THE HARYANA STATE AGRICULTURAL MARKETING BOARD AND ORS.versusSADHU RAM

                                       (2008] 6 S. C.R. 43

             }
                           THE HARYANA STATE AGRICULTURAL                          A
                               MARKETING BOARD AND ORS.
                                                \I.
                                         SADHU RAM
                               (Civil Appeal No. 2549 of 2008)
                                        APRIL 8, 2008                              B
         +·
                   (TARUN CHATTERJEE & HARJIT SINGH BEDI, JJ.)
__.,..
                     Punjab Agricultural Produce Markets Act, 1961; S.181
                 Constitution of India, 1950; Article 226:                         c
                       Auction of plots - Cancellation by authority ordering
                 second auction - Challenged on ground of non-disclosure of
                 reserved price in second auction - Allowed by High Court -
                 Correctness of - Held: Incorrect - The Chief Administrator,
                 the final authority did not approve the auction bids in first D
                 auction - A highest bidder in an auction did not acquire any
                 right to have auction concluded in his favour - Second auction
                 was ordered by the authority as earlier auction could not fetch
                 the expected amount - Moreover, in the facts and
                 circumstances of the case, the action of the Chief Administrator E
                 directing second auction of plots was fair and not arbitrary and
                 not a colourable exercise of power - Though reserved price
                 was not known to respondents, but that could not permit the
                 High Court to direct allotment of alternative plots to highest
                 bidder in firs.t auction in exercise of its power u!Article 226 of F
                 the Constitution - Judicial Review - Scope of
                      In connection with allotment of commercia·I plots, viz.,
                 shop plots and Booth plots in open auction, a public
                 notice was issued by appellant No.2. Respondents were
                 declared to be highest bidders for the plots, and they had G
                 deposited requisite amount of the bid money. Later, the
         ~       Chief Administrator conveyed its approval for the bids
                 given in respect of one plot and three booths and rejected
                 the auction held in respect of all other plots, directed to
                                               43                                  H
    44       SUPREME COURT REPORTS               [2008] 6 S.C.R.


A refund the amount deposited by the respondents and
  ordering second aution in respect of remaining plots.
  Accordingly, second auction took place. Respondents
  challenged the order of the Chief Administrator by filing a
  writ petition. High Court held that the respondents were
B entitled to be allotted alternative plots. Hence the present
  appeals.
          Appellant-authorities submitted that declaration of
    the auction in favour of the respondents was subject to
    final approval of the Chief Administrator of the Board and
C   since the Chief Administrator had rejected the auction in
    their favour, the action of the appellants directing second
    auction of the properties in question was wholly justified;
    that the bids offered by the respondents were lower than
    the reserve price, which resulted in the rejection of the
D   bids by the Chief Administrator who under Section 18 of
    the Act had the prerogative to accept or to reject the bids
                                                                   ;
    without assigning any reason; that in the subsequent
    auction, a higher price was fetched in respect of the same
    plots; that the High Court was not justified in invalidating
E   the action of the appellants on the ground of non-
    disclosure of the reserve price and even if the non-
    disclosure of the reserve price at the time of auction was
    to be treated as an irregularity/illegality, the High Court
    could at the most quash the entire auction but could not
F   confirm the auction in favour of the respondents; and that
    in fact, the respondents had already received back the         y
    amount deposited by them towards bid money and,
    therefore, had no subsisting right qua their claim.
       Respondents submitted that since the reserve price
G was not disclosed either in the Public notice or at the time
  of the auction to the persons participating in the same,
  the offers made by the respondents in the auction could
  not be rejected by the Chief Administrator of the Board as
  such the rejection must be treated as unfair, unreasonable
H and illegal; and that the respondents were not informed
      THE HARYANA STATE AGRI. MARKETING BOARD &                45
                  ORS. v. SADHU RAM

     the reason for rejection of their bids even in the letter dated A
     17th of December, 2004 and that the bids offered by them
     were rejected by the appellants after 6 months without
     affording them any opportunity of being heard.
          Allowing the appeals, the Court
~
                                                                    B
          HELD: 1. It is true that the reserve price was neither
     known to the respondents nor was it advertised for the
     purpose of allotting the plots to the respondents but that
     could not permit the High Court to direct allotment of
     alternative plots to the respondents. (Para - 9) [53-C, D]     c
           2.1 In terms of provisions u/s.18 of the Punjab
     Agricultural Produce Markets Act, in case the Chief
     Administrator of the Board rejects the auction, he may not
     be required to assign any reason for such rejection. If
     such rejection is made, Section 18 only provides that the D
1    amount deposited by the bidder must be refunded without
     interest by the Market Committee of the Board. Keeping
     this provision in mind, it is clear that since the Chief
     Administrator of the Board was the final authority to
     approve the auction bids, which in his own discretion, E
     were not approved, it could not be said that since the
     reserve price was not mentioned in the Public Notice and
     was not known to the respondents, the High Court could
     have directed allotment of alternative plots in the exercise
     of its power under Article 226 of the Constitution. (Para - F
·)
     11) [54-A, B, C]
          2.2 In the decided case of Rajasthan Housing Board
     and Another vs. J. S. Investments and Another, this Court
     considered the contours of power which the High Court
     would exercise in a writ petition filed under Article 226 of G
     the Constitution when the challenge was to cancellation
     of auction held by a public body where the prime
     consideration was fairness and generation of public
     revenue and held that even if some defect was found in
     the ultimate decision resulting in cancellation of the H
   46       SUPREME COURT REPORTS               [2008] 6 S.C.R.


A auction, the court should exercise its discretionary power
  under Article 226 with great care and caution and should
  exercise it only in furtherance of public interest. It was
  also held in that decision that when the Chairman of the
  Housing Board had the final authority regarding
B acceptance of the bid, a person who had made the highest
  bid in the auction did not acquire any right to have the
  auction concluded in his favour until the Chairman had
  passed an order to that effect. (Para - 11) [55-B, C, D, E]
        Tata Cellular vs. UOI (1994) 6 SCC 651 and Rajasthan
c Housing Board and Another vs. J. S. Investments and Another
   (2007) 1 sec 477 - relied on.
       3.1 In view of the facts and circumstances of the case,
  the action of the Chief Administrator of the Board was fair
  and the cancellation was not arbitrary. The second auction
D
  was held in respect of the plots in question and from the
                                                                  ,
                                                                  ~


  said auction, although the reserve price was not
  mentioned, much higher offers were received by the
  appellants. Apart from that, the amounts deposited by the
  respondents with the appellants were refunded to the
E respondents by account payee cheques, which were duly
  encashed by them. Such being the position, this Court
  does not find any malafide, unfairness or arbitrariness on
  the part of the Chief Administrator of the Board in rejecting
  the offers of the respondents nor does find it a colourable
F exercise of power. (Para - 12) [56-A, B, C, D]

       3.2 It is on record that the offers made by the
  respondents in the first auction could not fetch the amount
  expected from the said plots and that is the reason a fresh
  Public Notice was issued by the appellants for a
G
  subsequent auction. The second auction was held and
  from the said auction, the price fetched was much higher
  than the offers made by the respondents. That being the
  position and considering the fact that a subsequent
  auction was held and concluded, it was not open to the
H
         THE HARYANA STATE AGRI. MARKETING BOARD &                 47
                     ORS. v. SADHU RAM
    \
    ;

        High Court to direct the allotment of alternative plots at A
        the rate offered by the respondents treating the auction
        held earlier to be valid. (Para -12) [56-E, F, G, H]
             Rajasthan Housing Board and Another Vs. J. S.
        Investments and Another (2007) 1 SCC 477 - relied on.
                                                                         B
             3.3 Even assuming that the reserve price had to be
        given in the Public Notice, then also the best course for
        the High Court would be to cancel the entire auction rather
        than substituting its own opinion by directing allotment
        of alternative plots. It is, therefore, difficult to accept the  c
        views expressed by the High Court that since reserve
        price was not known to the respondents and they were
        found to be the highest bidders in the said auction, they
        have acquired a right to get the allotment of alternative
        plots and the appellants had no authority to reject the
                                                                        D
        highest offers given by the respondents or to cancel the
\       auction itself. Since the entire auction was cancelled, how
        the High Court could pass an order directing allotment of
        the alternative plots on the same terms and conditions
        when, after cancellation, the second auction was held in
        which the price fetched was much higher than the offers E
        made by the respondents. (Para - 14) [57-C, D, E, F]
              3.4 Nothing unfair is found in not disclosing the
        reser\te price. It is common knowledge that when reserve
        price is disclosed, the bidders often form cartels and bid F
        at or around the disclosed price, though the market price
        is much higher. Therefore, this Court does not agree with
        the High Court that the appellants had acted in an unfair
        manner in not disclosing the reserve price at the time of
        inviting tenders or even at the time of holding the auction.
                                                                     G
        (Para - 14) [57-F, G; 58-A]
              3.5 It was not open to the High Court to direct the
        appellants, in the exercise of its writ jurisdiction, to allot
        alternative plots to the respondents only on the ground
        that the auction held earlier could not be cancelled by the      H
      48       SUPREME COURT REPORTS                 [2008] 6 S.C'.R.


 A    Chief Administrator of the Board without assigning any
      reason and also on the ground that the reserve price was
      not disclosed in the Public Notice issued by the appellants.
      (Para - 15) [58-8, CJ

 B         CIVIL APPELLATE JURISDICTION : Civil Appeal No.
      2549 of 2008.
           From the final Judgment and Order dated 27.04.2006 of
      the High Court of Punjab and Haryana at Chandigarh in Civil
      Writ Petition No. 816 of 2005.
 c                               WITH

           Civil Appeal Nos. 2550-2557 of 2008.

       Neeraj Kumar Jain, Bharat Singh, Sanjay, Sandeep
   Chaturvedi, Umang Shankar and Ugra Shankar Prasad for the
 D Appellants.

            P.S. Patwalia, A.P. Bhandari, S.C. Patel, Tejas Patel,
      Subhash Bhommick, Sanjeev K. Pabbi, Shikha Roy, S.K.
      Sabharwal, J.S. Puri, Yash Pal Dhingra and Senthil Jagadeesan
      for the Respondent.
. E
           The Judgment of the Court was delivered by

           TARUN CHATTERJEE, J. 1. Leave granted.

         2. These bunch of appeals have arisen from a common
 F judgment and order dated 27th of April, 2006 of the High Court
   of Punjab & Haryana at Chandigarh whereby the High Court
   had allowed a bunch of writ petitions filed by the respondents
   challenging an order dated 17th of December, 2004 canceling
   the allotments of Plots in their favour in an open auction. Since
 G common questions of law and fact arise in the disposal of these
   bunch of appeals and the High Court has disposed of the entire
   bunch of writ petitions following the judgment passed in Mangat      .,
   Ram & Ors. Vs. State of Haryana & Ors. [CWP No. 213 of
   2005 decided on 27th of April, 2006], we take up the facts leading
   to the filing of these appeals from the judgment dated 27th of
 H
             THE HARYANA STATE AGRI. MARKETING BOARD &                      49
               ORS. v. SADHU RAM [TARUN CHATTERJEE, J.]
       )
       !
            April, 2005 passed in CWP No. 213 of 2005 of the High Court A
            of Punjab and Haryana at Chandigarh, which are as under: -
                   3. The appellants are statutory authorities under the Punjab
            Agricultural Produce Markets Act, 1951 (in short "the Act"). A
            public notice was issued by the office of Market Committee,
            Panchkula, Haryana, appellant no.2 inviting traders and general        B
            public to purchase commercial sites in an open auction to be
.j          held on 81h of July, 2004 in the New Grain and Vegetable Market,
~           Panchkula. By this auction, Shop plots (52 Nos.) and Booth plots
            measuring 20' X 50' were to be auctioned. On 15th of May, 2003,
            the High Powered Committee constituted by an office order              c
            recommended that the reserve price for a plot measuring 20' X
            50' be fixed at Rs. 33,91,391/-which was approved at the level
            of the Chief Administrator of the Board. However, the reserve
~
            price so fixed was neither mentioned in the public notice nor
            was the same announced before the start of the auction. The            D
      -1    auction of the plots was held as per schedule. The respondents
            were declared to be the highest bidders for the plots who
            deposited 25% of the bid money as per the requirement of law.
            On 24th of July, 2004, the auction committee report of the
            aforesaid auction held on ath of July, 2004 was put up before          E
 '
-~          the Market Committee, Panchkula, which by a resolution dated
             24th of July, 2004 recommended the confirmation of the auction
             bids and resolved that the approval of the Chief Administrator,
             Haryana State Agricultural Marketing Board be taken under
             Section 18 of the Act. On 301h of November, 2004, a letter was        F
      _\•    sent on behalf of the Chief administrator to the Executive Officer-
...         cum-Secretary, Market Committee, Panchkula by which some
            discrepancies were conveyed. On 5th of December, 2004, the
             Executive Officer addressed a letter to the Chief Administrator
·1           informing him that the discrepancies pointed out have been
                                                                                   G
             attended to and requested for approval. The Chief Administrator,
             on 15th of December, 2004 conveyed his approval in respect of
       j     the bids given for plot No. 1 measuring 20' X 50' and three booths
             bearing Nos. 149, 150, 152 measuring 12' X 27 %'. The auction
             of all the other plots was rejected and it was directed to refund
                                                                                   H
    50         SUPREME COURT REPORTS                 (2008] 6 S.C.R.


A the amounts to the respondents and to put the plots in open
  auction on 20th of December, 2004. On 17th of December, 2004,
  the respondents received a communication from the Market
  Committee that since the auction in their favour had not been
  approved by the Chief Administrator, 25% of the bid money
B deposited by them was being refunded. The second public
  auction, as scheduled, was held on 20th of December, 2004,
  and a price higher than that of the earlier price was fetched
  from the auction purchasers.
         4. On 4th of January, 2005, the respondents filed a batch
C of writ petitions seeking quashing of the order dated 17th of
   December, 2004 canceling the allotments of plots in their favour.
  The batch of writ petitions filed by the respondents before the
  High Court were taken up for hearing and the main judgment
  that was passed was in the case of Mangat Ram & Ors. Vs.
D State of Haryana & Ors., CWP No. 213 of 2005 decided on
  27th of April, 2006 and thereafter, following the same judgment,
  all the remaining writ petitions were disposed of by holding that
  the respondents were entitled to be allotted alternative plots. It
  is against these judgments of the High Court that separate
E appeals have now been filed by the respondents, in respect of
  which leave has already been granted. As noted herein earlier,
  the High Court, while deciding the bunch of writ petitions, had
  taken into consideration the facts from ·one of the writ petitions
  bearing CWP No. 213 of 2005 on the ground that the writ
F petitions involved common questions of law and fact. That being
  the stand taken by the High Court, we also, therefore, at this
  stage look at the findings of the High Court in CWP No. 213 of
  2005, which are as under: -
         i)    In view of non-disclosure of the reserve price to the
G              auction purchasers, the auction proceedings in their
               favour could neither be cancelled nor the approval
               be denied on the ground that the bid price offered by
               them was lower than the reserve price;
         ii)   The non-disclosure of the reserve price amounted to
H
       THE HARYANA STATE AGRI. MARKETING BOARD &                      51
         ORS. v. SADHU RAM [TARUN CHATTERJEE, J.]

                   an unfair practice;                                     A
            iii)   The auction in favour of the highest bidders was
                   subject to final approval by the Chief Administrator
                   but the approval could be declined only for reasons
                   which were relevant and could justify the non-
                   acceptance of highest bids of the auction purchasers     8
·.t·
                   but the same could not be arbitrary or absolute;

            iv)    The order dated 17th of December, 2004 would be
                   quashed but it would be open to the Chief
                   Administrator to exercise his powers in compliance      c
                   with the terms and conditions of auction so as to
                   consider the question of approval of the auction in
                   accordance with law.
            v)     Mere encashing of cheques, refunding the amount,
                   by the auction purchasers could not be taken 'to be      D
                   a fact against them.
              5. The learned counsel for the appellants argued that the
       auction in favour of the respondents was subject to final approval
       of the ChiefAdministrator of the Board and since the Chief
                                                                             E
       Administrator had rejected the said auction in their favour, the
       action of the appellants was whollyjustified. He further argued
       that the bids offered by the respondents were lower than the
       reserve price, which resulted in the rejection of the bids by the
       Chief Administrator who under Section 18 of the Act had the
. :1
       prerogative to accept or to reject the bids without assigning any F
       reason. The learned counsel for the appellants also submitted
       before us that in the subsequent auction conducted on 20th of
       December, 2004, a higher price was fetched in respect of the
       same plots. He accordingly argued that the High Courtwas not
       justified in invalidating the action of the appellants on the ground G
       of non-disclosure of the reserve price and even if the non-
 r     disclosure of the reserve price at the time of auction was to be
       treated as an irregularity or illegality, the High Court could at the
       most quash the entire auction but could not confirm the auction
       in favour of the respondents and in fact, the respondents had H
    52         SUPREME COURT REPORTS                     [2008] 6 S.C.R.


A already received back the cheques from the Market Committee
  and encashed them and therefore, had no subsisting right qua
  their claim.
        6. These submissions of the learned counsel for the
  appellants were hotly contested by the learned senior counsel
B for the respondents. Mr. Patwalia, the learned senior counsel
                                                                             ·1
  for the respondents argued that since the reserve price was not
  disclosed either in the Public notice or at the time of the auction
  to the persons participating in the same, the offers made by the
  respondents in the auction held on 3th of July, 2004 could not be
c rejected by the Chief Administrator of the Board as such rejection
  mush be treated as unfair, unreasonable and illegal. The learned
  senior counsel for the respondents Mr. Patwalia further submitted
  that the respondents were not informed the reason for rejection
  of their bids even in the letter dated 17th of December, 2004
D and that the bids offered by them were rejected by the appellants
  after 6 months without affording them any opportunity of being             ~
                                                                             I

  heard.
          7. We have examined the aforesaid submissions of the
  learned counsel for the parties. We have also examined the
E judgment of the High Court allowing the writ petitions and holding
  that since the reserve price was not disclosed before the auction,
  which was mandatory, and the respondents proceeded to
  participate in the auCtion without knowing such reserve price, it
  could not be said that since the offer of the respondents was
F less than the reserve price, the same was liable to be rejected.
  Having heard the learned counsel for the parties and after
  carefully examining the impugned judgment of the High Court
  and also the order dated 17th of December, 2004 and other
  materials on record including the terms and conditions of the
G auction held on 3th of July, 2004, we are of the view that this
  appeal must succeed for the reasons stated hereinafter.
         8. Before we proceed to consider the submissions made
    on behalf of the parties, at the risk of repetition, we may keep it
    on record that it is not in dispute that the reserve price for holding
H
      THE HARYANA STATE AGRI. MARKETING BOARD &                         53
        ORS. v. SADHU RAM [TARUN CHATTERJEE, J.]

     the auction of the plots in question was neither shown in the A
     Public Notice of the appellants nor was it known to the
     respondents. It is also an admitted position that the money that
     was deposited by the respondents was refunded by the
     appellants by account payee cheques, which were duly
     encashed by the respondents. As mentioned herein earlier, the B
~    High Court had practically allowed the writ petition on a finding
     that since the reserve price was not shown in the Public Notice,
     the authorities had no jurisdiction to cancel the auction in favour
     of the respondents on the ground that their offers were less than
     the reserve price and therefore, the auction held on 81h of July, c
     2004 could not be cancelled by the order of the Chief
     Administrator of the Board.
           9. We are unable to agree with this view expressed by the
     High Court in the impugned judgment. It is true that the reserve
     price was neither known to the respondents nor was it advertised D
~-
     for the purpose of allotting the plots to the respondents but that
     could not, in our view, permit the High Court to direct allotment
     of alternative plots to the respondents. Even assuming that there
     was error on the part of the authorities in not mentioning the
     reserve price in the Public Notice, then also, it was not proper E
     for the High Court to direct allotment of alternative plots to the
     respondents on the basis of the auction held on 81h of July, 2004.
           10. It is also not in dispute that the final authority to approve
     the auction bids was the Chief Administrator of the Board. Before
     proceeding further, we may refer to Section 18 of the Act which           F
.\
     runs as under: -
           "Under Section 18 of the Act all the sales of plots whether
           by open auction of draw of lots, are subject to approval
           by the CA of the Board. However, he may or may not
                                                                       G
           accord such approval without assigning any reason. In
           case of offer is rejected, the amount deposited as 1;4th
l          of the total price would be refunded without interest by
           the M.C."                          (Emphasis supplied)
           11. A perusal of the provisions under Section 18 of the             H
    54        SUPREME COURT REPORTS                     [2008] 6 S.C.R.


A Act, as quoted hereinabove, would show that the auction would
  be fihal only after the same is approved by the Chief Administrator
  of the Board. In case the Chief Administrator of the Board rejects
  the auction, he may not be required to assign any reason for
  such rejection. If such rejection is made, Section 18 only provides
B that the amount deposited by the bidder must be refunded
  without interest by the Market Committee of the Board. Keeping
  this provision in mind, it is clear that since the Chief Administrator
  of the Board was the final authority to approve the auction bids,
  which in his own discretion, were not approved, it could not be
c said that since the reserve price was not mentioned in the Public
  Notice and was not known to the respondents, the High Court
  could have directed allotment of alternative plots in the exercise
  of its power under Article 226 of the Constitution. The scope of
  judicial review/interference under Article 226 in contractual
  matters including Government contracts and auction of plots by
0
  State Government has been extensively dealt with by this Court
  in a catena of decisions. In Tata Cellular Vs. UO/ [1994 (6)
  sec 651], the principle that ought to be applied in judicial review
  of decisions especially those relating to acceptance of tender
  and award of contract was considered in detail and it was held
E thatthe principle of judicial review would apply to the exercise
  of contractual powers by Government bodie.s in order to prevent
  arbitrariness or favouritism. But it must also be kept in mind
  that there are inherent limitations in exercise of the power of
  judicial review. In that decision, it was held that the right to refuse
F the lowest or any tender is also available to the Government but
  the principles laid down in Article 14 of the Constitution must be
  kept in mind while accepting or refusing a tender. There can be
  no question of infringement of Article 14 if the Government tries
  to get the best quotation and also to cancel the best quotation if
G it was of the view that the best quotation also was not to the
  satisfaction of the Government to get a better market price of
  the plots in question. Therefore, it was held in that decision that
  the State Government and its instrumentalities cannot be said
  to have exercised an arbitrary power when they found that the
                                                                            '
H best offer made by the respondents could not be accepted
     THE HARYANA STATE AGRI. MARKETING BOARD &                    55
       ORS. v. SADHU RAM [TARUN CHATTERJEE, J.]

    because the market value of the plots in question would fetch       A
    better than the amount offered by the respondents. It was further
    held in that decision that since the power of judicial review is
    not an appeal from the decision, the court cannot substitute its
    own decision. In the present case, it is not in dispute that the
    plots auctioned by the appellants belonged to the                   B
    instrumentalities of the State Government, which must be
    expected to protect the financial interests of the State. In the
    decision reported in [2007(1) SCC 477] Rajasthan Housing
    Board and Another Vs. J.S. Investments and Another, this
    Court, after thoroughly considering the earlier decisions of this   c
    Court including the decision in Tata Cellular Vs. Union of India
    [supra], considered the contours of power which the High Court
    would exercise in a writ petition filed under Article 226 of the
    Constitution when the challenge was to cancellation of auction
    held by a public body where the prime consideration was             0
    fairness and generation of public revenue and held that even if
1   some defect was found in the ultimate decision resulting in
    cancellation of the auction, the court should exercise its
    discretionary power under Article 226 with great care and caution
    and should exercise it only in furtherance of public interest. It   E
    was also held in that decision that when the Chairman of the
    Housing Board had the final authority regarding acceptance of
    the bid, a person who had made the highest bid in the auction
    did not acquire any right to have the auction concluded in his
    favour until the Chairman had passed an order to that effect.
                                                                        F
           12. Keeping the principles laid down in the aforesaid
    decisions of this Court in mind, let us, therefore, consider
    whether non-disclosure of the reserve price in the Public Notice
    is a ground on which the High Court could direct the authorities
    to allot alternative plots in favour of the respondents in exercise G
    of its powers under Article 226 of the Constitution. At the risk of
    repetition, we may note that one of the conditions in the Public
    Notice was that the final authority to approve or disapprove the
    best offer in the auction was that of the Chief Administrator of
    the Board. It is true that the Chief Administrator of the Board H
    56         SUPREME COURT REPORTS                     [2008] 6 S.C.R.



A rejected the offers without assigning any reason but Section 18
     of th~ Act clearly provides that such rejection could be made
    without assigning any reason. Let us now consider whether the
     action on the part of the Chief Administrator of the Board
     canceling the auction was unfair, arbitrary and invalid. In our view,
B considering the facts and circumstances of the case, the action
     of the Chief Administrator of the Board was fair and the                -.
  · cancellation was not arbitrary. The second auction was held in
     respect of the plots in question on 201h of December, 2004 and
    from the said auction, although the reserve price was not
c mentioned, much higher offers were received by the appellants.
    Apart from that, we should not keep this fact out of mind that the
     amounts deposited by the respondents with the appellants were
     refunded to the respondents by account payee cheques, which
    were duly encashed by them. Such being the position, we neither
    find any malafide, unfairness or arbitrariness on the part of the
D
     Chief Administrator of the Board in rejecting the offers of the
     respondents nor do we find it a colourable exercise of power.
    That apart, in view of the decision of this court in Rajasthan
     Housing Board and another Vs. G.S. Investments and
   ,
     another [supra], since the final authority to approve the bids
E was with the Chief Administrator, it is obvious that a person who
     had made the highest bid in the auction did not acquire any
     right to have the auction concluded in his favour until the Chief
    Administrator had passed an order to that effect and the auction
     proceedings could always be cancelled. It is on record that the
F offers made by the respondents in the auction dated 81h of July,
     2004 could not fetch the amount expected from the said plots
     and that is the reason a fresh Public Notice was issued by the
     appellants for a subsequent auction. The said auction was held
     and as noted herein earlier, from the said auction, the price
G fetched was much higher than the offers made by the
     respondents. That being the position and considering the fact
    that a subsequent auction was held and concluded, it was not             f
     open to the High Court to direct the allotment of alternative plots
    at the rate offered by the respondents treating the auction held
          1
H on 8 h of July, 2004 to be valid.
           THE HARYANA STATE AGRI. MARKETING BOARD &                          57
             ORS. v. SADHU RAM [TARUN CHATTERJEE, J.]

                13. Mr. Patwalia, the learned senior counsel appearing             A
          for the respondents submitted that his clients were ready to pay
          the enhanced amounts which were offered by the bidders in the
          second auction and therefore, in view of this, the decision of the
          High Court should be upheld with such modification. We are
          unable to accept this submission of Mr. Patwalia because at              B
    ~     the present moment, third party interests have also been created
          in the matter and the bidders in the second auction were not
          made parties to the writ petitions.

                14. Let us now take up the other aspect of the matter. As
          noted herein earlier, the reserve price was not shown in the             c
          Public Notice and therefore, the respondents had no knowledge
          of the reserve price. Even assuming that the reserve price had
          to be given in the Public Notice, then also, we are of the view
          that the best course for the High Court would be to cancel the
          entire auction in view of the decision of this court in Tata Cellular D
    ...
      I
          Vs. Union oflndia [supra] rather than substituting its own opinion
          by directing allotment of alternative plots. It is, ·therefore. diffiC!Jlt
          to accept the views expressed by the High Court that since
          reserve price was not known to the respondents and they were
          found to be the highest bidders in the said auction, they have E
          acquired a right to get the allotment of alternative plots and the
          appellants had no authority to reject the highest offers given by
          the respondents or to cancel the auction itself. Since the entire
          auction was cancelled, we do not find any justification how the
          High Court could pass an order directing allotment of the F
          alternative plots on the same terms and conditions when, after
          cancellation, the second auction was held in which the price
          fetched was much higher than the offers made by the
          respondents. That apart, we do not find anything unfair in not
          disclosing the reserve price. It is common knowledge that when
                                                                                     G
          reserve price is disclosed, the bidders often form cartels and
          bid at or around the disclosed price, though the market price is
          much higher. We, therefore, do not agree with the High Court
     '    that the appellants had acted in an unfair manner in not
          disclosing the reserve price at the time of inviting tenders or
                                                                                     H
)
     58        SUPREME COURT REPORTS                  [2008] 6 S.C.R.


A    even at the time of holding the auction.
        15. In view of the admitted fact that the money deposited
  by the respondents with the appellants was refunded to the
  respondents by account payee cheques which were duly
  encashed by them and in view of the admitted fact that
B subsequently, a second auction was held on 201h of December,
  2004 in respect of the same plots which were put up for auction
  on 81h of July, 2004 and in the second auction, some other parties
  have now acquired interest in the said plots, it was not open to
  the High Court to direct the appellants, in the exercise of its writ
C jurisdiction, to allot alternative plots to the respondents only on
  the ground that the auction dated 81h of July, 2004 could not be
  cancelled by the Chief Administrator of the Board without
  assigning any reason and also on the ground that the reserve
  price was not disclosed in the Public Notice issued by the
D appellants.
          16. In this view of the matter, we are, therefore, unable to
     sustain the decision of the High Court and accordingly, the
     judgment of the High Court is liable to be set aside.
E         17. For the foregoing reasons, the impugned judgment of
     the High Court is set aside and the appeals are allowed and
     the writ petitions stand rejected. There will be no order as to
    ·costs.

     S.K.S.                                        Appeals allowed.
F




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