Public Auction

Case BriefsHigh Courts

Calcutta High Court: Shampa Sarkar, J. decided on a petition which was filed for a direction upon the respondents 7 and 8 to cancel and/or quash the notice dated April 6, 2022, with regard to handing over the possession of the ferry ghat to the Pradhan of the Mahanandatola Gram Panchayat, upon expiry of the lease of the petitioner.

Petitioner was the operator of Kosi Passengers Ferry Ghat. The lease period of the petitioner had been ended on 31-03-2022. The petitioner submitted that until ferry ghat was settled by way of an open tender, the petitioner must be allowed to operate.

The Court found that the rules with regard to the settlement of the ferry ghat and the circulars issued in this behalf did not permit continuation after expiry of the lease.  The Court clarified that the authority can make a stop-gap arrangement under emergent situation but Court sitting in judicial review under Article 226 of the Constitution of India, cannot direct the authorities to allow the petitioner to operate until the open tender is finalised.

Petitioner also submitted that the Pradhan did not have any right to ask the petitioner to hand over possession of the concerned ferry ghat as the water body over which the ferry services were carried on, spread over more than 5 acres and such settlement cannot be made by the concerned Gram Panchayat.

Advocate appearing on behalf of the Pradhan, submitted that the Gram Panchayat had approached the Block Development Officer to permit a public auction of the said ferry ghat. However, he submitted that no decision had been taken with regard to operation of the ferry ghat in the interim period.

Senior Government Advocate submitted that the ferry ghat was settled in favour of the petitioner by the concerned Gram Panchayat, which meant that the area of the water body must not have exceeded 5 acres.

The Court was of the view that the panchayat authorities themselves, had decided that the ferry ghat should be settled by public auction, such a policy decision cannot be interfered with under Article 226 of the Constitution of India. Transparency and maximisation of the revenue by allowing all eligible persons to participate in such tender is the correct method. The Court believed that it does not have any authority to either set aside the auction or to hold the policy of the authority to be bad in law, for the following reasons:

a) Judicial review of an administrative decision is permitted only when the decision making authority does not act in accordance with law or acts arbitrarily and with mala fide intentions relying on the judgment of Supreme Court in Tata Cellular v. Union of India, (1994) 6 SCC 651 where principles with regard to judicial review of administrative action were laid down.

b) The auction notice has been issued as a policy decision and the court must refrain from interfering with the policies of the Government. There are no allegations of unreasonableness, arbitrariness and favouritism. The petitioner was himself awarded the settlement through a public auction which was held when the pandemic was in the rise relying on the decision in Directorate of Film Festivals v. Gaurav Ashwin Jain, (2007) 4 SCC 737 where it was made clear that it was a settled law that policy decisions of the State were not to be disturbed unless they were found to be grossly arbitrary or irrational.

c) The idea of open auction is to ensure maximization of revenue and the panchayat samity cannot be faulted for having taken a policy decision to go for open auction when the pandemic situation has improved considerably and normalcy has resumed in every aspect of life.

The Court finally relying on Goa Foundation v. Sesa Sterlite Ltd., (2018) 4 SCC 218 and Centre for Public Interest Litigation v. Union of India, (2012) 3 SCC 1  held that the panchayat authorities have decided to go for a public auction, the competent authority under the law, shall go for a public auction, at the earliest, and all eligible bidders including the petitioner shall be entitled to participate. Prayer for extension of the lease of the petitioner during the stop gap period could not be granted by the court.[Azizur Rahaman v. State of West Bengal,  2022 SCC OnLine Cal 921, decided on 13-04-2021]

Mr Gazi Faruque Hossain,Mr Debasish Kundu, Ms Priyanka Mondal: for the petitioner

Mr Lalit Mohan Mahata,Mr Prasanta Behari Mahata: for the State

Mr Sufi Kamal: for the respondent 8

Suchita Shukla, Editorial Assistant ahs reported this brief.

Jammu and Kashmir and Ladakh High Court
Case BriefsHigh Courts

Jammu and Kashmir High Court: Javed Iqbal Wani, J., had heard the instant petition challenging inaction on the part of respondent regarding allotment of auctioned property. The Bench stated,

“The right to refuse the lowest or any other tender is always available to the government and even if a public auction had been completed and a person found to be highest bidder, no right accrued to the highest bidder till the confirmation letter is issued to him.”

 The petitioner had submitted his bid along with relevant documents including registration fee in response to notification for allotment of a shop No. 5, in Sector No. 1, at Housing Colony Channi Himmat, Jammu issued by the respondent, J&K Housing Board. The petitioner contended that he had submitted a bid for the shop in question for an amount of Rs. 5,00,500 as against minimum reserved bid of Rs 4,75,000. A demand draft of Rs 72,000 i.e., 15% of the total bid amount was also stated to had been pledged in the name of the Financial Advisor of the Board.

The grievance of the petitioner was that, despite being the lone highest bidder, as such was required to had been allotted the shop in question by the respondent-Board which, however, was not have been done by the respondent-Board. As the petitioner alleged that the respondent intended to allot the shop in question to his blue eyed person and urged that the failure of the respondents was bad in law and violative of Article 14 of the Constitution, besides being arbitrarily and tainted with malice.

Contrary to that the respondent submitted that the petitioner was the lone bidder necessitating recalling the process of bidding, in that as per the norms for such kind of bid at least three tenderers/bidders must participate in the process of bidding. It was being stated in the objections that the respondent –Board was a public organization and for auctioning of public property was governed by the principle based on public policy.

Reliance was placed by the Court on Rishi Kiran Logistics Pvt. Ltd. v. Board of Trustees of Kandla Port Trust, (2015) 13 SCC 233 wherein the Supreme Court had held that, “The right to refuse the lowest or any other tenderer is always available to the Government. But the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power.”

The Bench opined that the method to be adopted for disposal of public property must be fair and transparent as also to protect the financial interest of the State as the government being the guardian of the finances of the State. But, “The right to refuse the lowest or any other tender is always available to the government and even if a public auction had been completed and a person found to be highest bidder no right accrued to the highest bidder till the confirmation letter is issued to him.” The Bench further expressed, the respondents seemingly had found it reasonable and fair not to proceed with the process of bidding with only one responsive bid. The said process manifestly, had been followed in order to generate healthy competition and ultimately good revenue for the respondent-organization. Hence, the petition was dismissed as no indefeasible right qua the shop in question had be said to have occurred to the petitioner.[Ashu Deep Kohli v. State of J&K, 2021 SCC OnLine J&K 90, decided on 22- 02-2021]

Kamini Sharma, Editorial Assistant has put this story together