- The Hon’ble Supreme Court (SC or Court),in State of Punjab v Mehar Bin, has set aside the impugned order of the Punjab and Haryana High Court (HC) and observed that the highest bidder in an auction has no vested right concluded in his favour unless the bid has been confirmed by the competent authority.
- The Court also remarked that the HC, under the limited scope of judicial review under Article 226 of the Constitution, was not supposed to interfere in the opinion of the executive who were dealing on the subject, unless the decision was totally arbitrary or unreasonable, and it was not open for the High Court to sit like a Court of Appeal over the decision of the competent authority.
- The brief facts are that the Tehsildar Sales, Malerkotla conducted a public auction of a property with only three participants owing to lack of publicity and bid of the Defendant was the highest at Rs.3,90,000 which was provisionally accepted by the Tehsildar.
- Later, the Sales Commissioner ordered a re-auction on the ground of improper publicity and inadequacy of the Defendant’s bid. This order was upheld by the Financial Commissioner Revenue, Punjab.
- In the absence of any irregularity or illegality being committed in the auction proceedings, the Punjab and Haryana High Court allowed the writ petition filed against these orders and the directed the authority to confirm the sale.
- Aggrieved by the order, the Appellant filed the instant appeal.
- Quoting Rule 8 of the Scheme of Chapter III of Rules, 1976 relating to transfer of urban properties, the Court auction notice must be given wide publicity and a copy of the notice must be affixed in the locality where the property is situated and where the bid has been accepted, earnest money must be deposited for provisional acceptance which is subject to confirmation by the Sales Commissioner.
- The Court observed that in earlier decisions of the SC it was repeatedly pointed out that the State or authority which can be held to be State within the meaning of Article 12 of the Constitution, is not bound to accept the highest tender of bid and the right of the highest bidder is always provisional to the different conditions in which the auction has been held.
- The Court took note of the scope of judicial review in the matters of tenders/public auction and remarked that superior Courts should not interfere in the matters of tenders, unless substantial public interest was involved or the transaction was malafide.
- The Court also observed that allegations of illegality, irrationality and procedural impropriety would be enough grounds for Courts to assume jurisdiction and remedy such ills.
- Elaborating further, the Court also opined Court that the need for overwhelming public interest should be kept in mind to justify judicial intervention in contracts involving the State and its instrumentalities.
- Allowing the appeal, the Court held that the High Court was not supposed to interfere in the opinion of the executive who were dealing on the subject, unless the decision was totally arbitrary or unreasonable.
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