MUNICIPAL COUNCIL NEEMUCHversusMAHADEO REAL ESTATE AND ORS.

532                       [2019]
               SUPREME COURT     12 S.C.R. 532
                              REPORTS                    [2019] 12 S.C.R.


A                    MUNICIPAL COUNCIL NEEMUCH
                                       v.
                   MAHADEO REAL ESTATE AND ORS.
                     (Civil Appeal No. 7319-7320 of 2019)
B                           SEPTEMBER 17, 2019
          [ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]
             Constitution of India – Art.226– Administrative action–
      Judicial review of – Appellant invited tenders for allotment of land
      on lease, for 30 years – Bid of respondent no.1 found to be highest
C
      – Objection raised with regard to the tender process– Respondent
      no.3-Divisional Revenue Commissioner, Ujjain passed order dtd.
      03.07.10 that the tenders invited were not competitive as there was
      no adequate publicity and there was possibility of cartel of bidders
      – Direction to invite the tenders again by publishing the Notice
D     Inviting Tender (NIT) in at least one National level English
      newspaper and one State level reputed Hindi newspaper– High Court
      quashing the order dtd. 03.07.10, directed respondent no.3 to grant
      approval on behalf of the State Government for allotment of the
      land on lease in favour of respondent no.1 – Review – Dismissed –
      On appeal, held: Under clause (iii) of sub-sec.3 of s.109, no land,
E
      exceeding fifty thousand rupees in the value shall be sold or
      otherwise conveyed without the previous sanction of the State
      Government – In the present case, before inviting the bids, prior
      approval of the State Government as required u/s.109 of the 1961
      Act was not taken – Division Bench of the High Court by only
F     referring to the communication dtd. 21.12.09 came to the conclusion
      that the sanction contemplated u/s.109 was granted by the State
      Government – Commissioner, instead of blindly accepting the
      directions contained in the communication dtd. 21.12.09, acted in
      larger public interest so that the Municipal Council earns higher
      revenue by enlarging the scope of the competition – State
G
      Government also, after the Commissioner pointed out anomalies,
      re-examined the issue and authorised the Commissioner to pass
      appropriate orders including invalidating the tender process and
      directing initiation of fresh tender process – In this background,

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                                      532
   MUNICIPAL COUNCIL NEEMUCH v. MAHADEO REAL                              533
                ESTATE AND ORS.

the finding of the Division Bench that the action of the Commissioner     A
is arbitrary and illegal, is not correct – High Court, while exercising
its powers of judicial review of administrative action, could not
have interfered with the decision unless the decision suffers from
the vice of illegality, irrationality or procedural impropriety – Both,
the Commissioner as well as the State Government acted in the larger
                                                                          B
public interest – Scope of judicial review of an administrative action
is very limited – Interference by the High Court was improper –
Impugned orders set aside – However, appellant to refund the amount
deposited by respondent no.1 with interest @ 6% p.a.– Madhya
Pradesh Municipality Act, 1961– ss.109, 323– Municipal
Corporation (Transfer of Immovable Property) Rules, 1994– rr.3,           C
7– Principle of Wednesbury Unreasonableness.
      Allowing the appeals, the Court
        HELD: 1.1 No land, exceeding fifty thousand rupees in the
value shall be sold or otherwise conveyed without the previous
sanction of the State Government. The immovable property which            D
yields or is capable of yielding an income shall not be transferred
by sale or otherwise conveyed, except to the highest bidder at
the public auction or by inviting offers in a sealed cover. No doubt,
with the previous sanction of the State Government such a transfer
could be effected without public auction or inviting offers in a          E
sealed cover. The second proviso further provides that, the
Corporation may, with the previous sanction of the State
Government and for the reasons to be recorded in writing, transfer
any immovable property to a bidder other than the highest bidder.
 It is thus amply clear that, whenever any land which is having a
value exceeding fifty thousand rupees is to be sold the same              F
cannot be done without the previous sanction of the State
Government. The scope of judicial review of an administrative
action is very limited. Unless the Court comes to a conclusion,
that the decision maker has not understood the law correctly
that regulates his decision-making power or when it is found that         G
the decision of the decision maker is vitiated by irrationality and
that too on the principle of “Wednesbury Unreasonableness” or
unless it is found that there has been a procedural impropriety in
the decision-making process, it would not be permissible for the

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534           SUPREME COURT REPORTS                     [2019] 12 S.C.R.


A     High Court to interfere in the decision making process. It is not
      permissible for the Court to examine the validity of the decision
      but this Court can examine only the correctness of the decision-
      making process. An interference by the High Court would be
      warranted only when the decision impugned is vitiated by an
      apparent error of law, i.e., when the error is apparent on the face
B
      of the record and is self evident. The High Court would be
      empowered to exercise the powers when it finds that the decision
      impugned is so arbitrary and capricious that no reasonable person
      would have ever arrived at. The test is not what the court
      considers reasonable or unreasonable but a decision which the
C     court thinks that no reasonable person could have taken. Not
      only this but such a decision must have led to manifest injustice.
      [Paras 12, 13, 15 & 17] [541-B-E; 542-F-H; 544-A-B]
             1.2 Undisputedly, in the present case, before inviting the
      bids, prior approval of the State Government as is required under
D     Section 109 of the Madhya Pradesh Municipality Act, 1961 was
      not taken. Two municipal counsellors raised objections before
      the Collector under the provisions of Section 323 of the said Act.
      The Collector, who initially granted stay on 18.07.2008, vide order
      dated 23.12.2008 directed the Municipal Council to seek approval
      of the State Government to the said proposal. Vide communication
E     dated 21.12.2009, the State Government directed respondent No.
      3-Revenue Commissioner to hand over the possession of the
      land to respondent No. 1. While doing so, the State Government
      directed the Commissioner to inspect as to whether the land was
      being put for use as per the development plan. On receipt of the
F     communication, the Divisional Commissioner addressed a
      communication to the State Government on 03.03.2010 thereby,
      specifically pointing out that no proper publicity was given to the
      NIT and that the rates were not competitive as per the market
      value. It was specifically observed that there was a cartel among
      the tenderers and, therefore, sought clear orders of the State
G     Government in view of Section 109 of the said Act. He also
      proposed to reject the proposal with further direction to invite
      fresh tenders by giving adequate publicity. In response to the
      said communication, the State Government re-examined the issue

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   MUNICIPAL COUNCIL NEEMUCH v. MAHADEO REAL                         535
                ESTATE AND ORS.

and by communication dated 18.05.2010 authorised the                 A
Commissioner for transferring the land in question. The State
Government authorised the Commissioner to take necessary
decision with regard to grant of sanction under the provisions of
Section 109 of the said Act and Rule 7 of the Municipal
Corporation (Transfer of Immovable Property) Rules, 1994.
                                                                     B
[Paras 18, 22] [544-C; 545-G-H; 546-A-D]
       1.3 The Division Bench of the High Court by only referring
to the communication dated 21.12.2009 came to the conclusion
that the sanction contemplated under Section 109 of the said Act
was granted by the State Government. However, it totally ignored
the subsequent correspondence between the State Government           C
and the Commissioner. Perusal of the subsequent communication
reveals that the Commissioner had pointed out the infirmities in
the proposal of the Municipal Council and advised the State
Government to reject the said proposal with a direction to the
Municipal Council to invite fresh tenders. The Commissioner,         D
instead of blindly accepting the directions contained in the
communication dated 21.12.2009, has acted in larger public
interest so that the Municipal Council earns a higher revenue.
Not only this, but the State Government, after the Commissioner
pointing out anomalies to its notice, has re-examined and
reconsidered the issue and authorised the Commissioner to pass       E
appropriate orders including invalidating the tender process and
directing initiation of fresh tender process. In the background of
this factual situation, the finding of the Division Bench of the
High Court that the action of the Commissioner is arbitrary and
illegal, is neither legally or factually correct. The High Court,    F
while exercising its powers of judicial review of administrative
action, could not have interfered with the decision unless the
decision suffers from the vice of illegality, irrationality or
procedural impropriety. [Paras 23, 24] [546-E-G; H; 547-A-C]
      1.4 The Commissioner had acted rightly as a custodian of       G
the public property by pointing out the anomalies in the proposal
of the Municipal Council to the State Government and the State
Government has also responded in the right perspective by
authorising the Commissioner to take an appropriate decision.

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536            SUPREME COURT REPORTS                     [2019] 12 S.C.R.


A     Both, the Commissioner as well as the State Government, have
      acted in the larger public interest. The decision of the
      Commissioner which is set aside by the High Court is undoubtedly
      in larger public interest, which would ensure that the Municipal
      Council earns a higher revenue by enlarging the scope of the
      competition. By no stretch of imagination, the decision of the
B
      State Government or the Commissioner could be termed as
      illegal, improper, unreasonable or irrational, which parameters
      only could have permitted the High Court to interfere.
      Interference by the High Court when none of such parameters
      exist was totally improper. It is the High Court, which has failed
C     to take into consideration relevant material. In the result, the
      impugned Orders are not sustainable in law. The impugned orders
      dated 31.08.2017 and 05.07.2018 are quashed and set aside. The
      petition of respondent No.1 stands dismissed. However, the
      Municipal Council is directed to refund the amount deposited by
      respondent No.1 herein along with interest at the rate of 6% per
D
      annum forthwith. [Paras 25-27] [547-C-D; G-H; 548-A-C]
            Tata Cellular v. Union of India (1994) 6 SCC 651 :
            [1994] 2 Suppl. SCR 122 ; West Bengal Central School
            Service Commission v. Abdul Halim 2019 SCC OnLine
            SC 902 – relied on.
E
                             Case Law Reference
      [1994] 2 Suppl. SCR 122        relied on                 Para 14
            CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7319-
      7320 of 2019.
F
            From the Judgment and Order dated 05.07.2018 of the Madhya
      Pradesh High Court, Bench at Indore in Review Petition No. 1072 of
      2017 and order dated 31.08.2017 in W.P. No. 12204 of 2010.
            Harsh Parashar, Adv. for the Appellant.
G          Kalyan Banerjee, Sr. Adv., Uday Gupta, Ms.Shivani Lal, Hiren
      Dasan, M. K. Tripathi, Hemant Kushwalia, Mrs. Sarla Chandra, Avishkar
      Singhvi, Nipun Katyal, Rahul Kaushik, Advs. for the Respondents.



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    MUNICIPAL COUNCIL NEEMUCH v. MAHADEO REAL                                    537
                 ESTATE AND ORS.

       The Judgment of the Court was delivered by                                A
       B. R. GAVAI, J.
       1. Leave granted.
      2. The present appeals challenge the Judgment and Order passed
by the Division Bench of the Madhya Pradesh High Court, Bench at                 B
Indore, dated 31.08.2017 thereby allowing the writ petition filed by
respondent No. 1 herein and the subsequent Order dated 05.07.2018
thereby, rejecting the Review Petition filed by the appellant.
       3. The factual background, in brief, giving rise to the present appeals
is as under.                                                                     C
       The appellant, which is a Municipal Council, duly constituted under
the Madhya Pradesh Municipality Act, 1961 (hereinafter referred to as
the “said Act”) had invited tenders for allotment of land on lease, for a
period of 30 years. The land was ad-measuring 163176 sq. ft. situated in
Scheme No.1A (Commercial-cum-Residential Use), Neemuch. The                      D
Notice Inviting Tenders (“NIT” for short) was published in the daily
newspapers, viz., Nai Duniya, Dainik Bhaskar, Free Press and Dashpur
Express. Respondent No.1, which is a registered partnership firm along
with other bidders had submitted the tender thereby giving an offer of
Rs.5,81,00,106/-. It had also deposited the earnest money amounting to
Rs. 47,00,000/-. The bids of the participants were opened in presence of         E
the representatives of all the bidders. The bid of respondent No. 1
herein was found to be highest.
      4. The appellant issued a letter dated 27.09.2008 thereby informing
respondent No. 1 that its bid was accepted. Respondent No.1 was directed
to deposit an amount of Rs.1,45,25,050/-, i.e., 25% of the bid amount            F
within a period of seven days. Respondent no.1 in accordance therewith
deposited the aforesaid amount on 01.10.2008.
       5. It appears that an objection was raised by two members of the
Municipal Council under the provisions of Section 323 of the said Act
before the Collector with regard to the said tender process. It further          G
appears, that the Collector vide Order dated 18.07.2008 had stayed further
proceedings of the tender process. Vide Order dated 23.12.2008, the
Collector disposed of the proceeding observing therein, that the proposal
be sent for approval of the State Government in the Urban Administrative
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538               SUPREME COURT REPORTS                       [2019] 12 S.C.R.


A     and Development Department, respondent No. 2 herein, under the
      provisions of Section 109 of the said Act.
             6. Thereafter, it appears that, there was certain correspondence
      between the Urban Administrative and Development Department, on
      one hand, and the Divisional Revenue Commissioner of Ujjain, respondent
B     No.3 herein, on the other hand. Finally, respondent No.3 passed an order
      dated 03.07.2010 observing therein that, the tenders invited in connection
      with transfer of the said land were not competitive. He further observed
      in the said Order, that the NIT was published only in Indore edition of
      two Hindi Newspapers at Indore and as such there was no wide
      circulation. As such, he rejected the proposal of the Municipal Council
C     and returned the same with the direction to invite the tenders again by
      publishing the NIT in at least one National level English newspaper and
      one State level reputed Hindi newspaper. Being aggrieved thereby,
      respondent No. 1 herein approached the Madhya Pradesh High Court in
      Writ Petition No.12204 of 2010. The Division Bench vide Order dated
D     31.08.2017 allowed the writ petition thereby quashing and setting aside
      the Order dated 03.07.2010 passed by respondent No.3 and further
      directing him to grant approval on behalf of the State Government for
      allotment of the land on lease in favour of respondent no.1. The appellant,
      thereafter, preferred Review Petition No. 1072 of 2017. The same was
      rejected. Hence, the present appeals challenging both the Orders dated
E     31.08.2017 and 05.07.2018.
           7. We have heard Mr. Harsh Parashar, learned counsel appearing
      on behalf of the appellant and Mr. Kalyan Banerjee, learned senior
      counsel appearing on behalf of the respondents.

F            8. For appreciating the rival controversy, it will be relevant to
      refer to the provisions of Section 109 of the said Act. Section 109 reads
      as follows.
            “109. Provisions governing the disposal of Municipal property
            vesting in or under the management of Council.- No streets, land
G           public places, drains or irrigation channels shall be sold, leased or
            otherwise alienated, save in accordance with such rules as may
            be made in this behalf.-
            (2)     Subject to the provisions of sub-section (1)-
            (a)     the Chief Municipal Officer may, in his discretion, grant a
H                   lease of any immovable property belonging to the Council,
MUNICIPAL COUNCIL NEEMUCH v. MAHADEO REAL                                  539
       ESTATE AND ORS. [B. R. GAVAI, J. ]

       including any right of fishing or of gathering and taking fruits,   A
       flowers and then like, of which the premium or rent, or
       both, as the case may be, does not exceed two hundred
       and fifty rupees for any period not exceeding twelve months
       at a time:
       Provided that every such lease granted by the Chief                 B
       Municipal Officer, other than the lease of the class in respect
       of which the President-in-Council has by resolution
       exempted the Chief Municipal Officer from compliance with
       the requirements of this proviso, shall be reported by him to
       the President-in-Council within fifteen days after the same
       has been granted.                                                   C

 (b)   with the sanction of the President-in-Council, the Chief
       Municipal Officer may, by sale or otherwise grant a lease
       of immovable property including any such right as aforesaid
       for any period not exceeding three years at a time of which
       the premium, or rent, or both, as the case may be, for any          D
       one year does not exceed one thousand five hundred rupees;
 (c)   with the sanction of the Council, the Chief Municipal Officer
       may lease, sell or otherwise convey any immovable property
       belonging to the Council.
                                                                           E
 (3) The sanction of the President-in-Council or of the Council
      under sub-section (2) may be given either generally for any
      class of cases or specially in any particular case:
       Provided that-
       (i) no property vesting in the Council in trust shall be leased,    F
       sold or otherwise conveyed in a manner that is likely to
       prejudicially effect the purpose of the trust subject to which
       such property is held;
       (ii) no land exceeding fifty thousand rupees in value shall
       be sold or otherwise conveyed without the previous sanction         G
       of the State Government and every sale or other conveyance
       of property vesting in the Council shall be deemed to be
       subject to the conditions and limitations imposed by this Act
       or by any other enactment for the time being in force.”
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540             SUPREME COURT REPORTS                             [2019] 12 S.C.R.


A            9. It could thus be seen that, the aforesaid provision governs the
      disposal of municipal property vesting in or under the management of
      the Municipal Council. Clause (ii) of sub-section (3) of Section 109 of
      the said Act would be the most relevant provision. It provides that, no
      land exceeding fifty thousand rupees in value shall be sold or otherwise
      conveyed without the previous sanction of the State Government. It
B
      further provides that, every sale or other conveyance of property vesting
      in the Council shall be deemed to be subject to the conditions and
      limitations imposed by the said Act or by any other enactment for the
      time being in force.
             10. It will also be relevant to refer to Rule 3 of the Municipal
C     Corporation (Transfer of Immovable Property) Rules, 1994 (hereinafter
      referred to as the “said Rules”), which reads thus:
             “3. No immovable property which yields or is capable of yielding
             an income shall be transferred by sale, or otherwise conveyed
             except to the highest bidder at a public auction or by inviting offers
D            in a sealed cover:
             Provided that if the Corporation is of the opinion that it is not
             desirable to hold a public auction or to invite offers in sealed covers
             the Corporation may, with the previous sanction of the State
             Government, effect such transfer without public auction or inviting
E            offers in sealed covers:
             Provided further that the Corporation may with the previous
             sanction of the State Government and for the reasons to be
             recorded in writing, transfer any immovable property to a bidder
             other than the highest bidder:
F
             Provided also that for any such transfer by lease a reasonable
             premium shall be payable at the time of granting the lease and
             annual rent shall also be payable in addition during the total period
             of the lease.”
             11. A perusal of the aforesaid Rule 3 of the said Rules would
G
      reveal, that no immovable property which yields or is capable of yielding
      an income shall be transferred by sale, or otherwise conveyed, except to
      the highest bidder at a public auction or by inviting offers in a sealed
      cover. The proviso thereof provides that if the Corporation is of the
      opinion that it is not desirable to hold a public auction or to invite offers in
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    MUNICIPAL COUNCIL NEEMUCH v. MAHADEO REAL                                  541
           ESTATE AND ORS. [B. R. GAVAI, J. ]

sealed covers, the Corporation may, with the previous sanction of the          A
State Government, effect such transfers without public auction or inviting
offers in sealed covers. The second proviso also provides that the
Corporation may, with the previous sanction of the State Government
and for the reasons to be recorded in writing, transfer any immovable
property to a bidder other than the highest bidder.
                                                                               B
       12. It is thus amply clear that, no land, exceeding fifty thousand
rupees in the value shall be sold or otherwise conveyed without the
previous sanction of the State Government. The perusal of the aforesaid
Rule further makes it clear that the immovable property which yields or
is capable of yielding an income shall not be transferred by sale or
otherwise conveyed, except to the highest bidder at the public auction or      C
by inviting offers in a sealed cover. No doubt, with the previous sanction
of the State Government such a transfer could be effected without public
auction or inviting offers in a sealed cover. The second proviso further
provides that, the Corporation may, with the previous sanction of the
State Government and for the reasons to be recorded in writing, transfer       D
any immovable property to a bidder other than the highest bidder.
      13. It is thus amply clear that, whenever any land which is having
a value exceeding fifty thousand rupees is to be sold the same cannot be
done without the previous sanction of the State Government.
       14. In the present case, the learned Judges of the Division Bench       E
have arrived at a finding that such a sanction was, in fact, granted. We
will examine the correctness of the said finding of fact at a subsequent
stage. However, before doing that, we propose to examine the scope of
the powers of the High Court of judicial review of an administrative
action. Though, there are a catena of judgments of this Court on the said      F
issue, the law laid down by this Court in the case of Tata Cellular Vs.
Union of India reported in (1994) 6 SCC 651 lays down the basic principles
which still hold the field. Paragraph 77 of the said judgment reads thus:
          “77. The duty of the court is to confine itself to the question of
          legality. Its concern should be:                                     G
          1. Whether a decision-making authority exceeded its powers?
          2. Committed an error of law,
          3. committed a breach of the rules of natural justice,
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542            SUPREME COURT REPORTS                           [2019] 12 S.C.R.


A               4. reached a decision which no reasonable tribunal would have
                reached or,
                5. abused its powers.
                Therefore, it is not for the court to determine whether a
                particular policy or particular decision taken in the fulfilment
B               of that policy is fair. It is only concerned with the manner in
                which those decisions have been taken. The extent of the duty
                to act fairly will vary from case to case. Shortly put, the grounds
                upon which an administrative action is subject to control by
                judicial review can be classified as under:
C               (i)     Illegality : This means the decision-maker must
                        understand correctly the law that regulates his decision
                        making power and must give effect to it.
                (ii)    Irrationality, namely, Wednesbury unreasonableness.

D               (iii)   Procedural impropriety.
                The above are only the broad grounds but it does not rule out
                addition of further grounds in course of time. As a matter of
                fact, in R. v. Secretary of State for the Home Department, ex
                Brind, (1991) 1 AC 696, Lord Diplock refers specifically to
                one development, namely, the possible recognition of the
E
                principle of proportionality. In all these cases the test to be
                adopted is that the court should, ‘consider whether something
                has gone wrong of a nature and degree which requires its
                intervention’”.
             15. It could thus be seen that the scope of judicial review of an
F
      administrative action is very limited. Unless the Court comes to a
      conclusion, that the decision maker has not understood the law correctly
      that regulates his decision-making power or when it is found that the
      decision of the decision maker is vitiated by irrationality and that too on
      the principle of “Wednesbury Unreasonableness” or unless it is found
G     that there has been a procedural impropriety in the decision-making
      process, it would not be permissible for the High Court to interfere in the
      decision making process. It is also equally well settled, that it is not
      permissible for the Court to examine the validity of the decision but this
      Court can examine only the correctness of the decision-making process.
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   MUNICIPAL COUNCIL NEEMUCH v. MAHADEO REAL                                    543
          ESTATE AND ORS. [B. R. GAVAI, J. ]

      16. This Court recently in the case of West Bengal Central School         A
Service Commission vs. Abdul Halim reported in 2019 SCC OnLine
SC 902 had again an occasion to consider the scope of interference
under Article 226 in an administrative action.
       “31. In exercise of its power of judicial review, the Court is to
      see whether the decision impugned is vitiated by an apparent error        B
      of law. The test to determine whether a decision is vitiated by
      error apparent on the face of the record is whether the error is
      self-evident on the face of the record or whether the error requires
      examination or argument to establish it. If an error has to be
      established by a process of reasoning, on points where there
      may reasonably be two opinions, it cannot be said to be                   C
      an error on the face of the record, as held by this Court
      in Satyanarayan v. Mallikarjuna reported in AIR 1960 SC 137. If
      the provision of a statutory rule is reasonably capable of two or
      more constructions and one construction has been adopted, the
      decision would not be open to interference by the writ Court. It is       D
      only an obvious misinterpretation of a relevant statutory provision,
      or ignorance or disregard thereof, or a decision founded on reasons
      which are clearly wrong in law, which can be corrected by the
      writ Court by issuance of writ of Certiorari.
      32. The sweep of power under Article 226 may be wide enough               E
      to quash unreasonable orders. If a decision is so arbitrary and
      capricious that no reasonable person could have ever arrived at it,
      the same is liable to be struck down by a writ Court. If the decision
      cannot rationally be supported by the materials on record, the
      same may be regarded as perverse.
                                                                                F
      33. However, the power of the Court to examine the
      reasonableness of an order of the authorities does not enable the
      Court to look into the sufficiency of the grounds in support of a
      decision to examine the merits of the decision, sitting as if in appeal
      over the decision. The test is not what the Court considers
      reasonable or unreasonable but a decision which the Court thinks          G
      that no reasonable person could have taken, which has led to
      manifest injustice. The writ Court does not interfere, because a
      decision is not perfect.

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544             SUPREME COURT REPORTS                          [2019] 12 S.C.R.


A            17. It could thus be seen that an interference by the High Court
      would be warranted only when the decision impugned is vitiated by an
      apparent error of law, i.e., when the error is apparent on the face of the
      record and is self evident. The High Court would be empowered to
      exercise the powers when it finds that the decision impugned is so arbitrary
      and capricious that no reasonable person would have ever arrived at. It
B
      has been reiterated that the test is not what the court considers reasonable
      or unreasonable but a decision which the court thinks that no reasonable
      person could have taken. Not only this but such a decision must have led
      to manifest injustice.
             18. In the light of the aforesaid principles, let us examine the facts
C     of the present case. Undisputedly, in the present case, before inviting
      the bids, prior approval of the State Government as is required under
      Section 109 of the said Act was not taken. It appears, that only after the
      tender process was finalized and the Municipal Council had taken a
      decision to accept the bid of Respondent No.1, two municipal counsellors
D     raised objection under the provisions of Section 323 of the said Act,
      before the Collector, Neemuch. The Collector, Neemuch on 18.07.2008
      had granted stay to the proceedings. Finally, the Collector, vide Order
      dated 23.12.2008 held that for granting the said land on lease for a period
      of 30 years, the approval of the State Government is necessary. Pursuant
      to the said order by the Collector, the matter was sent to respondent No.
E     2- State Government. The Principal Secretary to the Government of
      Madhya Pradesh addressed a communication to the Commissioner, Ujjain
      Division, Ujjain (hereinafter referred to as “the Commissioner”) thereby
      authorising him to transfer the land in question. While doing so, the State
      Government also directed the Commissioner to inspect that the utilisation
F     of the land was for the purposes as provided under Neemuch
      Development Plan 2011.
             19. However, the Commissioner addressed a communication dated
      03.03.2010 to the State Government thereby, pointing out that the rights
      for transferring the property having a value more than fifty thousand
G     rupees is with the State Government. He has, therefore, solicited guidance
      from the State Government seeking clear orders in view of the provisions
      of Section 109 of the said Act and Rule 7 of the said Rules. He also
      pointed out to the State Government that the Municipal Council had
      published the NIT only in two daily newspapers of Hindi language and
      as such there was no sufficient competition. He also pointed out that, as
H
    MUNICIPAL COUNCIL NEEMUCH v. MAHADEO REAL                                    545
           ESTATE AND ORS. [B. R. GAVAI, J. ]

such tenders were filled up by only four bidders. He specifically observed,      A
that after noticing the rates offered, it appears that there is cartel amongst
the tenderers. He further pointed out that, had the NIT been published in
English and Hindi newspapers at the National and State level, then there
would have been a wider competition and the higher rates could have
been offered. He, therefore, proposed that while rejecting the proposal
                                                                                 B
as submitted to the Council it will be appropriate to direct the Municipal
Council, Neemuch, to invite the tenders again.
       20. In response to the aforesaid communication dated 03.03.2010,
respondent No. 2-State Government addressed another communication
dated 18.05.2010 to the Commissioner. The said communication states
that after re-examination the State Government has authorised the                C
Commissioner for transferring the land in question. The said
communication specifically states that if the proposal submitted by the
Municipal Council was not agreeable to the Commissioner then while
invalidating the proposal by the Municipal Council, he may give order for
initiation of proceedings afresh. In pursuance of the aforesaid                  D
communication dated 18.05.2010, the order impugned herein is passed
by the Commissioner dated 03.07.2010.
       21. The Commissioner in the Order dated 03.07.2010 has found
that the bids were not found to be competitive. He further found that the
NIT was published only in two Hindi newspapers and as such there was             E
no sufficient competition. He has, therefore, rejected the proposal of the
Municipal Council and while doing so, returned back the same with the
direction to invite the tenders again and get the NIT published in at least
one National level English newspaper and one State level Hindi
newspaper.
                                                                                 F
       22. The situation that emerges is thus. Initially the Municipal
Council, Neemuch, invited tenders for allotment of the said land on
lease for 30 years. This was done without taking prior approval of the
State Government as in required under Section 109 of the said Act. Two
municipal counsellors raised objections before the Collector under the
provisions of Section 323 of the said Act. The Collector, who initially          G
granted stay on 18.07.2008, vide order dated 23.12.2008 directed the
Municipal Council to seek approval of the State Government to the said
proposal. Vide communication dated 21.12.2009, the State Government
directed respondent No. 3-Revenue Commissioner to hand over the
possession of the land to respondent No. 1. While doing so, the State            H
546            SUPREME COURT REPORTS                          [2019] 12 S.C.R.


A     Government directed the Commissioner to inspect as to whether the
      land was being put for use as per the development plan. On receipt of
      the communication, the Divisional Commissioner addressed a
      communication to the State Government on 03.03.2010 thereby,
      specifically pointing out that no proper publicity was given to the NIT
      and that the rates were not competitive as per the market value. It was
B
      specifically observed that there was a cartel among the tenderers and,
      therefore, sought clear orders of the State Government in view of Section
      109 of the said Act. He also proposed to reject the proposal with further
      direction to invite fresh tenders by giving adequate publicity. In response
      to the said communication, the State Government re-examined the issue
C     and by communication dated 18.05.2010 authorised the Commissioner
      for transferring the land in question. It is further clear from the said
      communication that, the State Government authorised the Commissioner
      to take necessary decision with regard to grant of sanction under the
      provisions of Section 109 of the said Act and Rule 7 of the said Rules. It
      specifically observed that, if the Commissioner does not agree with the
D
      proposal of the Municipal Council he may while invalidating the proposal
      of the Municipal Council give orders for initiation of proceedings afresh.
      It is in view of this authorisation that the Divisional Commissioner has
      passed the orders which were impugned before the Madhya Pradesh
      High Court.
E            23. We are at pains to say, that the Division Bench of the High
      Court by only referring to the communication dated 21.12.2009 came to
      the conclusion that the sanction contemplated under Section 109 of the
      said Act was granted by the State Government. However, the Division
      Bench has totally ignored the subsequent correspondence between the
F     State Government and the Commissioner. Perusal of the subsequent
      communication reveals that the Commissioner had pointed out the
      infirmities in the proposal of the Municipal Council and advised the State
      Government to reject the said proposal with a direction to the Municipal
      Council to invite fresh tenders. On the objection of the Commissioner,
      the State Government re-examined and reconsidered the issue and
G     authorised the Commissioner to exercise powers under Section 109 of
      the said Act to take appropriate decision, including rejecting the proposal
      and directing the process of re-tendering.
             24. It could thus be clearly seen that, the Commissioner, instead
      of blindly accepting the directions contained in the communication dated
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    MUNICIPAL COUNCIL NEEMUCH v. MAHADEO REAL                                   547
           ESTATE AND ORS. [B. R. GAVAI, J. ]

21.12.2009, has acted in larger public interest so that the Municipal Council   A
earns a higher revenue. Not only this, but the State Government, after
the Commissioner pointing out anomalies to its notice, has re-examined
and reconsidered the issue and authorised the Commissioner to pass
appropriate orders including invalidating the tender process and directing
initiation of fresh tender process. In the background of this factual
                                                                                B
situation, the finding of the Division Bench of the High Court that the
action of the Commissioner is arbitrary and illegal, in our view, is neither
legally or factually correct. As discussed hereinabove, the High Court,
while exercising its powers of judicial review of administrative action,
could not have interfered with the decision unless the decision suffers
from the vice of illegality, irrationality or procedural impropriety.           C
       25. In the present case, we find that the Commissioner had acted
rightly as a custodian of the public property by pointing out the anomalies
in the proposal of the Municipal Council to the State Government and
the State Government has also responded in the right perspective by
authorising the Commissioner to take an appropriate decision. We are of         D
the considered view that, both, the Commissioner as well as the State
Government, have acted in the larger public interest. We are unable to
appreciate as to how the High Court, in the present matter, could have
come to a conclusion that it was empowered to exercise the power of
judicial review to prevent arbitrariness or favouritism on the part of the
State authorities, as has been observed by it in paragraph 13. We are           E
also unable to appreciate the finding of the High Court in para 17 wherein
it has observed that the impugned decision of the authorities are found
not to be in the public interest. We ask the question to us, as to whether
directing re-tendering by inviting fresh tenders after giving wide publicity
at the National level so as to obtain the best price for the public property,   F
would be in the public interest or as to whether awarding contract to a
bidder in the tender process where it is found that there was no adequate
publicity and also a possibility of there being a cartel of bidders, would
be in the public interest. We are of the considered view that the decision
of the Commissioner which is set aside by the High Court is undoubtedly
in larger public interest, which would ensure that the Municipal Council        G
earns a higher revenue by enlarging the scope of the competition. By no
stretch of imagination, the decision of the State Government or the
Commissioner could be termed as illegal, improper, unreasonable or
irrational, which parameters only could have permitted the High Court
                                                                                H
548             SUPREME COURT REPORTS                         [2019] 12 S.C.R.


A     to interfere. Interference by the High Court when none of such
      parameters exist, in our view, was totally improper. On the contrary, we
      find that it is the High Court, which has failed to take into consideration
      relevant material.
            26. In the result, the impugned Orders are not sustainable in law.
B     The appeals are, accordingly, allowed and the impugned orders dated
      31.08.2017 and 05.07.2018 are quashed and set aside. The petition of
      respondent No. 1 stands dismissed.
             27. However, the Municipal Council is directed to refund the
      amount deposited by respondent No. 1 herein along with interest at the
C     rate of 6% per annum forthwith.
            28. In the facts and circumstances of the case, there shall be no
      order as to costs.


D     Divya Pandey                                                 Appeals allowed.




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H