2004 (8) TMI 739 - SC - Indian Laws

Summary

Issues Involved:
1. Alleged arbitrariness and violation of norms in the scheme for the development of a commercial hub.
2. Fixation of reserve price and its alleged undervaluation.
3. Evaluation of the tender price and its alleged understatement.
4. Concessions in ground rent and transfer charges and their alleged arbitrariness.

Issue-Wise Detailed Analysis:

1. Alleged Arbitrariness and Violation of Norms in the Scheme:
The petitioner, a public-spirited citizen, challenged the scheme for developing a commercial hub on a plot in Sector 18, Noida, alleging it was arbitrary and violated norms, resulting in a Rs. 340 crore loss to the state exchequer. The scheme involved constructing a shopping mall, multiplexes, showrooms, retail outlets, hotels, restaurants, and offices with parking facilities. The reserve price was set at Rs. 27,500 per sq. mtr., and the only tender received was from M/s DLF Universal Ltd., quoting Rs. 31,850 per sq. mtr., which was higher than the reserve price.

2. Fixation of Reserve Price and Its Alleged Undervaluation:
The petitioner argued that the reserve price of Rs. 27,500 per sq. mtr. was abysmally low, especially compared to previous schemes where smaller plots had higher reserve prices. The petitioner contended that the reserve price should have been 1.5 times the sector rate, which was allegedly Rs. 90,000 per sq. mtr. Respondent no.2 countered that the reserve price was fixed based on average rates of adjoining sectors and previous unsuccessful tenders for smaller plots with higher reserve prices. The court noted that the fixation of reserve price is meant to facilitate the conduct of the sale and is not synonymous with the valuation of the property.

3. Evaluation of the Tender Price and Its Alleged Understatement:
The central issue was whether the tender price of Rs. 31,850 per sq. mtr. was understated. The court found no material evidence to show that the tender price was low. The petitioner's challenge was primarily against the reserve price, not the tender price. The court emphasized that the reserve price is to guide the auction process and that the tender price was higher than the reserve price. The court also noted that the tender process was given wide publicity, and the bid from respondent no.3 was accepted based on prior experiences and terms of the board resolution.

4. Concessions in Ground Rent and Transfer Charges and Their Alleged Arbitrariness:
The petitioner argued that concessions in ground rent and transfer charges were arbitrarily given to benefit the developer. The court found that these concessions were part of the scheme's terms and conditions, applicable to all eligible bidders. The ground rent was set at 2.5% of the total premium for the first 10 years, with a concession for the first three years to attract entrepreneurs. Transfer charges were waived for the first two years for built-up commercial spaces. The court found no merit in the argument that these concessions were arbitrary, emphasizing that the scheme should be viewed as an entire package, considering the tender price, cost of amenities, and future projections.

Conclusion:
The Supreme Court dismissed the civil appeal and the transferred case, finding no merit in the petitioner's contentions. The court directed respondent no.3 to pay the balance 75% of the premium within one week from the date of the judgment. The court upheld the scheme, finding that the reserve price and tender process were conducted appropriately, and the concessions were part of the scheme's terms and conditions.