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Rejecting highest bid to prevent 'plunder'

In Haryana Urban Dev. Authority and Ors. Vs. Orchid Infrastructure Developers P. Ltd., the Respondent filed a suit for declaration with consequential relief as against the Appellants with regard to rejection of bid relating to the commercial tower when the bid submitted by the Respondent was the highest. Plaintiff questioned the rejection of the bid. The question before the court was -
(i) Whether there being no concluded contract in absence of acceptance of bid and issuance of allotment letter, suit could be said to be maintainable for declaratory relief and mandatory injunction sought by Plaintiff
(ii)  Whether Administrator had rejected bid in illegal or arbitrary manner

Held, while allowing the appeal:

(i) The Respondent prayed for a declaration that rejection of the bid was illegal. Merely by that, Plaintiff could not have become entitled for consequential mandatory injunction for issuance of formal letter of allotment. Court while exercising judicial review could not have accepted the bid. The bid had never been accepted by concerned authorities. It was not a case of cancellation of bid after being accepted. Thus even assuming as per Plaintiff's case that the Administrator was not equipped with the power and the Chief Administrator had the power to accept or refuse the bid, there had been no decision by the Chief Administrator. Thus the suit, in the form it was filed, was not maintainable for relief sought in view of the fact that there was no concluded contract in the absence of allotment letter being issued to the Plaintiff, which was a sine qua non for filing the civil suit.

(ii) It is a settled law that the highest bidder has no vested right to have the auction concluded in his favour. The Government or its authority could validly retain power to accept or reject the highest bid in the interest of public revenue. There was no right acquired and no vested right accrued in favour of the Respondent merely because his bid amount was highest and had deposited 10% of the bid amount.

(iii) In the absence of a concluded contract, i.e. in the absence of allotment letter and acceptance of highest bid, the suit by the Respondent was wholly misconceived. Even if non-acceptance of the bid was by an incompetent authority, the court had no power to accept the bid and to direct the allotment letter to be issued. Merely on granting the declaration which was sought that rejection was illegal and arbitrary and by incompetent authority, further relief of mandatory injunction could not have been granted, on the basis of findings recorded, to issue the allotment letter, as it would then become necessary to forward the bid to competent authority-Chief Administrator-for its acceptance, if at all it was required.





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