Writ Petition (L) No. 815 of 2017,Chamber Summons (L) No.126 of 2017,Notice Of Motion (L) No.210 of 2017

11th April, 2017.

Petitioner Counsel: Mr. GOLDIE SUD
Respondent Counsel: Mr. ASSEM NAPHADE a/w Ms. KAVITA ANCHAN i/b M.V. KINI AND CO, Ms. DEEPA PAHEJA

Cases Cited:
Haryana State Agricultural Marketing Board and Others Vs. Sadhu Ram, (2008) 16 SCC 405 [Para 10]

JUDGMENT

B. P. COLABAWALLA, J. :- Though the Writ Petition and the Notice of Motion was on our production Board today, since the Petitioner is appearing in-person, we have allowed him to address us and by consent of all parties, we have heard the Petition for admission.

2. We must also mention that the above Chamber Summons was filed by one Ashwin Wadhwa 1zz5seeking to intervene in the Writ Petition and be added as a party Respondent. The said Ashwin Wadhwa supports the stand taken by the Petitioner. It is in these circumstances that we are disposing of all these matters by this common judgment.

3. By this Writ Petition filed under Article 226 of the Constitution of India, the Petitioner seeks an appropriate writ, order or direction calling for the record and proceedings in respect of an E-auction dated 2nd February, 2017 and an extended Eauction of even date conducted by Respondent No.4 for and on behalf of Respondent No.1

4. The additional prayer that is sought is to quash the Communication dated 8th February, 2017 addressed by the Deputy Materials Manager (Sales), Oshiwara, Scrapyad and to direct Respondent Nos.1 to 4 to award / allot the material at Sr No.10 in Section-V of the E-auction dated 2nd February, 2017, to the Petitioner. In a nutshell, by the present Petition, the Petitioner seeks to question the action on the part of Respondent No.1 (BEST) in adopting the process for sale of its property. The only grievance that the Petitioner (being the party in-person) has projected before us is that the tender process is vitiated on the ground that there was no fixation of reserve price that was communicated to any of the bidders. On this ground, according to the Petitioner, the entire tender process is vitiated, and therefore, ought to be set aside.

5. The brief facts giving rise to the present controversy are that, the Petitioner is a Proprietor of a firm called B. D. Bansal and Company which deals in sale and purchase of scrap materials. Respondent No.1 is the BEST, an undertaking of the Mumbai Municipal Corporation (the MMC). Respondent No.1 mainly caters to the needs of residents of Mumbai in relation to transportation and electrical supply. Respondent No.2 is the Manager of Respondent No.1 and Respondent No.3 is the Deputy Materials Manager (Sales) of Respondent No.1-Corporation who deals with sale of scrap materials that belong to the BEST undertaking. Respondent No.4 is a private auctioneer appointed by Respondent No.1 for conducting auctions of scrap material of Respondent No.1.

6. Respondent No.1 vide its E-auction dated 2nd February, 2017 invited bidders for purchase of different scrap materials of Respondent No.1 - undertaking. For the purposes of conducting this auction, Respondent No.4 was appointed as an auctioneer. The said auction was to be conducted on-line and on various terms and conditions as mentioned in the special conditions of sale. These special conditions have been annexed by the Petitioner at Exhibit-A page 27 of the paper book. According to the Petitioner, under this E-auction, the EMD payment was to be made by 6th February, 2017 and the last date for payment of balance sale value was to be 10th February, 2017. The scrap to be sold under this E-auction was section-wise i.e. Section-I, Section-II etc.

7. The Petitioner being interested in participating in the E-auction, registered for the same upon payment of the necessary CMD charges. It is the case of the Petitioner that he was interested for the scrap at Item No.10 of Section-V, namely, "scrapping of JCBL Cerita AC Buses in running condition". Lot Number allotted for the same was Lot No.10 and the quantity of Buses was also 10 (ten). It appears that the Petitioner for this lot was the only bidder and placed his highest bid of Rs.12,50,000/- . Though it is stated in the Petition that his bid was the highest and was therefore accepted by Respondent No.1, we find no such acceptance on record. In fact, when we asked the Petitioner to show us an acceptance of his bid, he was unable to do so. Contrary to this, it is the case of the BEST that the tender for the sale of these 10 AC Buses (under Lot No.10) was cancelled in view of the fact that they had only one bidder and that too at a ridiculously low price. It was in these circumstances that the Petitioner was informed on 2nd February, 2017 by Respondent No.4 that its bid of Rs.12,50,000/- was rejected. This Communication can be found at page 48 (Exhibit-F) of the paper book. It is in continuation of this Communication that on 9th February, 2017 the Petitioner was informed to collect his CMD of Rs.5,00,000/- from the office of Respondent No.4. It is aggrieved by these actions of the Respondents that the Petitioner is before us in our writ jurisdiction under Article 226 of the Constitution of India.

8. Though several grounds have been raised in the Petition, Mr. Sud (Petitioner in-person) fairly canvassed only one point before us. That can be found in paragraph 5 of the Petition which is the summary of challenge. The Petitioner in-person argued that his bid was wrongly rejected, though being the highest bid, on the specious plea that it does not match the reserve price. He submitted that in fact when questioned, the reserve price was not even disclosed to the Petitioner on the ground that the same was confidential. The Petitioner in-person therefore submitted that such conduct of the Respondents of not disclosing of the reserve price smacks of malafides and is contrary to law and therefore requires our interference under Article 226 of the constitution of India.

9. On the other hand, Mr. Naphade, learned counsel appearing on behalf of Respondent Nos.1 to 3, submitted that as far as Lot No.10 is concerned, (sale of 10 AC Buses), the BEST decided to scrap the sale of the said Lot since the Petitioner was the only bidder and the bid given by him of Rs.12,50,000/- for 10 AC buses (in running condition) was far too low to accept. It was in these circumstances that his bid was rejected. It is not as if the said Lot No.10 was sold to some other bidder at a price lesser than what was offered by the Petitioner. He submitted that the entire tender process was done in a fair and transparent manner. In any event, he submitted that if Respondent No.1 after floating the tender decided not to go ahead with it for any reason, it cannot be compelled to sell its property. It is entirely at the discretion of Respondent No.1 to decide whether to accept the offer made by a particular bidder to purchase its property. Even after the bids are received, it is always open to Respondent No.1 not to accept any offer and no party has a vested right in compelling Respondent No.1 into accepting a bid of a particular bidder. He submitted that Respondent No.1, not having accepted anyone's offer with respect to Lot No. 10, there was no concluded contract between the Petitioner and Respondent No.1 or any other person, and therefore, the reliefs sought for in the Petition were wholly misconceived and untenable in law.

10. As far as the issue of reserve price is concerned, Mr. Naphade submitted that this issue is no longer res-integra and the exact same argument has been considered by the Hon'ble Supreme Court in the case of Haryana State Agricultural Marketing Board and Others v/s Sadhu Ram., (2008) 16 SCC 405 He submitted that the Supreme Court has clearly held that there is nothing unfair in not disclosing the reserve price and the tender is not vitiated on this ground. It is common knowledge that when the reserve price is disclosed, the bidders often form cartels and bid at or around the disclosed price, though the market price is much higher. He submitted that the Supreme Court held that in the facts of that case the Appellant had not acted in an unfair manner in not disclosing the reserve price at the time of inviting the tender or even at the time of holding the auction. Looking to all this, Mr. Naphade submitted that there was no merit in this Writ Petition and the same ought to be dismissed.

11. We have heard the learned counsel for the parties at length and carefully perused the papers and proceedings in the Writ Petition. We find considerable force in the argument canvassed by Mr. Naphade. It is not in dispute that the Petitioner had bid in the E-auction that was conducted on 2nd February, 2017. It is also not in dispute that his bid was the highest bid and that he was the only bidder for Lot No.10. It is now settled law that in a tender, the bidder is the party that makes the offer and the party floating the tender is the one that has to accept the offer. It is only once the bid is accepted can a concluded contract come into existence. If the party floating the tender before accepting any bid, decides to scrap the tender, then, it is always free to do so because there is no concluded contract at all. In these circumstances, we fail to see how the Petitioner can insist that Respondent No.1 be directed to accept the bid of the Petitioner. It is not as if the bid of the Petitioner was rejected and the bid of some other party was accepted by Respondent No.1. After seeing the bid of the Petitioner and it being the only bid, we are clearly of the view that Respondent No.1 was well within its right not to go ahead with the tender process as far as Lot No.10 was concerned. There being no concluded contract at all and furthermore there being no other bidder, Respondent No.1 was fully justified in its actions. We, therefore, have no hesitation in rejecting the Petitioner's contention that the bid of the Petitioner ought to be accepted by Respondent No.1.

12. Equally, we find the argument of the Petitioner that the tender process is vitiated because there was no disclosure of the reserve price, without any substance. As rightly submitted by Mr. Naphade, we find that this issue is squarely covered by a decision of the Supreme Court in the case of Haryana State Agricultural Marketing Board and Others., (2008) 16 SCC 405 As can be seen from the facts of that case, the Appellant, being a statutory authority, had invited the traders and the general public to purchase the commercial sites in an open auction to be held on 8th July, 2004. By this auction, shop plots (62 numbers) and booth plots were to be auctioned. Whilst conducting this auction, the reserve price was neither mentioned in the public notice nor was the same announced before the start of the auction. The auction of the plots was held as per the schedule and the Respondents were declared to be the highest bidders. This was thereafter put up before the market committee, which by its Resolution dated 24th July, 2004, recommended the confirmation of the auction bids. However, the Chief Administrator, except giving approval in respect of one plot and three booths, rejected the auction of all other plots and directed refund of the amounts to the Respondents and put the plots in open auction once again. Being aggrieved by this, the Respondents filed a batch of Writ Petitions in the Punjab and Haryana High Court. Whilst deciding these Writ Petitions the High Court inter alia held that non-disclosure of the reserve price amounted to an unfair practice. Whilst setting aside the decision of the Punjab and Haryana High Court, the Supreme Court, at paragraphs 17, 18 and 19 held thus:-

"17. Mr Patwalia, the learned Senior Counsel appearing 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 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.

18. Let us now take up the other aspect of the matter. As noted hereinearlier, the reserve price was not shown in the 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 v. Union of India [(1994) 6 SCC 651] rather than substituting its own opinion by directing allotment of alternative plots. It is, therefore, difficult 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 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 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 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 even at the time of holding the auction.

19. 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 subsequently, a second auction was held on 20-12-2004 in respect of the same plots which were put up for auction on 8-7- 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 jurisdiction, to allot alternative plots to the respondents only on the ground that the auction dated 8-7-2004 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 appellants." (emphasis supplied)

13. As can be seen from the aforesaid decision, the Supreme Court has clearly opined that there is nothing unfair in not disclosing the reserve price. It has taken judicial notice of the fact that when the reserve price is disclosed, the bidders often form cartels and bid at or around the disclosed price though the market price may be much higher. We find that this decision of the Supreme Court squarely answers the grievance raised by the Petitioner that the E-auction conducted by Respondent No.1 was vitiated on the ground that the reserve price was not disclosed. We, therefore, have no hesitation in rejecting this argument made on behalf of the Petitioner.

14. As far as the Chamber Summons is concerned, the same was not on Board today. However, the same was taken up with the consent of all parties. On perusing the Chamber Summons, we fail to see how the Applicant therein (Ashwin Wadhwa) has any locus to intervene in the present Writ Petition. In the present Writ Petition the challenge is to the rejection of the Petitioner's bid for Lot No.10 in Section-V (in relation 10 AC buses) of the E-auction dated 2nd February, 2017. It is common ground before us that the Applicant in the Chamber Summons had not even bid for the said Lot No.10. According to the Applicant, it had taken part in some other auction that was conducted by Respondent No.1. If it is aggrieved by any action taken by Respondent No.1 with reference to his bid, then, he would have to adopt independent substantive proceedings to challenge the tender floated by Respondent No.1. We cannot in this Writ Petition take cognizance of any such argument made on behalf of the Applicant (Ashwin Wadhwa). Therefore, reserving the right of the Applicant (Ashwin Wadhwa) to adopt his independent substantive proceedings, if so advised, we dismiss the Chamber Summons.

15. In view of the foregoing discussions, we find no merit in the Writ Petition as well as Chamber Summons (L) No. 126 of 2017 and both are accordingly dismissed. However, in the facts and circumstances of the case, we leave the parties to bear their own costs. In view of the disposal of the Writ Petition, nothing survives in Notice of Motion (L) No. 210 of 2017 and the same is disposed of accordingly.

Ordered accordingly.