LexANIL KUMAR SRIVASTAVA versus STATE OF U.P. AND ANR.
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ANIL KUMAR SRIVASTAVA A v. STATE OF U.P. AND ANR. AUGUST 20, 2004 B [ASHOK BHAN AND S.H. KAPADIA, JJ.] Constitution of India, 1950: Public auction-Tenders invited for construction of a commercial C land on a plot of land-Bid quoted by one bidder accepted as his b!d was higher than the reserve price-Validity of-Held: An invitation to tender is not an offer-Acceptance of bids/offers is conditional-It is still open to challenge on the ground that the property has not fetched the proper price and that the sale be set aside-On facts, acceptance of highest bid is valid. Public auction-Scheme floated for construction of a commercial hub D on a plot for a shopping mall-Writ petition filed before High Court challenging the Scheme on the ground that the reserve price was abysmally low, throwaway price pnd, therefore, the said Scheme was arbitra1y and E violative of Art.14-.,Held: There was no material to show that the tender price was a low price-The reserve price was fixed taking into account the. comparative offers/sales in adjoining sectors-Difference between circle rate and sector rate explained-Further, there was no material to show that the sector rate, on the basis of which the reserve price was to be fixed, was F the rate as claimed by the petitioner-Various concession/incentives offered in the Scheme were not arbitrarily given as largesse to the tenderer-Moreover, when a Scheme is challenged it has to be looked at as an entire package-There are no figures on record to show the alleged loss to the exchequer-Valuation is a question of fact-Supreme Court is reluctunt to interfere where valuation is based on relevant materials- G Hence, Scheme upheld. Words & Phrases: "Reserve price'; "Upset price" and "valuation"-Meaning of H 675 676 SUPREME COURT REPORTS (2004] SUPP. 3 S.C.R. A Respondent No. 2 floated Scheme for construction of a commercial hub on a plot ofland consisting ofa shopping mall with 2800 Estimated Car Spaces. Wide publicity was given to the Scheme. Several reputed developers bought tender documents. However, at the end of the day, there was only one bidder (respondent No. 3) in the field. Since B respondent No. 3 was the only bidder and since it had quoted the price, which was higher.'than the reserve price, its tender was accepted. The appellant, claiming to be a public-spirited citizen, filed a writ petition before the High Court challenging the said Scheme as arbitrary and violative of the norms contained in the Board resolution dated C 10-7-2003 and the precedents with regard to size and reserve price, resulting in a loss to the State Exchequer. In the writ petition, it was alleged that the impugned Scheme awarded a certain area of prime commercial land, without precedents, at I/4th of the prevailing market price, and by fixing the reserve price at abysmally low, throw away, D price the said Scheme was arbitrary and violative of Article 14 of the Constitution. E The High Court refused to grant the interim stay as prayed for by the petitioner. Hence the appeal, and the transferred case. The following questions arose bdore the Court:- (a) Whether the tender price quoted by respondent No. 3 was F understated? G (b) Whether respondent No. 2's decision in accepting the bid of respondent No. 3 was arbitrary, unreasonable and in violation of the Board resolution dated 10-7-2003? Dismissing the matters, the Court HELD: 1.1. In a sale by auction, subject to reserve, every offer/ bid and its acceptance is conditional. The public is informed by the fact, H that the sale is subject to a reserve, that the auctioneer has agreed to ANIL KUMAR SRIVASTAVA v. STATE 677 sell for the amount which the bidder is prepared to give only in case A that amount is equal to or higher than the reserve. The reserve puts a limit on the authority of the auctioneer. He could refuse the bid, which is below the upset price. This explains the meaning of the term 'reserve price'. It indicates the object behind fixing the reserve price viz. to limit the authority of the auctioneer. [686-B-DI B McManus v. Fortescue, [1907] Vol. II KB, referred to. 1.2. In the present case, the Board resolution is meant to guide the officers of the second respondent. The resolution prescribes the C guidelines for fixing the reserve price. [686-El 2. The concept of reserve price is not synonymous with 'valuation of the property'. These two terms operate in different spheres. An
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