Government Authority not bound to accept highest bid in auction, acceptance of highest bid is always subject to conditions of holding public auction: SC

Government Authority not bound to accept highest bid in auction, acceptance of highest bid is always subject to conditions of holding public auction: SC

The Supreme Court ruled that the government authority is not bound to accept the highest bid in an auction, acceptance of the highest bid is always subject to conditions of holding a public auction.

Background 

The sub-urban properties are to be disposed of in terms of the procedure for sale by public auction, as provided under Chapter III of the Punjab Package Deal Properties (Disposal) Rules, 1976, framed by the State Government in exercise of its power conferred under Section 18 of the Punjab Package Deal Properties(Disposal) Act, 1976. Part III of Rules 1976 provides for transfer of urban properties.   

The appellants being the custodian of the subject property initiated the process of putting the property to public auction through the notice published in Punjabi Tribune of 17th May, 1993, the extract of auction notice is reproduced.

Decision 

The division bench of Justice Ajay Rastogi and Justice Abhay S. Oka noted that the provisional bid, in the instant case, was not confirmed by the competent authority (Sales Commissioner) and not being accepted after recording its due satisfaction by an order and the decision of the authority in passing the order of cancellation of the auction bid was scrutinized/examined by the appellate/revisional authority and the discretion exercised by the competent authority in taking decision of cancellation was upheld at later stages. 

It was stated that the highest bidder has no vested right to have the auction concluded in his favour and in the given circumstances under the limited scope of judicial review under Article 226 of the Constitution, the High Court was not supposed to interfere in the opinion of the executive who were dealing on the subject, unless the decision is totally arbitrary or unreasonable, and it was not open for the High Court to sit like a Court of Appeal over the decision of the competent authority and particularly in the matters where the authority competent of floating the tender is the best judge of its requirements, therefore, the interference otherwise has to be very minimal.

The court said that the premise on which the High Court has proceeded in recording a finding, particularly, in the matters of auction of public properties is unsustainable in law and that apart, it is also not in conformity with the Scheme of auction of public properties as defined under Chapter III of Rules 1976. 

The court set aside the finding recorded by the High Court in the impugned judgment and held it as unsustainable.

Case title: State of Punjab & Ors. v/s Mehar Din 

Citation: CIVIL APPEAL NO(S). 5861 OF 2009

Click  here to read the Order/Judgment

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