Bombay High Court: Highest Bidders in Tender Process Do Not Create a Right for Allocation of Plot

Bombay High Court: Highest Bidders in Tender Process Do Not Create a Right for Allocation of Plot

The Bombay High Court by its division bench comprising of Acting Chief Justice S.V. Gangapurwala and Justice Sandeep V. Marne observed that, no right is created in favor petitioners to have plots allotted to them by City and Industrial Development Corporation of Maharashtra Limited (CIDCO) by mere reason of them being the highest bidders in the tender process.

In the present case, the Petitioners- M/s. Aditya Enterprises, were aggrieved by the decision of Respondent i.e., 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.

The issue that arose for the consideration before the bench was whether petitioners had acquired any right to seek issuance of allotment letters by CIDCO?

In this regard, the bench opined that there was no dispute to the proposition that where arbitrariness is demonstrated on the part of a State instrumentality, the Court would be justified in interfering with its decision.

However, in the present case, the Court noted that the tender process was cancelled even before the letter of allotment could be issued in favor of petitioners. It was not the case where Petitioners had erroneously been disqualified in the tender process or that any term of tender notice was violated. CIDCO had cancelled the entire tender process under the hope of securing higher prices for lease of plots.

In such a situation, the bench was of the considered view 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.”

However, the issue involved in the present case was altogether different.

The bench noted that the Petitioners sought allotment of plots only because they were H-1. They were not questioning correctness of the tender process. It was their demand that tender process must be taken to its logical end by allotting plots to them.

In view of the foregoing facts the bench held, that no right was created in favor of petitioners to have plots allotted to them by CIDCO by mere reason of they being the highest bidders in the tender process.

The next issue taken up for consideration was whether action of CIDCO in canceling the tender process could be termed as ‘arbitrary.’

The Court found that the Petitioners had attempted to question the methodology adopted by Knight Frank in determining valuation of the plots.

However, the bench stated that since, we they are not experts in the field, hence they cannot go into the correctness of methodology adopted by Knight Frank.

Senior Advocate Mr. G.S. Hegde appearing for the Respondent had clarified that CIDCO will determine base price of respective plots in fresh auction process by taking into consideration minimum price indicated by Knight Frank.

Regardless, the Court found 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 was sought to be fixed by CIDCO was merely base price and CIDCO was likely to receive much higher offers than base price.

Lastly, the bench asserted that the CIDCO being a custodian of public property and carries an obligation of securing maximum possible price while leasing out the plots, therefore, the High Court concluded that neither any right was created in favor of petitioners to have the plots allotted to them nor there was any arbitrariness on the part of CIDCO in cancelling tender process.