U.P. AVAS EVAM VIKAS PARISHAD & ORS. versus OM PRAKASH SHARMA

Citation: [2013] 6 S.C.R. 199 · Decided: 18-04-2013 · Supreme Court of India · Bench: C.K. PRASAD · Disposal: Appeal(s) allowed
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Judgment (excerpt)

(2013] 6 S.C.R. 199 
U.P. AVAS EVAM VIKAS PARISHAD & ORS. 
v. 
OM PRAKASH SHARMA 
(Civil Appeal Nos. 3908-3909 of 2013) 
APRIL 18, 2013 
[CHANDRAMAULI KR. PRASAD AND 
V. GOPALA GOWDA, JJ.] 
Contract Act, 1872 - ss. 3 and 4 - Auction of plot - Held 
A 
B 
by Housing Board - Under supervision of an officer of the 
C 
Board - Plaintiff being the highest bidder deposited earnest 
money - Later the bid amount rejected by the competent 
authority - Suit filed to declare the rejection order as illegal 
and void - Decreed by trial court - Decree set aside in first 
appeal - High Court in second appeal confirmed the decree 
D 
- Held: Until final acceptance of the bid, the highest bidder 
acquires no-vested right to have the auction concluded in his 
favour -
An authority falling under Article 12 of the 
Constitution, is not bound to accept the highest bid in the 
interest of public revenue - In the present case, since the final 
E 
bid was not accepted, there was no concluded contract in 
favour of the highest bidder - Thus, no legal right accrued in 
favour of the plaintiff to invoke remedy available u/s. 34 of 
Specific Relief Act, seeking declaratory relief - Uttar Pradesh 
Avas Evam Vikas Parishad Adhiniyam, 1965 - ss. 12 and 
F 
16 - Uttar Pradesh Avas Evam Vikas Parishad (Delegetion 
of Powers by the Board and the Housing Commissioner) 
Rules, 1968- r.3 - Constitution of India, 1950 - Article 12 -
Specific Relief Act, 1963 - s.34. 
Uttar Pradesh Avas Evam Vikas Parishad Adhiniyam, 
G 
1965 - s.88(2) - Suit against the Housing Board - Without 
issuing notice - Maintainability of the suit - Held: Notice u/s. 
88(2) is mandatory - Hence suit instituted without issuing 
notice, not maintainable. 
199 
H 
200 
SUPREME COURT REPORTS 
[2013] 6 S.C.R. 
A 
Practice and Procedure - New plea - Raising of -
Permissibility - Held: A plea on legal ground can be raised 
even at appellate stage. 
Appellant-authority conducted public auction of the 
B plot in question, under supervision of Assistant Housing 
Commissioner of the appellant-authority. The respondent 
offered highest bid, and as per the terms and conditions 
of the auction, deposited the earnest money. Thereafter, 
the respondent was informed that the Housing 
Commissioner of the Board rejected the bid amount of 
C the respondent. 
The respondent filed a suit seeking declaration that 
the auction held in favour of the respondent was binding 
on the appellant-Board and rejection thereof was illegal 
D and void. Trial court decreed the suit. First appellate court 
allowed the appeal of the appellant-Board setting aside 
the decree. The High Court, in second appeal, confirmed 
the decree, setting aside order of first appellate court. 
Review against the order of the High Court was also 
E dismissed. Hence the present appeal. 
Allowing the appeal, the Court 
HELD: 1.1. The bidder who has participated in tender 
process has no other right except the right to equality 
F and fair treatment in the matter of evaluation of 
competitive bids offered by interested persons in 
response to the notice inviting tenders in a transparent 
manner and free from hidden agenda. So long as an order 
regarding final acceptance of the bid had not been 
G passed by the Chairman of the Housing Board, the 
highest bidder acquires no vested right to have the 
auction concluded in his favour and the auction 
proceedings could always be cancelled. The 'State' or the 
Authority, which can be held to be a 'State' within the 
H meaning of Article 12 of the Constitution, is not bound to 
U.P. AVAS EVAM VIKAS PARISHAD v. OM PRAKASH 201 
SHARMA 
accept the highest tender/offer or bid and the 
A 
Government could validly retain its power to accept or 
reject the highest bid in the interest of public revenue. 
[Paras 27 and 28] [219-H; 220-A; 221-C-E] 
1.2. The plaintiff-respondent had not acquired any 
B 
right and no vested right has been accrued in his favour 
in respect of the plot in question, merely because his bid 
amount was highest and he had deposited 20% of the 
highest bid amount along with earnest money with the 
Board. In the absence of acceptance of bid offered by the 
plaintiff to the competent authority of the first defendant, 
C 
there is no concluded contract in respect of the plot in 
question. [Para 29] [224-8] 
State of U.P. vs. Vijay Bahadur Singh 1982 (2) SCC 365; 
RajasthanHousing Board vs. G.S. Investments and Anr. 2007 
D 
(1) SCC 477: 2006 (7) Suppl. SCR 868; Laxmikant vs. 
Satyawan
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