Holding

A bidder cannot compel a public authority to negotiate or accept a bid below the reserved price, and the authority’s decision to re‑tender and alter land‑use is a lawful exercise of discretion not subject to invalidation under Article 14 or public‑interest grounds.

Summary

The Meerut Development Authority (MDA) invited tenders for two parcels of land to be used for educational purposes, fixing a reserved price of Rs.690 per sq.m for 20,000 sq.m and Rs.500 per sq.m for 37,000 sq.m. The Association of Management Studies (AMS) bid below the reserved price for the 20,000‑sq.m plot and later requested the Authority to allocate only the 37,000‑sq.m plot at its offered price, while refusing to pay the higher rate. MDA rejected the low bid, later re‑advertised the 20,000‑sq.m plot for residential use at a higher price, and eventually cancelled an auction of the land after a writ petition. The Supreme Court held that a bidder has no contractual right to force the Authority to negotiate or accept a bid below the reserved price, and that the Authority’s decision to invite fresh tenders and change the land‑use was within its statutory discretion and not violative of Article 14 or public‑interest considerations. Consequently, the Court allowed MDA’s appeal and dismissed the appeal of the auction purchaser, upholding the cancellation of the auction.

Issues considered

The nature of rights of a bidder participating in a tender process.
The scope of judicial review in contractual and administrative decisions.
Whether MDA's decision to invite fresh tenders and change land use is arbitrary or violative of Article 14 of the Constitution.
Whether the decision is contrary to public interest.
Whether AMS is entitled to equitable relief or a mandamus directing allotment of land.
Whether the High Court was justified in cancelling the auction and treating the matter as a concluded contract.

Legislation cited

Uttar Pradesh Urban Planning and Development Act, 1973

Subjects

tender processjudicial reviewpublic procurementArticle 14land use changepublic interestequityadministrative lawcontractual rights

Judgment

--- ~·
[2009) 6 S.C.R. 663

MEERUT DEVELOPMENT AUTHORITY A
v.
ASSOCIATION OF MANAGEMENT STUDIES & ANR.
(Civil Appeal No. 2619 of 2009)
APRIL 17, 2009

-
\..

+
[LOKESHWAR SINGH PANTA AND B. SUDERSHAN
REDDY JJ.]
B

Tender - Nature of rights of a bidder participating in
tender process -Held: Bidder is not entitled as a matter of c
right to insist the Authority inviting tenders to enter into further
negotiations unless the terms and conditions of notice so
provided for such negotiations.

Tender - Decision making process - Judicial review in D
contractual matters - Scope of - Held: Court not to substitute
its own opinion for the opinion of the authority deciding the
matter - But at the same time, courts can certainly examine
whether 'decision making process' was reasonable, rational,
not arbitrary and violative of Article 14 - On facts, allotment E
of land for educational purposes - Bidder made a bid at a
rate less than the reserved price - Authority was not under
,,. ·~ any legal or constitutional obligation to entertain the bid -
Plea that allotment of land for educational purpose at
reasonable rate would subserve public interest, not tenable
as public interest parameters were taken into consideration F
by Government itself in directing the Authority to make the
lands to educational institutions at a concessional rate -
Bidder had no legal or constitutional right to make any
.. perpetual demands and dictate terms to the Authority to allot
any particular land at the chosen rate - Conduct of the bidder G
would also not entitle it to get any relief in equity - Equity -
Administrative law.

Urban development - Change of land use - Disputed
663 H
664 SUPREME COURT REPORTS [2009] 6 S.C.R:- -
'

A land in Master Plan was reseNed for 'Residential' purpose -
Authority earlier relaxed the use and made it for 'educational'
purpose - There is nothing unreasonable in changing the
land use and eannarking it again for 'Residential' use - Uttar
Pradesh Urban Planning and Development Act, 1973.
B
Respondent-Association of Management Studies
was indulged in managing various educational
institutions imparting education such as MBA, MCA,
-+
Engineering etc. On 12.5.2000, MDA allotted a plot of land
measuring 20,000 sq.m. situated in Ganganagar
C Residential Scheme @ Rs. 560 per sq m. to AMS for
construction of building for educational purposes. The
AMS requested to allot ~n additional land of 20,000
sq.mts. and 37,000 sq.mts. in the said Scheme for
establishment of Engineering College and other Degree
D Colleges. The MDA invited tenders for allotment of land
measuring 20,000 sq.mts. and 37,000 sq.mts. located in
the said residential scheme available to be utilized for
educational use. The reserved price was fixed at Rs. 690
per sq.m. for 20,000 sq. mts. and for the remaining extent
E of 37,000 sq.m. of land at Rs. 500 per sq. m. both being
50% of sector rate. The reserved price was fixed in terms
of G.O. dated 19.04.1996 which provided that plots for -+
educational institutions/engineering colleges should be "'
sold at 50% of the sector rate.
F
In response to the advertisement, AMS submitted its
tender@ Rs. 500 per sq.m. for the plot of 37,000 sq.mts.
and Rs. 560 per sq.m. for 20,000 sq.mts. The MDA
informed AMS on 3.09.2001 that the offer @ Rs. 560 per
G sq.m was less than the reserved rate of Rs. 690 per sq.m. ~
in respect of 20,000 sq.mts. of land.

AMS was put on notice to give its consent within one
week if it was desirous of getting 20,000 sq.m. of land at
Rs. 690 per sq.m. AMS in response to the said letter
H requested the Authority to allot 37,000 sq.m. of land at Rs.
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION 665
.,._ OF MANAGEMENT STUDIES
).
500 per sq.m. offered by them in their tender and in clear A
terms stated that the other land of 20,000 sq.m. may be
deleted from offer as the cost of that land was not viable
for them. However, it stated that it was ready to purchase
the same at Rs. 560/- per sq.m. as quoted by it which was
the same rate at which the part of that land was already B
purchased.
-....... On 27 .11.2001, MDA informed AMS that only 37 ,000
+ sq.mts. of land was allotted. This was accepted by AMS
and they took allotment of only 37 ,000 sq.mts. of land.
However, having accepted the offer of 37,000 sq.mts. of
c
land, AMS raised an objection stating that injustice was
d~ne by the Authority in fixing the reserved pric~ at Rs.
690 per sq.m. even though adjoining plots were allotted
at Rs. 500-560 per sq.m. MDA in its meeting held on
15.03.2002 decided that the disposal of the land would be D
-'¥
made through open Tender-cum-Auction for residential
use after giving wide publicity. The Authority considered
the offer made on behalf of a Housing Society to
purchase the bulk of land measuring 20,000 sq.mts at Rs.
775 per sq.m. and as well as the letter dated 4.3.2002 sent E
by AMS.

AMS by its letter dated 27.03.2002, requested the
>-,. Authority to allot the said land at Rs. 690 per sq.m. or in
alternative, the topography,of the land be so adjusted .F
that both the 20,000 sq.mts. of land and 37,000 sq.mts.
of land already allotted to the society may be made
contiguous to each other so that the entire land could be
fruitfully utilized by it for educational purposes.

On 15.4.2002, MDA got issued fresh advertisement G
J.
inviting applications in newspapers for allotment of the
aforementioned plot of land of 20,000 sq.mts. 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. H
666 SUPREME COURT REPORTS [2009] 6 S.C.R.

A Aggrieved, AMS filed writ petition in the High Court.

The High Court by its interim order dated 7.05.2002,
permitted the MDA to allot the land in pursuance of the
advertisement dated 15.04.2002, but subject to the
decision of the writ petition.
8
In the auction held, the highest bid of Rs. 1365 per
sq.m. was accepted. The highest bidder deposited the
earnest money of Rs. 5.50 lakhs. The balance
consideration was required to be paid in instalments. But
--
C during the pendency of the writ petition, the MDA by its ..
order dated 14.5.2007 cancelled the auction and the
decision of allotment to the auction purchaser. Auction
purchaser filed the writ petition challenging the order of
cancellation. The High Court allowed the writ petition filed
D by AMS and dismissed the writ petition filed by auction
purchaser. Hence these appeals.

The questions which arose for consideration in these
appeals were what was the nature of rights of a bidder
E participating in the tender process; the scope of judicial
review in contractual matters; whether the decision of the
Authority dated 15.03.2002 undoing its earlier decision
dated 7.7.2001 and changing land use of the disputed
plot from educational to housing was unreasonable and
F violative of Article 14 of the Constitution; whether the
decision was not in public interest; whether AMS was
entitled to equitable relief and whether the High Court was
justified in cancelling the auction in which the highest
bidder deposited the earnest money of Rs. 5.50 lakhs.

G Allowing the appeal of MDA and dismissing the .I
appeal filed by the auction purchaser, the Court

HELD: 1.1. A tender is an offer. It is something which
invites and is communicated to notify acceptance. It
H must be unconditional; in the proper form, the person by
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION 667

·- }
OF MANAGEMENT STUDIES

whom tender is made must be able to and willing to A
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 B
were so tailor made to suit the convenience of any
particular person with a view to eliminate all others from
.. participating in the bidding process. The bidders
participating in the tender process have no other right
except the right to equality and fair treatment in the matter c
of evaluation of competitive bids offered by interested
persons in response to notice inviting tenders in a
transparent manner and free from hidden agenda. No
bidder is entitled as a matter of right to insist the Authority
inviting tenders to enter into further negotiations unless
.,,,, D
the terms and conditions of notice so provided for such
negotiations. [Para 17] [683-G-H; 684-A-D]

1.2. The 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 E
property must be fair and transparent providing an
opportunity to all the interested persons to participate in
the process. 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, F
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. [Para 18] [684-E-G]
G
-~- 1.3. A mere look at the tender notice makes it clear
Jo
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. AMS itself mentioned different and
H
668 SUPREME COURT REPORTS [2009) 6 S.C.R.

A separate bids in their tender and made a bid at Rs.560 per
sq.m. for 20,000 sq.mts plot which was less than that of
the reserved price. The Authority was not under any legal
or constitutional obligation to entertain the bid which was
much below the reserved price. The plea that there was
B some vagueness, uncertainty 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 was not raised
C even in the Writ Petition filed by the AMS. [Para 19] [684-
G-H; 685-A-D]

1.4. "J:he MDA, though not under any obligation, .
provided a further opportunity to the Society and
expressed its willingness to part away with the land,
D provided AMS agreed to pay the reserved rate of Rs.690
per sq.m. AMS did not avail this opportunity. 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
E 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.
F 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
G 27 .11.2001 allotting 37 ,000 sq.mts. of land alone. The
rights of AMS, if any came to an end when it informed the
Authority - MDA that it was not claiming any right over
the land admeasuring 20,000 sq.mts. and made a further
request to delete its offer in respect of the said land. [Para
H 20] [685-0-H; 686-A-B]
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION 669
·-- ->
OF MANAGEMENT STUDIES

· 1.5. The subsequent letters sent by AMS at its own A
'. 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 B

- -4
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
c
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.
-')
[Para 21] [686-B-E]
D
Tata Cellular v. UOI 1994 (6) SCC 651; Air India Ltd. v.
Cochin International Airport Ltd. 2000 (2) SCC 617;
Directorate of Education v. Educomp Datamatic Ltd. 2004 (4)
SCC 19; Association of Registration Plates vs. UOI 2005 (1)
SCC 676 and Global Energy Ltd. v. Adani Exports 2005 (4) E
SCC 435; Purvanchal Projects Ltd. v. Hotel Venues 2007(10)
sec 33, relied on.
., 't-
1.6. The bids offered by AMS received their due
attention in a fair and transparent manner free from any
F
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 by
·~ letter dated 17.09.2001 which was accepted by MDA. The G
decision of the Authority was duly communicated to the
AMS by letter dated 27 .11.2001. The decision so taken by
the MDA resolved in infringement of rights of AMS. (Para
22] [686-F; 687-A-B]
H
670 SUPREME COURT REPORTS [2009] 6 S.C.R.

A 2.1. The authorities owe a duty to act fairly but it is
equally well settled that 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
8 opinion for the opinion of the authority deciding the
matter. [Para 25] [689-E-F]
...
2.2. 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.
C Courts have inherent limitations on the scope of any
such enquiry. If the contract has been entered into
w!thout ignoring the procedure which can be sai~ to be
basic in nature and after an objective consideration of
different options available taking into account the interest
D of the State and the public, then the court cannot act as
an appellate court by substituting its opinion in respect
of selection made for entering into such contract. But at
the same time the courts can certainly examine whether
'decision making process' was reasonable, rational, not
E arbitrary and violative of Article 14. [Para 25] [689-G-H; 690-
A-B]

Ramana Dayaram Sheffy v. International Airport
Authority of India 1979 (3) SCC 489; Kasturi Lal Lakshmi
Reddy v. State of J & K 1980 (4) SCC 1; Ram and Shyam
F Co. v. State of Haryana 1985 (3) SCC 267; Mahabir Auto
Stores v. Indian Oil Corporation 1990 (3) SCC 752; Sterling
Computers Ltd. v. M & N Publications 1993(1) SCC 445; A.B.
International Exports v. State Corporation of India. 2000 (3)
SCC 553 and Administrative Law, 9th Edition, H. WR. Wade
G & C.F. Forsyth, relied on.

Chief Constable of North Wales Police v. Evans (1982)
3 ALLER 141; R. v. Independent Television Commission, ex.
P. TSW Broadcasting Limited (1996) JR 185;
H Nottinghamshire Country Council v. Secretary of State for the
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION 671
OF MANAGEMENT STUDIES
,._
-t Environment (1986) 1 AllER 199 and Lochner v. New York A
198 US 45, 76 (1995), referred to.

3.1. There is nothing on record to suggest that
impugned decision was taken only for making higher
financial gain and profit. However, there is nothing wrong B
even if any such effort was made by MDA to augment its
financial resources. 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
c
owned natural assets to the private sector. Whenever the
Government or the authorities get less than the full value
of the asset, the country is being cheated; there is a
simple transfer of wealth from the citizens as a whole to
whoever gets the assets 'at a discount'. Most of the times D
-1.: 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.The impugned action of the authority in the
present case did not suffer from absence of jurisdiction E
nor was vitiated and ultra vires. Financial gain was not at
the cost of any social welfare. [Paras 27 and 28] [693-A-
D; 694-B]
-' ~·
Bangalore Medical Trust v. B.S. Muddappa (1991) 4 F
SCC 54 and Padma v. Hirata/ Moti/al Desarda & Ors. (2002)
7 sec 564, referred to.

3.2. 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 G
.... 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. The decision of MDA
could not be characteris~ as an unreasonable one. That
was the only course left open to the Authority. The H

:i
672 SUPREME COURT REPORTS [2009] 6 S.C.R.

A money to be realized 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. [Para 29] [695-A-D]
B
3.3. 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 characterized as an illegal one. In fact,
C 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. [Para 30] [695-E-G]

4. The disputed land in the Master Plan was reserved
for 'Residential' purpose. The residential category of use
D 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
E be used for housing, various other kinds of uses such
as institutional, commercial etc. 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
F use and earmarking it again for 'Residential' use. 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. [Para 31] [696-
G B-F]
5.1. AMS may have established Engineering Colleges
to impart education and may have a role to play in
providing education in engineering courses; out it
cannot insist the MDA to provide land at the rate chosen
H by it for itself.The object of the Uttar Pradesh Urban
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION 673
OF MANAGEMENT STUDIES

Planning and Development Act, 1973 under which MDA A
is constituted was to provide for development of certain
areas according to 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 B
gift or freely make available any land or at a rate lesser
than that of reserved price. [Para 32) [697-8-0)

Unni Krishnan J.P. v. State of A.P. (1993) 1 SCC 645
and TMA PaiFoundation v. State of Kamataka (2002) 8 SCC C
481, referred to.

5.2. 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 D
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 E
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 time for which
the AMS has to blame itself. The AMS having failed to offer F
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. The
State had already made effective provision for securing G
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 H
674 SUPREME COURT REPORTS [2009) 6 S.C.R.

A Article 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. [Para 32] [697-E-H; 698-
A-D]
B
6. 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
C pressed into service to confer any right upon a person
who otherwise does not possess any such right in law.
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
D 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 reserved price fixed by
E the MDA. The High Court went to the extent of holding that
there was a concluded contract between MDA and AMS.
[Para 33] [697-E-H; 698-A-D]

7. The AMS expressed its willingness to pay such
F reasonable price as may be fixed by this Court. The prices
of the land in the vicinity of are have gone up many times
and as at present prevailing rates are very high. Equity
is not a one way street. The conduct of the AMS does not
entitle it to get any such relief in equity. [Para 34] [700-A-
G C]
8. The cancellation of the auction was not tenable.
But the fact remains the appellant, the auction purchaser
deposited only an amount of Rs. 5,50,000/- towards
earnest money out of huge amount of total consideration.
H Having regard to the totality of the facts and
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION 675
OF MANAGEMENT STUDIES
\--.

* circumstances, interference with the order of cancellation A
passed by MDA on 14.5.2007 in exercise of jurisdiction
under Article 136 of the Constitution of India is not called
for. [Para 38] [701-E-F]
9. The MDA shall be at liberty to call for fresh tenders
in accordance with law but duly notifying the land use for B

--
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 c
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. [Para 39] [701-G-H;
702-A] D
- J.
Case Law Reference
1994 (6) sec 651 relied on Para 21
2000 (2) sec s11 relied on Para 21
E
2004 (4) sec 19 relied on Para 21
-'( 2005 (1) sec 676 relied on Para 21

~
2005 (4) sec 435 relied on Para 21
•
2001(10) sec 33 relied on Para 21 F
1979 (3) sec 489 relied on Para 25
1980 (4) sec 1 relied on Para 25
1985 (3) sec 261 relied on Para 25
1990 (3) sec 752 relied on Para 25 G
,..
1993(1) sec 445 relied on Para 25
2000 (3) sec 553 relied on Para 25
(1982) 3 ALLER 141 referred to Para 23
H
676 SUPREME COURT REPORTS [2009] 6 S.C.R.
,...~

...
A (1996) JR 185 referred to Para 25
(1986) 1 AllER 199 referred to Para 26
198 us 45, 76 (1995) referred to Para 26
(1991) 4 sec 54 referred to Para 28
B

c
(2002) 1 sec 564
(1993) 1 sec 645
(2002) 8 sec 481
referred to
referred to
referred to
Para 29
Para 32
Para 32
,f\ -
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2619 of 2009.
From the Judgment & Order dated 16.11.2007 of the High
Court of Judicature at Allahabad in Civil Misc. Writ Petition No.
18578 of 2002.
D
~-
WITH
C.A. Nos. 2620-2621 of 2009.
P.S. Patwalia, Rakesh Dwivedi Sunil Gupta, J.S. Attri,
E Shiva Kumar Sinha, Kavin Gulati, Rashmi Singh, T. Mahipal,
Vinay Garg, Ajay Kumar, Deepam Grag, Jyoti Sharma and
Avnish Pandey for the appearing parties.
The Judgment of the Court was delivered by '#
"
F B. SUDERSHAN REDDY, J. 1. 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.
G
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,
H MCA, Engineering etc., the details of which are not required
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 677
MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]

""''"""" + to be noted. A

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 B
said Act, has been enacted to provide for development of
certain areas of Uttar Pardesh according to plan and for matters
·-' ancillary tbereto. The main object and reasons for the enactment
A.
was to tackle resolutely the problems of town planning and urban
development in the State of Uttar Pardesh.
c
FACTUAL MATIERS:

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 D
-). 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 E
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
F
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 G
.~
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 H
678 SUPREME COURT REPORTS [2009] 6 S.C.R.

A 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
B 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. "
c 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
D
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
E 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.'
F
7. MDA having considered the response of AMS vide its
letter dated 27.11.2001 informed AMS that only 37,000 sq.m.
of land has been allotted for the establishment of engineering
college with the condition that the construction of the
G engineering college is made in accordance with the norms of
the A.l.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.
H
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 679
..... t MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]

8. AMS having accepted the offer of 37,000 sq.mts. of A
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- B
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 c
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 Development Authority,
--~ MEERUT. D
Subject :-ALLOTMENT OF LAND AT GANGA NAGAR.

Hon'ble Sir,

Following facts are submitted for your honour's kind E
consideration:-

1. That M.D.A. on 19.9.2001 floated a tender for
Ji.
'?' allotment of two pieces of land measuring 37,000
and 20,000 sqm bulk scale for Technical Institute
F
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.
,__ G
. 3. That due to paucity funds, we could not deposit the
25% of amount for 20,000 sqm land on 27.11.2001.

4. That now we are ready to deposit the demanded
amount and kindly condone the delay and oblige.
H
680 SUPREME COURT REPORTS [2009] 6 S.C.R.
,..~·

.+
A With Regards,

Yours faithfully,

(YOGESH MOHAN)
Chairman."
B
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 "'-
j,
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
c 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
D 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
E 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
~
.
F 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

G
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
H price fixed by it i.e. Rs.690/- per sq.metre and the
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 681
\...., MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
l
interest till the payment of the amount by the A
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 B
which the Hon'ble Court may deem fit and proper
.J
in the circumstances of the case .
A
(v) To award cost of this petition to the petitioner.

11. The High Court vide its interim order dated c
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." D
-).

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 E
required to be paid in installments. But during the pendency of
the Writ Petition, the MDA vide its order dated 14.05.2007,
"¥ f> cancelled the auction and the decision of allotment to Pawan
Kumar Aggarwal. He filed the Writ Petition No.3007 of 2007
challenging the order of cancellation. The High Court by the F
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 : G
·- 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
H
682 SUPREME COURT REPORTS [2009] 6 S.C.R.
,... ,,~

-t
A appearing for AMS. Elaborate submissions were made by the
counsel for the respective parties. The following is the surr.mary
of contentions urged by respective ~enior rounse! which aie
critical and crucial to decide the case.

14. The principal objection of MDA is that the High Court
B
was not justified in scrutinising its action and the tendering
process in such great detail as if it was hearing an appeal .......
against its decision in the matter. The High Court virtually acted A,
as more than the appellate court and went into the merits in
c 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
a.s 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
D 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
E not suffer from any vice of illegality or unconstitutionality. He,
however submitted that the MDA was not justified in cancelling
thP. auction and its decision to allot land in favour of appellant
··· Pawan Kumar Aggrawal. Shri Suni! Gupta, learned senior + ,..
counsel for the respondent - AMS submitted that the decision
F 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
G High Court. There was snme ~"nf• is ion as regards reserved
price in respect of disputi:-t~ ;:i•• · of bnt! which led AMS ~o offc" •
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
H the reserved price is unsustainable in law. The decision to
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 683
MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
~--
t
reauction the land by changing the land use from that of A
'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.
B
These contentions ·are culled out from the storms of
submissions made during the course of hearing of these
,A appeals.

ISSUES REQUIRING RESOLUTION :
c
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 D
- ), 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:
E
(a) what is the nature of rights of a bidder participating
in the tender process?
;,
- . '9 (b) the scope of judicial review in contractual matters;

(c) whether the decision of the Authority is vitiated by F
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
G
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 H
684 SUPREME COURT REPORTS [2009] 6 S.C.R
~#"'
,j

A 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
B the invitation to tender were so tailor made to suit the
convenience of any particular 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
c 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
D
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
E 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 Authority has the
F 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
G or favoritism.

WHETHER ANY RIGHT OF AMS HAS BEEN INFRINGED
~
..
?

19. A mere look at the tender notice in the present case
H makes it abundantly clear that the two plots of land admeasuring
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 685
MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
·" 1 "
37,000 and 20,000 sq.mts. meant for establishing engineering A
...' colleges were advertised as a single item, though the specified
reserved price was different. The reserved price of 20,000 sq.
mts. was expressly and clearly mentioned at Rs.690/- per sq.m.
There is no ambiguity nor any confusion in this regard. AMS
itself mentioned different and separate bids in their tender and B
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 c
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.
D
->
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 E
not say that it was under some confusion as regards the
specified reserved price. No objections were raised whatsoever
in this regard. Instead it made a request that the two plots be
.. ,.
~
segregated and 37,000 sq.mts. be allotted to it while the other
plot of 20,000 sq.mts "may be deleted from .......... offer as the F
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 G
+. 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 H
686 SUPREME COURT REPORTS [2009] 6 S.C.R.

A 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
B was not claiming any right over the land admeasuring 20,000
sq.mts. and made a further request to delete its offer in respect
of the said land.

21. The subsequent letters sent by AMS at its own choice
is of no consequence. The MDA did not make any promise that
C 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,
D 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
E the tendering authority is found to be malicious and misuse of
its statutory powers.

[See: Tata Cellular vs. U0/1, Air India Ltd. vs. Cochin
International Airport Ltd. 2 , Directorate of Education vs.
F Educomp Datamatic Ltd. 3 , Association of Registration Plates
vs. U0/4, Global Energy Ltd. vs. Adani Exports 5 , and
Purvanchal Projects Ltd. vs. Hotel Venues 6 .J

22. The bids offered by AMS received their due attention
G 1. [1994 (6) sec 651),
2 12000 (2) sec 617),
3. 12004 (4) sec rn1.
4. 12005 (1 l sec 6761
5. 12005(4) sec 4351
H 6. 12001(1 OJ sec 33J.
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 687
MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
t
in a fair and transparent manner free from any bias at the hands A
of MDA. No rights of AMS have been infringed by MDA in not
giving opportunity to involve itself in lengthy negotiations. The
Authority was free to make its choice and to invite fresh bids
after the Society relinquished its claim in respect of the disputed
plot vide letter dated 17.09.2001 which was accepted by MDA. B
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.

SCOPE OF JUDICIAL REVIEW IN CONTRACTUAL
MATTERS:
c
23. In Tata Cellular (supra) this Court observed that
"Judiciar 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 D
-~ 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
E
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 F
the State or "other authorities" are bound to act 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 G
.j< 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.

7. ((1982) 3 AllER 141). H
'

688 SUPREME COURT REPORTS [2009] 6 S.C.R.
,...~

-~

A 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,
B 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 lndia6 , Kasturi Lal Lakshmi Reddy vs. State of J
& K.9, Ram and Shyam Co. vs. State of Haryana 10 , Mahabir
"
11
c Auto Stores vs. Indian Oil Corporation , Sterling Computers

Ltd. vs. M & N Publications and A.B. International Exports
12

vs. State Corporation of lndia. 13 Executive does not have an
absolute discretion, certain principles have to be followed, the
public interest being the paramount consideration.
D It has been stated by this Court in Kasturi Lat's case ~ .
(supra):

"It must follow as a necessary corollary from this proposition
that the Government cannot act in a manner which would
E 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
F from it, unless of course, there are other considerations
which render it reasonable and in public interest to do so."

The law has been succinctly stated by Wade in his
treatise, Administrative Law:

G 8. [1979 (3) sec 489).
9. [1980 (4J sec 11.
~
10. [1985 (3) sec 267],
11. [1990 (3) sec 752),
12. [1993(1 J sec 4451
H 13. 12000(3) sec 553].
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 689
MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
....,
t
"The powers of public authorities are therefore essentially A
different from those of private persons. A man making his
.....
I 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 B
has an absolute power to allow whom he likes to use his
....,
I
~
land, to release a debtor, or, where the law permits, to evict
J.. 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 c
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 D
-> 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
E
the public good." 14

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
~ ,., t court is not concerned with the merits or correctness of the
decision, but with the manner in which the decision is taken or F
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
G
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
14. Administrative Law, 9th Edition,H.W.R.Wade & C.F.Forsyth. H
690 SUPREME COURT REPORTS [2009] 6 S.C.R.
...
A been entered into without ignoring the procedure which can be
said to be basic in nature and after an objective consideration
of different options available taking into account the interest of
the State and the public, then the court cannot act as an
appellate court by substituting its opinion in respect of selection
s 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
C 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:
D
"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.
E 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
F exceed or abuse his powers ... But the rules of natural
justice do not 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
G
be open to judicial review."

In the concluding section of his speech, he added:

"Of course in judicial review proceedings, as in any other
H 15. [1996 JR 185 and 1996 EMLR 291)
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 691
MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
,·'""
• proceedings, everything depends on the facts. But judicial
review should not be allowed to run riot. The practice of
A

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." B
One has to bear in mind the caution administered by Lord
' Scarman in Nottinghamshire Country Council Vs. Secretary
~
.~ a
of State for the Environment16 that: " 'Judicial review' is great
weapon in the hands of the judges; but the judges must observe
the constitutional limits set by our parliamentary system upon c
the exercise of this beneficial power." It is equally necessary
that the following observations of Benjamin. Cardozo, should
always be kept in mind:

"The Judge, even when he is free, is still not wholly free. D
-} 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 E
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].
F
26. There cannot be any disagreement that unjustified
I
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 G

• Oliver Wendell Holmes in Lochner Vs. New York. 17 It remains
to be decided which acts of discrimination are justified and
'
:..--/1
which are not. It is for the court to decide in the given facts and
16. [(1986) 1 AllER 199]
17. [198 U.S. 45,76 (1995)] . H
.... ,
692 SUPREME COURT REPORTS [2009] 6 S.C.R.
,. .
l
A circumstances whether 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
B 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.
,., '
c 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
D 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. This
was done for making higher financial gain and profit and that
E 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 t '<' ,
claim of AMS, in our considered opinion came to an end on
F
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
G 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
11
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 693
MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
....
~
one Harpal Singh Chowdhary on behalf of the Officer's Class A
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 B
resources. We are, however, of the opinion that the effort, if any,

-· A.
-
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 c
assets to the private sector. Whenever the Government or the
authorities get less than the full value of the asset, the country
is being cheated; there is a simple transfer of wealth from the
citizens as a whole to whoever gets the assets 'at a discount'.
Most of the times the wealth of a State goes to the individuals
D
within the country rather than to multi-national corporations; still,
-~
wealth slips away that ought to belong to the nation as a whole.

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, E
in its meeting dated 15.3.20_02 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 fhrough fresh tender-cum-auction for
residential use after giving wide publicity. F

28. The learned senior counsel relied upon the decision
in Bangalore Medical Trust Vs. B.S. Muddappa 18 in which this
Court observed: "Financial gain by a local authority at the cost
of public welfare has never been con~idered as legitimate
G
.)I" 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 suffered from
1a. ((1991) 4 sec 54] H
694 SUPREME COURT REPORTS [2009] 6 S.C.R.

A 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
B 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. Hirala/ Motilal Desarda & Ors., 19 this
C 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 !iS were
craving for a roof over their heads. It is in that context the Court
observed; the land acquired and entrusted to CIDCO cannot
D just be permitted to be parted with guided by the sole
consideration of money making. CIDCO is not a 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
E 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
F 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
G 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 publicity than what was
H 19. 1c2002) 1 sec 5641
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 695
MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
'I
done so as to attract a larger number of bidders". The A
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 B
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 c
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
D
.> ).
development of the development area .

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 E
legal standard of reasonableness? The meaning of all such
expressions as arbitrary and capricious, frivolous or vexatious
.... i< 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 F
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 G
-.II(
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 by enter.taining such
representations and entering into avoidable correspondence
with the AMS. H
696 SUPREME COURT REPORTS [2009) 6 S.C.R.

A 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 us.e of the
8
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
Plah is reserved for 'Residential' purpose. The residential
category of use is a category in contrast with industrial,
C 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 resiqential use in the
Master Plan means that the land can be used for housing,
various other kinds of uses such as institutional, commercial
D etc. At any 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
E 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
F 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
G further controversy that the land in question can be put to both
residential and educational use.

PUBLIC INTEREST:

32. The learned senior counsel relied on the decisions of
H
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 697
..... MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
" this Court in Unni Krishnan, J.P. Vs. State of A.P. 20 and TMA A
Pai foundation Vs. State of Karnataka~ 1 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 B
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 c
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 plan
and for matters ancillary thereto. It is mainly concerned with an
,> ~ orderly development of the areas and balanced use of the D
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 E
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 F
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 G
this time for which the AMS has to blame itselCThe 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
20. [(1993) 1 sec 6451
21. [(2002J s sec 4811 H
698 SUPREME COURT REPORTS [2009) 6 S.C.R.

.A favour based on self-serving representations. The AMS
indulged to say the least in speculative litigation. We
accordingly find no merit in the su!:>mission of the AMS placing
reliance upon the Directive Principles of State Policy and more
particularly, Article 41 of the Constitution of India which says
B 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 disablem~nt and in other
cases of undeserved want. The State had already made
C 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 taker:i only with the view to give
effect to the Directive Principles of State Policy enshrined under
Article 41 of the Constitution of India. The AMS has no legal or
0
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
E 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
F 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
G plot between pre-existing educational campuses would make
housing use 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
H in Meerut that even the disputed plot cannot be spared.
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 699
--... MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
-~

The expression 'public interest' if it is employed in a given A
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 B
'
", conclusion that MDA's decision in calling for fresh tender from
the interested persons for making the land available for
...
residential use is n9t 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 c
public interest than making it available for residential use.
Public interest floats in a vast, deep-ocean of ideas, and
"imagined experiences". It would seem- to us wise for the courts
not to venture into this unchartered minefield. We are not
exercising our will. We cannot impose our own values on
--> ~ D
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 E
that the High Court virtually converted the judicial review
proceedings into an inquisitorial one. The way proceedings
"" 1- 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 F
decision making process of the MDA in not accepting the offer/
tender of the AMS in respect of the disputed plot on the ground
that the offer so made was less than that of the reserve price
fixed by the MDA. We express our reservation in the manner
-,1.. in which the High Court dealt with the matter. The High Court G
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.
H
I

700 SUPREME COURT REPORTS [2009] 6 S.C.R.
.. 4

A 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
B this Court. It is brought to our notice that the prices ofthe 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
c way street. The conduct of the AMS does not entitle it to get
any such relief in equity.

35. For all the afores?id reasons, we find it difficult to
sustain the impugned judgment.

D 36. Civil A~~eal Nos. 2620-2621/09 arising out of SLP (c} ~~

Nos. 1602-1603 of 2008 ~referred bl£ Pawan Kumar
Agarwal :

On 15.4.2002, MDA got fresh advertisement issued
inviting bids to acquire the land for housing purposes at the t
E
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 -f ..
its letter dated 17.8.2002. However, further amounts were not
F 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
G requiring 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
H be issued only after the disposal of the writ petition.
MEERUT DEVELOPMENT AUTH. v. ASSOCIATION OF 701
-<~ MANAGEMENT STUDIES [B. SUDERSHAN REDDY, J.]
' 37. AMS challenged the fresh advertisement in which the A
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 B
hearing, the High Court on 8.5.2007 directed the Vice-
"' Chairman, MDA to file additional affidavit inter alia explaining
,..,
as to why ~llotment in favour of appellant-Pawan Kumar
Agarwal was not cancelled when it has deposited only earnest
money and not the balance of total consideration and whether c
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 D
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 E
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 F
to exercise our jurisdiction under Article 136 of the Constitution
of India and interfere with the order of cancellation passed by
MDA on 14.5.2007.

RESULT
_.., G
'
,-
;

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 H
702 SUPREME COURT REPORTS [2009] 6 S.C.R.

A 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.
B
40. n 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)
C Nos. 1602-1603/08 shall stand dismissed but without any order
as to costs.

D.G. C.A. 2619 of 2009 allowed
and Civil Appeals Nos. 2620-
2621 of 2009 dismissed.

.., ..