Highest Bidders In Tender Process Do Not Create Any Right In Their Favour: Observes Bombay HC
While observing that funds received by CIDCO by lease of plots are to be utilized for providing public amenities in Navi Mumbai and Navi Mumbai Airport Influence Notified Area (NAINA), the Bombay High Court said that it is incumbent that CIDCO ensures highest possible lease premium for plots put on auction, and therefore, there is no element of arbitrariness in CIDCO’s proposed action of securing higher price for the plots.
On the contrary, CIDCO’s decision subserves public interest, added the Court.
The Division Bench of Acting Chief Justice S. V. Gangapurwala and Justice Sandeep V. Marne observed that "no right is created in favour of petitioners to have plots allotted to them by CIDCO by mere reason of they being the highest bidders in the tender process".
Advocate Rohan Cama appeared for the Petitioner and Advocate G. S. Hegde appeared for the Respondent.
In a nutshell, Petitioners being aggrieved by the decision of Respondent i.e., City and Industrial Development Corporation of Maharashtra Limited (CIDCO) in cancelling tender process in which they were declared as highest bidders for purchase of respective plots, had approached this court seeking directions against CIDCO to accept their bids and issue allotment letters in respect of plots for which they had bid.
After considering the submissions, the Division Bench accepted the proposition that where arbitrariness is demonstrated on the part of a State instrumentality, this court would be justified in interfering with its decision.
“However, in the present case, the tender process is cancelled even before the letter of allotment could be issued in favour of petitioners. It is not that Petitioners have erroneously been disqualified in the tender process or that any term of tender notice is violated. CIDCO has cancelled the entire tender process under the hope of securing higher prices for lease of plots. In such a situation, whether this court would be justified in interfering with decision of the CIDCO is the issue that arises for our consideration”, added the Bench.
The Bench observed that judicial review by courts is not completely ousted in tender matters, and in appropriate cases, involving non-adherence to proper procedure or violation of terms and conditions of tender document or existence of complete arbitrariness, courts would be justified in interfering in the tender process, even before execution of contract.
“Petitioners seek allotment of plots only because they are H-1. They are not questioning correctness of the tender process. They demand that tender process must be taken to its logical end by allotting plots to them”, noted the Bench.
On the issue as to whether action of CIDCO in cancelling the tender process could be termed as arbitrary, the High Court found that the Petitioners have attempted to question the methodology adopted by Knight Frank in determining valuation of the plots.
“However, we are not experts in the field and cannot go into the correctness of methodology adopted by Knight Frank. Mr. Hegde has clarified that CIDCO will determine base price of respective plots in fresh auction process by taking into consideration minimum price indicated by Knight Frank”, added the Court.
Finding that there was huge difference between the reserve price fixed by CIDCO in the earlier tender process and one that would be fixed by CIDCO in the fresh tender process, the High Court admitted that the gap between rates quoted by petitioners and the proposed revised price by CIDCO may not be too wide, however at the same time, also clarified that what is now sought to be fixed by CIDCO is merely base price and CIDCO is likely to receive much higher offers than base price.
Observing that the CIDCO is the custodian of public property and carries an obligation of securing maximum possible price while leasing out the plots, the High Court concluded that neither any right is created in favour of petitioners to have the plots allotted to them nor there is any arbitrariness on the part of CIDCO in cancelling tender process.
Cause Title: Aditya Enterprises and Anr. Vs. City Industrial and Development Corporation of Maharashtra Ltd. and Anr.