In a recent ruling of Raviprakash Chaturdeo Patel v/s The State of Maharashtra Through its Secretary Urban Development Department, having office at Mantralaya, Mumbai & Others, the court examined the legality of the City and Industrial Development Corporation (CIDCO)'s decision to reject a bid for a plot of land despite the petitioner being declared the highest bidder. The case centered on whether CIDCO was legally bound to accept the highest bid and whether its rejection of the bid was arbitrary or unreasonable.
Facts of the Case:
In 2021-2022, CIDCO launched Scheme No.MM/SCH-18A/2021-22, inviting bids for various plots, including Plot No. B (130+131), Sector 13, Kalamboli, Navi Mumbai. The petitioner submitted a bid of Rs. 43,333 per square meter, exceeding the reserve price of Rs. 26,202. On October 19, 2021, the petitioner was declared the highest bidder, and payment for the Earnest Money Deposit (EMD) was accepted.
However, despite the petitioner being the highest bidder, no allotment letter was issued within the prescribed three-day period. After reaching out to CIDCO, the petitioner received a communication dated December 8, 2021, informing them that their bid had been rejected. The petitioner subsequently filed a writ petition, seeking a writ of mandamus to quash the rejection letter and direct CIDCO to issue the allotment letter.
Arguments from the Petitioner:
The petitioner argued that CIDCO acted arbitrarily and unfairly by rejecting the highest bid, especially when the bid was significantly higher than the reserve price. It was pointed out that CIDCO had previously failed to auction the plot, and despite this, the rejection caused a financial loss to the public exchequer, as the bid was higher than the base price by 65%. The petitioner further emphasized that CIDCO violated its own process manual by failing to issue the allotment letter within the stipulated time frame.
CIDCO’s Defense:
CIDCO, represented by its senior counsel, refuted the petitioner’s claims. CIDCO maintained that the invitation for bids was not an offer but an invitation to make an offer. The tender explicitly reserved CIDCO's right to reject any bid without providing reasons. CIDCO also clarified that no contract had been formed with the petitioner, as the allotment letter had not been issued, and the petitioner had no vested right to the plot.
Furthermore, CIDCO argued that the rejection was based on sound commercial judgment. A memo dated October 27, 2021, outlined the reasons for rejecting the bids, stating that the bids received for the majority of plots were below the market price. CIDCO had decided to accept only the bids for the eight plots that met the market standards.
Court’s Decision:
The court examined the arguments and the relevant documents, particularly the terms of the tender and the reasoning provided by CIDCO for rejecting the petitioner's bid. The court found that:
CIDCO’s Right to Reject the Bid: The court noted that the tender conditions clearly stated CIDCO’s right to reject any or all bids without providing reasons. Since the petitioner did not challenge this condition, it could not be argued that CIDCO was obligated to accept the highest bid.
Commercial Discretion: The court observed that CIDCO’s decision to reject the petitioner’s bid was a commercial decision based on the comparison with market prices. CIDCO had consistently rejected bids that were below market value, and there was no evidence of discriminatory treatment towards the petitioner.
No Violation of Process Manual: The court concluded that CIDCO had acted within the prescribed timelines, and its rejection of the bid did not violate any procedural rules.
Thus, the court upheld CIDCO’s decision to reject the bid, asserting that CIDCO acted within its discretion and the commercial framework laid out in the tender process. The writ petition was dismissed.
Conclusion:
This case underscores the principle that in commercial matters, especially those involving government agencies, judicial review is limited. The court’s decision highlights the broad discretion afforded to public authorities in matters of procurement and bidding. As long as the process is transparent and adheres to the prescribed conditions, public bodies are not obligated to accept the highest bid, even if it is significantly above the reserve price. The ruling reaffirms the importance of respecting the terms of the tender process and allows public bodies the flexibility to make decisions based on market considerations and public interest.
