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Rejection of highest bid...re-auction to be justified

The government has discretion to cancel an auction sale due to valid reason like cartelisation or failing to fetch adequate price above the reserve price, but the reason should be transparent to the bidders. This rule was reiterated last week by Supreme Court in its judgment, Punjab State Leather Development Corporation vs M/s Bandeep Singh. Supreme Court incidentally took a decade to deliver its judgment dismissing the appeal of the state government and the corporation. The highest bidder had deposited the earnest money and 25 per cent of the bid amount and auction was confirmed. But for some reason, the corporation cancelled the sale and ordered re-auction. The bid money was also not returned, leading to a complaint before the high court. It found in favour of the bidder. The corporation appealed to Supreme Court, which upheld the high court judgment. The apex court said, "every decision of an administrative or executive nature must be a composite and self-sustaining one, in that it should contain all the reasons which prevailed on the official taking the decision to arrive at his conclusion. It is beyond cavil that no authority can be permitted to travel beyond the stand adopted and expressed by it in the impugned action."

Article referred: http://www.business-standard.com/article/opinion/curtains-on-1992-securities-scam-115083000775_1.html

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