2013 (4) TMI 815 - SC - Indian Laws

Maintainability of suit - Offering of highest bid - absence of a concluded contract - seeking relief u/s 34 of the Specific Relief Act - property on lease for a period of 90 years - The first defendant on published in the local newspapers for auction of nine shops and a plot earmarked for Cinema Hall specifying the date of auction and furnishing necessary information. According to the plaintiff, the reserved price of the Cinema plot was fixed at ₹ 1,80,200/- and the auction of the property was conducted on 11.3.1977 under the supervision of one Mr. Raj Kumar Singh Bisen, the then Assistant Housing Commissioner(AHC) of the first defendant Board. In the auction, the plaintiff (respondent) offered the highest bid of ₹ 1,31,500/- and as per the terms and conditions of the auction, he had deposited ₹ 26,300/- i.e. 20% of the bid amount, plus ₹ 500/- as earnest money. the plaintiff then asked to first defendant for issuance of the allotment letter in his favour, the dispute arised, when AHC informed the plaintiff that the third defendant Housing Commissioner of the Board had rejected the bid amount deposited by the plaintiff and the same was refunded by way of DD. The Plaintiff aggrieved filled suit in trial court, later on aggrieved defendant filed a review application challenging the findings and reasons recorded in the HC judgment contending that there was an error apparent on the face of the record and therefore prayed for review of the said judgment and order, which was dismissed by the HC after hearing the parties. Therefore, the defendants have filed these appeals. HELD THAT - The important factual and legal aspects have not been examined in proper and constructive manner either by the trial court or by the second appellate court. Therefore, the impugned judgment, order and decree are liable to be set aside. The substantial questions framed by the court in the second appeal did not arise for its consideration. The High Court ought to have noticed that the legal right claimed by the plaintiff seeking relief u/s 34 of the Specific Relief Act on the basis of the pleadings is wholly untenable in law. In view of the fact that no legal right accrued in his favour in the absence of a concluded contract which was said to have existed by mere offering of highest bid in relation to the property in question to obtain the property on lease for a period of 90 years amounting to disposal of the property of the first defendant being an authority under Article 12 of the Constitution, no right was accrued upon the bidder in relation to the property in question. Therefore, the suit itself is not maintainable and the suit filed on the basis of the alleged cause of action did not arise. Hence, the trial court could not have granted any relief by not framing the relevant and proper issue and answering the same. This aspect of the matter is not considered by the trial court. Therefore, the impugned judgment is set aside by the first appellate court by recording reasons. It also did not address and examine the points that arose for consideration as framed by this Court in this judgment. However, the conclusion arrived at by the first appellate court in setting aside the impugned judgment and dismissing the suit is perfectly legal and valid. The said judgment has been erroneously interfered with by the High Court by framing substantial questions of law. Hence, the appeals must succeed.

Summary

Issues Involved:
1. Rights of the plaintiff/bidder in the auction process.
2. Vested rights of the plaintiff/bidder until bid acceptance.
3. Maintainability of the plaintiff's suit in the absence of a concluded contract.
4. Authority of the Assistant Housing Commissioner to accept the bid.
5. Requirement of notice under Section 88(2) of the U.P. Avas Evam Vikas Parishad Adhiniyam, 1965.
6. Suit for declaratory relief without an allotment letter.
7. Validity of substantial questions of law framed by the High Court.

Detailed Analysis:

Rights of the Plaintiff/Bidder in the Auction Process:
The plaintiff participated in a public auction held by the first defendant for a cinema plot, where he was the highest bidder. However, the highest bid alone does not confer any rights unless accepted by the competent authority. The Supreme Court reiterated the principle that bidders have no vested rights until their bids are accepted, as per the judgments in *Meerut Development Authority* and *Rajasthan Housing Board*. The auction process must be transparent, and the authority is not bound to accept the highest bid if it deems the bid inadequate.

Vested Rights of the Plaintiff/Bidder Until Bid Acceptance:
The Court emphasized that merely being the highest bidder and depositing 20% of the bid amount does not create a vested right in favor of the plaintiff. There must be a formal acceptance of the bid by the competent authority, which was not present in this case. The Housing Commissioner had rejected the bid, and no allotment letter was issued, confirming that there was no concluded contract.

Maintainability of the Plaintiff's Suit in the Absence of a Concluded Contract:
The plaintiff's suit was deemed not maintainable as there was no concluded contract. The Supreme Court held that without the acceptance of the bid by the competent authority, the plaintiff could not claim any legal right to the plot. The lack of a concluded contract precluded the plaintiff from seeking declaratory relief.

Authority of the Assistant Housing Commissioner to Accept the Bid:
The Assistant Housing Commissioner was only authorized to supervise and conduct the auction, not to accept the bid. The Housing Commissioner was the only competent authority to accept or reject bids. The Court found no evidence of delegation of this power to the Assistant Housing Commissioner, making the plaintiff's claim baseless.

Requirement of Notice Under Section 88(2) of the Act:
The plaintiff failed to issue the mandatory notice under Section 88(2) before filing the suit. The Supreme Court held that the requirement of notice is a legal ground that can be raised at any stage, and the absence of such notice rendered the suit non-maintainable. The trial court's finding of waiver by the defendants was incorrect.

Suit for Declaratory Relief Without an Allotment Letter:
The plaintiff's request for declaratory relief was not maintainable as he did not possess any legal right to the plot. The Court highlighted that the absence of a concluded contract and the non-issuance of an allotment letter invalidated the plaintiff's claim for such relief. The suit was based on an unaccepted offer, which does not create any legal obligations.

Validity of Substantial Questions of Law Framed by the High Court:
The Supreme Court found that the substantial questions of law framed by the High Court did not arise for consideration. The High Court's interference with the first appellate court's judgment was erroneous, as the plaintiff had no legal right to the plot. The trial court and the High Court's findings were deemed incorrect both factually and legally.

Conclusion:
The Supreme Court set aside the High Court's judgment and dismissed the plaintiff's suit, confirming that the plaintiff had no legal right to the plot in question. The appeals were allowed, and the original suit was dismissed with no order as to costs.