2009 (4) TMI 833 - SC - Indian Laws

What is the nature of rights of a bidder participating in the tender process? What is the scope of judicial review in contractual matters? Whether the decision of the Authority is vitiated by any arbitrariness and therefore hit by Article 14 of the Constitution of India? Whether the decision is not in public interest? Held that - Appeal allowed. It is needless to observe that the MDA shall be at liberty to call for fresh tenders in accordance with law but duly notifying the land use for both educational and residential and invite bids accordingly. It shall permit AMS and other educational institutions intending to participate in the auction. In view of the undertaking given by MDA to this Court it shall not raise any objection for the use of the land for educational purposes in case if any educational institution is found to be the successful bidder. The bids shall obviously be invited from the intending bidders duly notifying the residential and educational use.

Summary

Issues Involved:
1. Nature of rights of a bidder participating in the tender process.
2. Scope of judicial review in contractual matters.
3. Whether the decision of the Authority is vitiated by any arbitrariness and therefore hit by Article 14 of the Constitution of India.
4. Whether the decision is not in public interest.
5. Change of land use.

Issue-wise Detailed Analysis:

1. Nature of Rights of a Bidder Participating in the Tender Process:
A tender is an offer that must be unconditional and in the proper form. The terms of the invitation to tender cannot be open to judicial scrutiny as they are in the realm of contract. Judicial review is limited to cases where terms are tailor-made to suit a particular person. Bidders have the right to equality and fair treatment in the evaluation of bids in a transparent manner. The Authority has the right not to accept the highest bid if there are good reasons, such as the highest bid not representing the market price.

2. Scope of Judicial Review in Contractual Matters:
Judicial review ensures that the authority does not abuse its power and that individuals receive fair treatment. The court is not concerned with the merits of the decision but with the manner in which it was made. The court cannot substitute its opinion for that of the authority. Judicial review can examine whether the decision-making process was reasonable, rational, not arbitrary, and not violative of Article 14. Authorities must act reasonably and in good faith, and their actions must be free from arbitrariness or favoritism.

3. Whether the Decision of the Authority is Vitiated by Any Arbitrariness and Therefore Hit by Article 14 of the Constitution of India:
The decision of the Meerut Development Authority (MDA) to invite fresh tenders and make the land available for residential use was not found to be arbitrary or capricious. The AMS had relinquished its claim over the land, and the MDA was not under any obligation to entertain a bid lower than the reserved price. The decision to re-auction the land was taken after careful deliberation and was in line with the need to augment financial resources.

4. Whether the Decision is Not in Public Interest:
The MDA's decision to re-auction the land for residential use was not found to be against public interest. The land in the Master Plan was reserved for residential use, and the MDA's decision to change the land use back to residential was reasonable. The MDA had already provided land to educational institutions at a concessional rate, and the AMS had failed to offer the reserved price. Public interest was considered by the MDA in its decision-making process.

5. Change of Land Use:
The decision to change the land use from educational to residential was found to be reasonable. The land was originally reserved for residential use in the Master Plan, and the MDA had the authority to change the land use. The MDA's decision was not arbitrary, and it was made after considering the representations and offers from various parties.

Result:
The Supreme Court allowed the appeal by the MDA, setting aside the High Court's judgment. The MDA was permitted to call for fresh tenders for the land, notifying its use for both educational and residential purposes. The appeal by Pawan Kumar Agarwal was dismissed, but the MDA was given the liberty to invite fresh bids. The MDA's decision to cancel the auction and not to allot the land to AMS was upheld.