price and
11111u1nu1n of 3
bids have been
received. If a
site is not sold
even after three
F
attempts at a price
higher than the
reserve price the
administrators
may revise the
G pnce downwards
upto maximmn of
I0% of the reserve
price.
18. It is apparent that there had been delegation of power by
HUDA to the Administrator with respect to the power to accept the
H
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 865
[ARUN MISHRA, J.]

auction bids for commercial/residential/industrial sites provided the highest A
bid is more than the reserve price and minimum of three bids have been
received. The Administrator has also the power if the site is not sold in 3
attempts, to revise the price downwards up to a maximum of I 0% of the
reserve price. Thus plaintiff has not come to the court with clean hands
and has suppressed for the reasons best known to it, the aforesaid order
B
of HUDA by which delegation of power has been made. The fact that
there was delegation of power is also crystal clear from the
communication exchanged between the Administrator and the Chief
Administrator. As the Administrator was reluctant to accept the bid, as
was the case in the case of fixation of reserve price also, the Administrator
considering the huge property, said that the auction involved prime and c
big commercial sites, huge revenue is involved and such a big auction
has been carried out for the first time in the State of Haryana, therefore,
all the record pertaining to the auction was sentto the Chief Administrator
for scrutiny and approval at the level of Chief Administrator, HUDA,
Gurgaon. However, the Chief Administrator also washed off his hands.
D
He wrote back to the Administrator on 28.7 .2004. The decision to confirm
or otherwise of a bid, should be taken only by a competent authority
whose order is appealable. Therefore, bids should be considered by the
competent authority and as the Administrator is the competent authority
to take the follow-up action, the Headquarters be apprised of the decision
taken. Thereafter, the Administrator had taken the decision not to confirm E
the seven bids of seven prop~rties. It is apparent from the order dated
21.9.2004 that the Administrator after examining the relevant aspects
and the report, had decided to reject the seven bids mentioned therein.
The said letter of the Administrator is extracted hereunder:
"From F
Administrator
HUDA, Gurgaon
To
The Estate Officer
HUDA, Gurgacn
G
Memo no. 709
Dated: 21.9.04
Sub: Auction of Commercial Sites-5 sites of Shopping
Mall, One Site of Multiplex and one Site of
Commercial Tower held on 24.5.2004 at Gurgaon.
H
866 SUPREME COURT REPORTS [2017] l S.C.R.

A Ref: Your letter No. 11592 dated 28.6.2004 and the comments
submitted by your office in the case files.
After examining the relevant aspects and reports submitted by
your office as well as keeping in view the contents of the letter No.
26559 dated 28.7.2004 received from Chief Administrator, HUDA,
8 Panchkula, this office exercising the powers delegated by the Authority
has decided to reject the following bids of Commercial Sites for which
auction was held on 24.5.2004:-
Sr. Sector Particulars Sr.No. Area Reserve Highest lernarks
of site in Sq. Price (in Bid (In
Mtr. rupees) rupees)
c
I. 29 :::on11nercial :::01nmercial 9.527 106.65 Cr. 111.IOCr. Highest
Tower rrower Acre bid
ejected

2. 29 Shopping ~djoining 16500 ?8.78 Cr. 30.15Cr. -do-
Mall !Leisure
D
~alley
IPark

3. 29 -do- C-5A ~865.60 10.12. Cr. 10.61 Cr. -do-

4. 29 -do- C-9 7 820.80 14.84 Cr. 15.46Cr. -do-
E Corner

5. 29 -do- C-10 820.80 14.84 Cr. 15.51 Cr. -do-
Comer

6. 5-56 -do- -- 850.00 o.72 Cr. ~. 15 Cr. -do-
F
7. 29 Multiplex -- 700.00 fl.69 Cr. 5.07 Cr. -do-

Bid sheets for the above mentioned sites as received from your
office are returned herewith.
Sci/-
G Administrator,
HUDA, Gurgaon"
19. The Administrator had also mentioned in his letter that there
was delegation of power to him. The letter from the Chief Administrator
also indicated that the Administrator was armed with the power. That
H apart, when we see the terms and condition No.4 of the tender notice,
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 867
fARUN MISHRA, J.l

subject to which auction was held, provided thus: A
"4. The presiding officer reserves the right. to' withdraw any
property from the auction or reject any bid without assigning any
reason."
20. Admittedly, the Presiding Officer was the Administrator,
HUDA. Thus, as per the terms of the auction also, the Administrator B
was having the power to accept or reject the bid. That the bid was more
than the reserve price and there were more than 3 bidders, is not disputed.
Thus, in ouropinion, the Administrator had the power to reject the bid as
per the delegation made to him on 13.9.J 989.
. .
21. The learned counsel representing the plaintiff-respondent c
vehemently, .contended that there was no delegation of power under
section 51(4) and it was the State Government only who could have
delegated the power of the Chief Administrator as found by the High
Court. As delegation had been made by HUDA under section 5 I (I) of
the Act of 1977; it was incumbent upon the plaintiff to question it and D
assail the same. However, the plaintiff had feigned ignorance as to
delegation on its part which does not inspire confidence as the line of
arguments advanced on its behalf that no delegation was there under
section 5 I (4) was clearly grounded upon the fact that the delegation
made under section 51(1) was in fact to the knowledge of the plaintiff
that is why the aforesaid argument had been advanced and unfortunately E
learned counsel for HUDA also conceded that there was no delegation
of power made by the State Government under section 5 I (4). This was
done by overlooking the delegation dated I 3.9.1989, the factum whereof
has not been controverted by the learned counsel appearing on behalf of
the respondent in any manner whatsoever. In the absence of having F
questioned delegation made by HUDA under section 51(1) of the Act,
plaintiff could not have succeeded in the suit.
22: The plaintiffhas not questioned the delegation of power before
the courts below in any manner whatsoever. We decline to examine the
submission raised by learned counsel for the plaintiff in this Court that
G
there is no delegation of power under section 5 I (4) and the power of the
Chief Administrator could have been delegated only by the State
Government not by HUDA under section 5 I (1) as per its order dated
I 3 .9. I 989. In the absence of challenge to legality of delegation order
dated 13.9.1989, and the plaintiff being guilty of suppressio veri, it is not
H
868 SUPREME COURT REPORTS [2017] I S.C.R.

A entitled to urge the aforesaid submission so as to invalidate the statutory
delegation of power made by I-JUDA under section 51 ( 1).
23. In view of the aforesaid fact-situation, it is apparent that the
Administrator had the power to reject a bid, not only being the Presiding
Officer as per terms and condition N0.4 of auction but otherwise also he
B had the power, as discussed above. Thus, the decision of the High Court
in setting aside the auction on the aforesaid ground cannot be said to be
legally sustainable.
In re : Legality of rejection of bid :
24. Coming to the question whether the Administrator had rejected
c the bid in an illegal or arbitrary manner, the learned counsel for the plaintiff
has submitted that the bid had been rejected by an unreasoned order, as
such it was an arbitrary rejection. Learned counsel has drawn our
attention to the communication dated 24.9.2004 which has been
communicated by the Estate Officer to the plaintiff in which it has been
D mentioned that the bid has not been accepted, hence earnest money had
been refunded. However. this communication of the decision reflects
only the return of the cheque pursuant to the decision of the Administrator.
The order passed by the Administrator is apparent from the
communication of the Administrator made to Estate Officer, I-JUDA on
21.9.2004 which has been extracted above. It is apparent from the
E rejection order that the reports submitted were considered and decision
was taken not to accept the bids with respect to auction of seven
properties. It was not a case of singular rejection of the bid made by the
plaintiff alone. Six other bids were also not accepted. The reason for
rejection has been made clear in para 15 of the written statement filed
F by I-JUDA. The relevant po1tion is extracted hereunder:
"The action of not accepting the bid is very much sustainable in
the eyes oflaw as the prices fetched by the auction was not in
consonance with the prices fetched in other urban estates like
Faridabad and Panchkula for similar kind of property. The bid
G
prices received for the above said site was also not on the rising
trend as per the prevalent market prices of the similar property
in Gurgaon. The judicial view had been taken by the competent
authority to safeguard the revenue interest ofHUDA. The price
of the site in question fetched in Gurgaon was on lower side as
compared to the prices fetched in Panchkula, Faridabad and
H Panipat. The statistical date for analysing the trend of price
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 869
fARUN MISHRA, J.l

rising and revenue fetched was considered by the competent A
authority and it was revealed that the price fetched by the said
auction was on lower side. Remaining para to the contrary is
wrong and denied. xx xx x
The competent authority after going through the individual report/
comments/opinion of the Members of the Auction Constituted B
Committee, comprising of Estate Officer, HUDA, Gurgaon,
Senior Accounts Officer, District Town Planner and District
Revenue Officer (Representative of the Deputy Commissioner,
Gurgaon) as Members under the Chairmanship of Administrator,
HUDA, Gurgaon, thoroughly examined the observations and
recommendations of the Member of the Auction Committee
c
regarding not to accept the bid prices of big commercial site,
since these prices being on apparently lower side which was
examined by the Government at the Headquarters level. The
entire records of the entire auction proceedings, including the
opinion of the Estate Officer, Gurgaon, other members of the D
Auction Committee and Deputy Commissioner, Gurgaon's report
and also after studying the reserve price and auction price trends,
decision was taken by the competent authority not to accept the
bid prices vide their detailed report. Remaining para to the
contrary is wrong and hence denied."
E.
25. Thus, it is apparent that the report and recommendations of
the Auction Committee consisting of 5 members, was not to accept the
bids of big commercial sites as the prices fetched were on lower side
which was examined by the Government at the Headquarters level.
Considering the auction trends and also taking into consideration the
higher prices fetched at Panipat, Panchkula and Faridabad, it was decided F
to reject the seven bids. Thus, there was due application of mind.
26. Jn our opinion when it is apparent from the communication
that the reports were considered and what was contained in the report
was very much pleaded in the written statement, mere non-production
ofreport was not of any significance in the instant case. We are satisfied G
that the rejection of the bid by the Administrator was absolutely proper
and justified and was beyond the pale of judicial scrutiny. The
Administrator had the right to reject the bids and he had rejected it on
sufficient ground, duly considering the materials on record as is apparent
from the communication dated 21.9.2004. In the interest of the public,
H
870 SUPREME COURT REPORTS [2017] I S.C.R.

A revenue of the State and in the interest of HUD A the huge property was
saved f,om being plundered.
27. This Court in the case of State of Uttar P.radesh & Ors. v.
Vijay Bahadur Singh & Ors. (1982) 2 SCC 365 has laid down that
there is no obligation to accept the highest bid. The Government is entitled
B even to change its policy from time to time according to the demands of
the time. It was observed thus :
"3. It appears to us that the High Court had clearly misdirected
itself. The Conditions of Auction made it perfectly clear that the
Government was under no obligation to accept the highest bid
and that no rights accrued to the bidder merely because his bid
c happened to be the highest. Under Condition I 0 it was expressly
provided that the acceptance of bid at the time of auction was
entirely provisional and was subject to ratification by the
competent authority, namely, the State.Government. Therefore,
the Government had the right, for good and sufficient reason,
D we may say, not to accept the highest bid but even to prefer a
tendererotherthan the highest bidder. The High Court was clearly
in error in holding that the Government could not refuse to accept
the highest bid except on the ground of inadequacy of the bid.
Condition I 0 does not so restrict the power of the Government
not to accept the bid. There is no reason why the power vested
E
in the Government to refuse to accept the highest bid should be
confined to inadequacy of bid only. There may be a variety of
good and sufficient reasons, apart from inadequacy of bids, which
may impel the Government not to accept the highest bid. In fact,
to give an antithetic illustration, the very enormity ofa bid may
F make it suspect. It may lead the Government to realise that no
bona fide bidde.r could possibly offer such a bid ifhe meant to do
honest business. Again the Government may change or refuse
its policy from time to time and we see no reason why change of
policy by the Government, subsequent to the auction but before
its confirmation, may not be a sufficient justification forthe refusal
G
to accept the highest bid. It cannot be disputed that the
Government has the right to change its policy from time to time,
according to the demands of the time and situation and in the
public interest. If the Government has the power to accept or
not to accept the highest bid and if the Government has also the
H power to change its policy from time to time, it must follow that
••
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 871
[ARUN MISHRA, J.]

a change or revision of policy subsequent to the provisional A
acceptance of the bid but before its final acceptance is a sound
enough reason for the Government's refusal to accept the highest
bid at an auction ... "
28. In Laxmikant & Ors. v. Satyawan & Ors. ( 1996) 4 SCC
208, this Court has laid down that in the absence of completed contract B
when the public auction had not culminated to its logical end before
confirmation of the bid, no right accrued to the highest bidder. This Court
has laid down as under :
"4. Apart from that the High Court overlooked the conditions
of auction which had been notified and on basis of which the c
aforesaid public auction was held. Condition No. 3 clearly said
that after the auction of the plot was over, the highest bidder had
to remit 1/10 of the amount of the highest bid and the balance of
the premium amount was to be remitted to the trust office within
thirty days "from the date of the letter informing confirmation of
the auction bid in the name of the person concerned". Admittedly, D
no such confirmation letter was issued to the respondent.
Conditions Nos. 5, 6 and 7 are relevant:
"5. The acceptance of the highest bid shall depend on the
Board of Trustees.
E
6. The Trust shall reserve to itself the right to reject the
highest or any bid.
7. The person making the highest bid shall have no right to
take back his bid. The decision of the Chairman of the Board
of Trustees regarding acceptance or rejection of the bid shall
F
be binding on the said person. Before taking the decision as
above and informing the same to the individual concerned, if
the said individual takes back his bid, the entire amount
remitted as deposit towards the amount of bid shall be
forfeited by the Trust."
G
From a bare reference to the aforesaid conditions, it is apparent
and explicit that even ifthe public auction had been completed
and the respondent was the highest bidder, no right had accrued
to him till the confirmation letter had been issued to him. The
conditions of the auction clearly conceived and contemplated
that the acceptance of the highest bid by the Board of Trustees H
872 SUPREME COURT REPORTS (2017] I S.C.R.
•
• A was a must and the Trust reserved the right to itself to reject the
highest or any bid. This Court has examined the right of the
highest bidder at public auctions in the cases of Tri/ochan Mishra
v. State of Orissa (1971) 3 SCC 153, State of Orissa v.
Harinarayan Jaiswal (1972) 2 SCC 36, Union of India v.
Bhim Sen Walaiti Ram (1969) 3 SCC 146 and State of UP. v.
B
Vipy Bahadur Singh (1.982) 2 SCC 365. It has been repeatedly
pointed out that State or the authority which can be held to be
State within the meaning of Article 12 of the Constitution is not
bound to accept the highest tender or bid. The acceptance of the
highest bid is subject to the conditions ofholdingthe public auction
c and the right of the highest bidder has to be examined in context
with the different conditions under which such auction has been
held. In the present case no right had accrue.ct to the respondent
either on the basis of the statutory provision under Rule 4(3) or
under the conditions of the sale which had been notified before
the public auction was held."
D
29. In Meerut Development Authority v. Association of
Management Studies & Anr. (2009) 6 SCC 171, this Court has laid
down that a bidder has no right in the matter of bid except of fair treatment
in the matter and cannot insist for further negotiation. The Authority has
a right to reject the highest bid. This Court has laid down thus :
E
"27. The bidders pai1icipating 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
F and conditions of the tender except on the abovestated 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 ofright to
insist the authority inviting tenders to enter into further negotiations
unless the te1ms and conditions of notice so provided for such
G negotiations.
xxxxx
29. The 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
H repre~enting the market price but there cannot be any doubt that
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. . 873
fARUN MISHRA, J.l

the Authority's action in accepting or refusing the bid must be A
free from arbitrariness or favouritism."
30. Reliance has been placed on behalf of the respondent on a
decision of this Court in Mis. Star Enterprises & Ors. v. City and
Industrial Development Corporation of Maharashtra Ltd. & Ors.
(1990) 3 SCC 280. The relied upon portion is extracted hereunder: B
"I 0. In recent times, judicial review of administrative action
has become expansive and is becoming wider day by day. The
traditional limitations have been vanishing and the sphere ofjudicial
scrutiny is being expanded. State activity too is becoming fast
pervasive. As the State has descended into the commercial field c
and giant public sector undertakings have grown up, the stake of
the public exchequer is also large justifying larger social audit,
judicial control and review by opening of the public gaze; these
necessitate recordingofreasons for executive actions including
cases of rejection of highest offers. That very often involves
large stakes and availability ofreasons for actions on the record D
assures credibility to the action; disciplines public conduct and
improves the culture of accountability. Looking for reasons in
support of such action provides an opportunity for an objective
review in appropriate cases both by the administrative superior
and by the judicial process. The submission of Mr Dwivedi, E
therefore, commends itself to our acceptance, namely, that when
highest offers of the type in question are rejected reasons
sufficient to indicate the stand of the appropriate authority should
be made available and ordinarily the same should be
communicated to the concerned parties unless there be any
specific justification not to do so." F

No doubt about it that there have to be some reasons for rejection
of the bid which are adequately present in the instant case as discussed. ·
hereinabove. The decision is of no help to espouse the cause of the
plaintiff.
G
3 L Reliance has also been placed on a decision of this Court in
Kalu Ram Ahuja & Anr. v. Delhi Development Authority & Anr.
(2008) 1.0 SCC 696 in which this Court bas laid down that the highest bid
was rejected without assigning any reason and there was no record
showing that the decision was based on rational and tangible reasons
and was in public interest. In the instant case we are satisfied from the
874 SUPREME COURT REPORTS (20 I 7] I S.C.R.

A order that the reports were considered and what were the reports, has
been made clear in the reply filed by the respondents which has not
been controverted. In the instant case merely the bid being above the
reserve price, was not a safe criteria to accept the same.
32. Jn Mohinder Singh Gill & Am'. v. The Chief Election
B Commi.cioner, New Delhi & Ors. ( 1978) I SCC 405, this Court has
laid down that when a statutory functionary makes an order, its validity
must be judged by the reasons so mentioned and cannot be supplemented
by fresh reasons in the shape of affidavit or otherwise. This Court has
held thus:

c "8. The second equally relevant matter is that when a
statutory functionary makes an order based on certain grounds,
its validity must be judged by the reasons so mentioned and cannot
be supplemented by fresh reasons in the shape of affidavit or
otherwise. Otherwise, an order bad in the beginning may, by the
time it comes to court on account of a challenge, get validated
D by additional grounds later brought out. We may here draw
attention to the observations of Bose, J. in Gordhandas Bhanji
AIR 1952 SC I 6 :
"Public orders, publicly made, in exercise of a statutory
authority cannot be construed in the light of explanations
E subsequently given by the officer making the order of what he
meant, or of what was in his mind, or what he intended to do.
Public orders made by public authorities are meant to have public
effect and are intended to affect the actings and conduct of
those to whom they are addressed and must be construed
F objectively with reference to the language used in the order itself.
Orders are not like old wine becoming better as they grow older."
There is no dispute from the aforesaid proposition. However, in
the instant case reasons have been mentioned in the rejection order and
the nature of reports has also been sufficiently explained. Thus the rejection
G ofseven different bids in the auction reflects thatthere was due application
of mind by the concerned authority and rejection could not be said to be
illegal, arbitrary or sans of reason.
33. We are constrained to observe in the instant case that with
respect to reserve price also, there was a hitch to fix and approve it right
from the word go. It was a case of auction of big commercial tower
H
HUDA v. ORCHID INFRASTRUCTURE DEVELOPERS P. LTD. 875
fARUN MISHRA. J.l

having a huge area of9.527 acres. Only the reserve price of the same A
was forwarded for fixation to the Chief Administrator, whereas the
reserve prices of other properties were fixed by the Administrator. When
the bids were received, the Administrator considering the huge stakes
involved, forwarded the matter to the Chief Administrator. However,
the Chief Administrator washed off his hands and did not decide it and
B
sent the matter back to the Administrator, clearly indicating that the
Administrator was delegated with the power to decide the bids. Thus,
under compelling circumstances and duly considering the reports, the
Administrator had taken the decision to reject the bids not only of the
plaintiff but also six others. For the first time in the history of State of
Haryana, such big properties were put to hammer on the prices indicated. c
The hitch in fixing the reserve price also indicates that the reserve price
was not determined in a fair manner in the instant case. Not only the
plaintiff but HUDA also did not place the delegation of power on record
of the courts below. None of the officials of HUDA had been examined.
Only an Assistant - a junior ranking person had been examined who
D
was not posted there when the auction was held and came only in 2008.
As the property was a commercial tower in Sector 29, Gurgaon, with
huge commercial complex, the first appellate court was right in dismissing
the suit.
34. Plaintiff came to the court for mandatory injunction, for
issuance of allotment letter without payment of court fee also. It was E
incumbent upon the plaintiff to pay the ad valorem court fee as prevailing
and the valuation of the suit should not have been less than the bid amount
ofRs.111.75 crores, as rightly held by the first appellate court. The plaintiff
is directed to pay the ad valorem court fee not only before the trial court
but also before the High Court. Plaintiff is directed to deposit the court F
fee within two months from today, as payable.
35. Resultantly, the appeal is allowed. The judgment and decree
passed by the High Court is set aside and that of the first appellate court
is restored. In the facts and circumstances of the case, we impose costs
of Rs.5 lakhs on the plaintiff/respondent to be deposited as : Rs.2.5 G
lakhs in the Advocates' Welfare Fund and Rs.2.5 Jakhs in the Supreme
Court Employees' Welfare Fund within a period of two months from
today.

Nidhi Jain Appeal allowed. H