Lessee learns of cancellation of tender from Newspaper Report. SC holds authority can’t circumvent the requirement of providing effective hearing

Supreme Court: In a case where process of cancellation of a tender was initiated without affording a chance to be heard to the lessees, the 3-judge bench of NV Ramana*, CJ and Vineet Saran and Surya Kant, JJ has held that any attempt by authority to circumvent the requirement of providing effective hearing before reaching a conclusion, cannot pass the muster.

“Natural justice is an important aspect while reviewing the administrative orders. Providing effective natural justice to affected parties, before a decision is taken, it is necessary to maintain rule of law. Natural justice is the sworn enemy of intolerant authority.”

Factual Background

A tender was passed for lease of land for purposes of development of necessary infrastructure such as Hotels etc., around Navi Mumbai Airport.

As complaints were made regarding irregularities in allotment of plots of land, change of user and deviation from the terms and conditions of the tender, a preliminary enquiry was held by the Principal Secretary, Urban Development Department as per the directions of the State Government of Maharashtra.

One of the Respondents placed on record letter dated 23.12.2010 addressed to the Urban Development Department and CIDCO, stating that it was shocked to see a newspaper report stating that a committee appointed by the State Government has recommended the cancellation of the allotment done in their favour.

Analysis

The perusal of the materials produced on record showed that the initiation of the enquiry by the Principal Secretary, Urban Development Department was suo-motu, without any natural justice being provided for the respondents. After arriving at a conclusion, a show-cause notice was issued by CIDCO to sanctify the enquiry.  A post­-decisional hearing was conducted just to sanctify the process of cancellation.

The Court said that,

“ the post-decisional hearing given to the respondent-lessee is reduced to a lip-service, which cannot be upheld in the eyes of law.”

The Court, hence, held that the conduct of the authorities indicated that the enquiry was not conducted with an open mind. The preexisting findings of the Principal Secretary recommending the cancellation of allocation has the potential to color the entire proceedings held subsequently just to meet the procedural requirements.

Finding that there was an element of abuse of bureaucratic power behind subsequent change in the tender allotment, the Court noticed that after conducting a tender process and receiving money, the Government backtracked which led to this present prolonged litigation.

The Court, hence, concluded that there was substantive violation of law or tender conditions, which mandate annulling the allotment and subsequent arrangements, thereby proving the conduct of the authority to be disproportionate.

[City and Industrial Development Corporation of Maharashtra Ltd v. Shishir Realty Private Limited, 2021 SCC OnLine SC 1141, decided on 29.11.2021]


Counsels

For CIDCO: Senior Advocate Rakesh Dwivedi

For State: Senior Advocate Atmaram Nadkarni

For PIL petitioner­-appellant: Advocate Harinder Toor

For respondents: Senior Advocates Dr. Abhishek Manu Singhvi and Mukul Rohatgi


*Judgment by: Chief Justice NV Ramana

Know Thy Judge| Justice N.V. Ramana

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