1985 (5) TMI 213 - SC - Indian Laws

Principles of natural justice - Held that - Appeal allowed. The highest bidder whose bid was rejected on the ground that the bid did not represent the market price, was not given an opportunity to raise his own bid when privately a higher offer was received. If the allegations made in the letter influenced the decision of the Chief Minister, fair-plan in action demands that the appellant should have been given an opportunity to counter and correct the same. Application of the minimum principles of natural justice in such a situation must be reading the statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action That having not been done, the grant in favour of the fourth respondent must be quashed.

Issues Involved:

1. Legality of the auction process and the confirmation of bids.
2. Allegations of monopolistic practices and anti-social elements.
3. Validity of the Chief Minister's acceptance of a private offer.
4. The principle of fair play in administrative actions.
5. The requirement of exhausting alternative remedies before invoking writ jurisdiction.
6. The State's obligation to secure the best market price for public property.
7. Judicial intervention in the disposal of public property.

Issue-wise Detailed Analysis:

1. Legality of the Auction Process and the Confirmation of Bids:

The appellant, Ram & Shyam Company, participated in an auction for Sarai Khawaja Plot No. II, offering the highest bid of Rs. 1,52,000 p.a., which was not confirmed by the State Government. A subsequent auction saw the appellant's highest bid rise to Rs. 3,87,000 for three years, again not confirmed. The Court noted that the State Government's refusal to confirm the highest bid was not questioned, and various decisions affirming the Government's right to reject the highest bid were deemed irrelevant in this case.

2. Allegations of Monopolistic Practices and Anti-Social Elements:

Respondent No. 4 alleged that the auction participants formed a syndicate to monopolize the business and involved "goondas and anti-social elements." This led to the Chief Minister accepting Respondent No. 4's private offer of Rs. 4,50,000 per year without giving the appellant an opportunity to counter these allegations or raise their bid.

3. Validity of the Chief Minister's Acceptance of a Private Offer:

The Chief Minister's acceptance of Respondent No. 4's private offer was criticized for being based on unverified allegations and for not providing the appellant an opportunity to raise their bid. The Court emphasized that disposal of public property must be transparent and achieve the best market price, rejecting arbitrary and secretive methods.

4. The Principle of Fair Play in Administrative Actions:

The Court highlighted that the State's actions must adhere to principles of fair play and natural justice. The appellant was not given a fair opportunity to counter the allegations or improve their bid, violating the fundamental principle of fair play in administrative actions.

5. The Requirement of Exhausting Alternative Remedies Before Invoking Writ Jurisdiction:

The High Court's dismissal of the writ petition on the grounds of alternative remedies was deemed unjustified. The Court noted that in cases where the Chief Minister's decision is involved, appealing within the State administration is ineffective. The Court reaffirmed that the rule requiring exhaustion of alternative remedies is one of convenience and discretion, not a strict rule of law.

6. The State's Obligation to Secure the Best Market Price for Public Property:

The Court emphasized that the disposal of public property must serve public interest by securing the best market price. The State's action of accepting a private offer without public auction or tender was criticized for failing to achieve this objective. The Court reiterated that public property disposal must be transparent and competitive to prevent favoritism and ensure maximum revenue.

7. Judicial Intervention in the Disposal of Public Property:

The Court intervened to quash the grant in favor of Respondent No. 4, directing the State to grant the right to the appellant to extract stones from Sarai Khawaja Plot No. II at a rate of Rs. 25 lacs per year for five years. The decision underscored the judiciary's role in ensuring that public property is disposed of fairly and in public interest.

Conclusion:

The appeal was allowed, and the decisions of the High Court and the Director of Industries were quashed. The appellant was granted the right to extract stones from Sarai Khawaja Plot No. II, and Respondent No. 4 was given time to wind up its affairs. The judgment emphasized the importance of transparency, fairness, and securing the best market price in the disposal of public property.

← Previous Next →