THE VICE CHAIRMAN & MANAGING DIRECTOR, CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LTD.& ANR. versus SHISHIR REALTY PRIVATE LIMITED & ORS. ETC

Citation: [2021] 13 S.C.R. 190 · Decided: 29-11-2021 · Supreme Court of India · Bench: N.V. RAMANA · Disposal: Dismissed

Cited by 4 judgment(s) · cites 7 · see the full citation network in Lexace

Judgment (excerpt)

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SUPREME COURT REPORTS
[2021] 13 S.C.R.
THE VICE CHAIRMAN & MANAGING DIRECTOR, CITY AND
INDUSTRIAL DEVELOPMENT CORPORATION OF
MAHARASHTRA LTD.& ANR.
v.
SHISHIR REALTY PRIVATE LIMITED & ORS. ETC
(Civil Appeal Nos. 3956-3957 of 2017)
NOVEMBER 29, 2021
[N. V. RAMANA, CJI, VINEET SARAN AND
SURYA KANT, JJ.]
Government contracts: Judicial review – Scope of – On facts,
appellant (CIDCO) invited tender for lease of land for the
development of Hotels – Issuance of allotment letter in favour of
the highest bidder – Complaints regarding irregularities in allotment
of plots of land, change of user and deviation from the terms and
conditions of the tender – On the basis of preliminary enquiry,
issuance of notice to the highest bidder and the respondent-lessee
by the newly appointed Vice Chairman – Thereafter, cancellation
of lease deed, pursuant to the enquiry – Writ petitions – High Court
quashed the cancellation order – On appeal, held: There is an
element of abuse of bureaucratic power behind subsequent change
in the tender allotment – When a contract is being evaluated, the
mere possibility of more money in the public coffers, does not in
itself serve public interest – Blanket claim by the State claiming loss
of public money cannot be used to forgo contractual obligations –
On facts, post-decisional hearing given to respondent-lessee was
just to sanctify the process of cancellation – Change of usage and
the subsequent division was within the statutory limitations – Thus,
the earlier undertakings taken by the appellant-authorities cannot
be set aside with the change of person in power, without any rhyme
or reason – Phenomenon of ‘regime revenge’ is detrimental to the
constitutional values and rule of law – Equity demands that when
the State failed to produce an iota of evidence of either financial
loss or any other public interest that has been affected, it should be
compelled to fulfill its promises – Thus, the order of CIDCO, inter
alia, annulling the allotment on hyper-technical grounds cannot be
sustained for being contrary to the doctrine of fairness, and is set
aside – Judicial restraint.
[2021] 13 S.C.R.190
190
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Government contracts: Tender process – Judicial review of –
Power of constitutional courts – Explained.
Government contracts: Constitutional factors – Satisfaction
of – Held: Governmental bodies being public authorities are
expected to uphold fairness, equality and rule of law even while
dealing with contractual matters – Right to equality u/Art. 14 abhors
arbitrariness – Public authorities have to ensure that no bias,
favouritism or arbitrariness are shown during the bidding process,
unless public interest demands otherwise – Degree of compromise
of any private legitimate interest must correspond proportionately
to the public interest, so claimed – On mere grounds of public interest
or loss to the treasury, the successor public authority cannot undo
the work undertaken by the previous authority – In that case,
businessmen would be hesitant to enter Government contract or
make any investment.
Administrative law: Administrative orders – Principle of
natural justice – Significance of – Held: Natural justice is an
important aspect while viewing the administrative orders – To
maintain rule of law, effective natural justice is to be provided to
affected parties, before a decision is taken – Any attempt by authority
to evade the requirement of providing effective hearing before
reaching a conclusion, cannot pass the muster.
Dismissing the appeals, the Court
HELD: 1.1 The Constitution of India allows the government
to enter into contracts and perform certain commercial activities.
Due to increase in government business, there is a requirement
of this Court to uphold certain discretion accruing to the
government and disallow certain conduct in light of prevailing
circumstances. Merely instilling an agency with discretion may
not be prohibited by the Constitution, rather it is unfettered use
of such discretion, that is prohibited; the Constitution frowns upon
those decisions which are taken in gross abuse of law. [Para
25][210-C]
1.2 Being governed under “rule of law” every action of the
State or its instrumentality while exercising its executive powers
must met the aforesaid requirements. While recognising the
existing principle of freedom to enter or not to enter into contracts
THE VC & MD, CITY AND IND. DEVEL. CORP. OF MAHARASHTRA
LTD. v. SHISHIR REALTY PVT. LTD.
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