Lachhman Dass Vs. the Financial Commissioner and ors. - Court Judgment

Excerpt:
- administrative law - government contract: [vijender jain, c.j., rajive bhalla & sury kant, jj] government contract rejection of highest bid challenge as to held, state has no dominus status to dictate unilateral terms and conditions when it enters into contract. its actions must be reasonable, fair and just in consonance with rule of law. as a necessary corollary thereto, state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. the state is free to enter into a contract just like any other individual and the contract shall not change its legal character merely because other party to contract is state. though no citizen possesses a legal right to compel state to enter into a contract, yet latter can neither pick and choose any person arbitrarily for entering into such agreement nor can it discriminate between persons similarly circumstanced. similarly, where breach of contract at hands of state violates fundamental rights of a citizen or its refusal to enter into a contract is contrary to statutory provisions or public duty, judicial review of such state action is inevitable. likewise, if state enters into a contract in consonance with article 299 rights of the parties shall be determined by terms of such contract irrespective of fact that one of the parties to it is a state or a statutory authority. for these precise reasons the equitable doctrine of promissory estoppel has been made applicable against the government, as against any other private individual, even in cases where no valid contract in terms of article 299 was entered into between the parties. hence, if government makes a representation or a promise and an individual alters his position by acting upon such promise, the government may be required to make good that promise and shall not be allowed to fall back upon the formal defect in the contract, though subject to well known limitations like larger public interest. the state, thus, has no dominus status to dictate unilateral terms and conditions when it enters into contract and its actions must be reasonable, fair and just and in consonance with rule of law. as a necessary corollary thereto state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. -- consumer protection act, 1986 [c.a. no. 68/1986]. articles 14 & 300a: government contract noon-acceptance of highest bid held, it does not result in taking away right to property of highest bidder highest bid, per se, unless it is accepted by competent authority, and consequential sale certificate is issued, does not grant the highest bidder right to property of type which is protected under article 300a right to property is limited to confer highest bidder the right to challenge action of appropriate authority in refusing to accept highest or other bids. [air 1984 p&h 282 (fb) explained] articles 14 & 226: government contract rejection of highest bid held, highest bidder has locus standi to maintain writ petition and assail action of state government or its authorities by contending that his bid has been turned down for arbitrary, illegal or perverse reasons however in such matters, heavy onus would like on petitioner bidder to establish his allegations as state action shall always be presumed to be in accordance with law - 4. aggrieved by the said order of the administrator, the petitioner sled an appeal before the commissioner, ambala division, who vide his order dated 25th may 1979, accepted the appeal and set aside the order of resumption passed by the administrator, before the commissioner, it was argued that in fact the construction had been completed in the year 1975 and the administrator could not pass the order on 16th january, 1978 resuming the plot as the construction bad already been completed. further, it was argued before the commissioner that section 13 of the act bad been held ultra vires by a division beach of this court in shri dharam pal and ors. he further bad that in view of the decision of this court in shri dharam pal's case (supra) the administrator had no power of resumption.r.s. mongia, j.1. lachhaman dsss petitioner purchased booth plot no. 32, in mandi township, kaithal, for rs. 2,100/- in an open auction held on 31st july, 1957. he paid one- fourth of the price of the plot at the spot and the balance three-fourth was to be paid vide allotment order no. 655, dated 14th january, 1958. according to the petitioner, full price of the plot was duly paid.2. as per condition no. 14, of the sale-auction, is was necessary for the auction purchaser to complete construction on the plot within two years of the allotment, but according to the respondents. he did not raise any construction thereon till june, 1975. a show cause notice dated 27th june, 1975 was issued by the mandi township department to the petitioner as to why the plot be not resumed for not complying with condition no. 14 of the auction sale i. e non construction on the plot. no reply was received from the petitioner and another show cause notice dated 14th october, 977, was issued, which was again not replied by the petitioner. the petitioner was then served with a last notice en 2nd december, 1977, in which an opportunity for appearing in person was also given on 16th january, 1978.3. in spits of personal service, the petitioner did not appear before the administration of the new mandi township, and, therefore, exparte proceedings were taken against lim by the administrator. exercising powers under section 13(2) or the punjab new mandi townships (development and regulation) act, i960 (as applicable to haryana) (hereinafter referred to as the act), the administration vide order dated 16th january, 1978 (annexure t-l), ordered the resuming the plot in question for con-construction and further ordered that after deducting 10% of the amount as penalty from the amount already paid by the petitioner, the balance be refunded to him.4. aggrieved by the said order of the administrator, the petitioner sled an appeal before the commissioner, ambala division, who vide his order dated 25th may 1979, accepted the appeal and set aside the order of resumption passed by the administrator, before the commissioner, it was argued that in fact the construction had been completed in the year 1975 and the administrator could not pass the order on 16th january, 1978 resuming the plot as the construction bad already been completed. further, it was argued before the commissioner that section 13 of the act bad been held ultra vires by a division beach of this court in shri dharam pal and ors. v. the state of punjab, 1978 p. l. j. 396. and, therefore, the administrator had not power to resume the plot. it may be noticed here that the commissioner has observed in his order dated 25th may, 1979 (annexure p-2) that 'both parties take as correct that construction on the disputed plot had been completed before the resumption order'. since the construction had been completed on the disputed plot, the learned commissioner set aside the order of resumption. he further bad that in view of the decision of this court in shri dharam pal's case (supra) the administrator had no power of resumption.5. the respondents herein dissatisfied with the order of the commissioner, took up the matter before the financial commissioner, who vide his order dated 24th april, 1980, accepted the revision of the respondents and set aside the order of the commissioner, while restoring the order of resumption passed by the administrator. the financial commissioner held that it could not be held that the construction had been completed in the year 1975, inamuch as if that was so, the petitioner would have certainly replied to the show cause notices issued in the year 1977 and would have appeared before the administrator. further it was held that section 13 (2) of the act (as amended by the haryana act no. 10 of 1973) had not been held to be ultra vires the constitution by the judgment of this court in shri dharam pal's case (supra).6. the writ petition was admitted on 1st september, 19p0, and the operation of the impugned order was stayed. after going through the record of the case, i am of the view that on peculiar facts and circumstances of this case, the order of the financial commissioner needs to be set aside. even now it has been admitted by the respondents in their written statement that en the day the resumption order was passed, the construction had been completed on the plot. whether it was done in the year 1975 or it was completed after the service of the notice on the petitioner, is besides the point in the present case, because it is admitted by both bands that construction had been completed by january, 1978. i may not be understood to be holding that if the construction is not done within the stipulated period, resumption cannot be ordered on the ground that on the day the resumption order was passed the constriction had been completed, but this would be one of the major considerations for the authorities considering the matter of resumption. since in the present case, the construction had been completed prior to the passing of the resumption order and the operation of the impugned order was also stayed in the year 1980, i am of the view that the delay, if any, in the construction of the structure on the plot, should be condoned and the resumption order passed by the administrator and upheld by the financial commissioner be set aside.7. it is not necessary for me to go into the question whether the administrator had the powers under section 13(2) of the act, as applicable to haryaha, for the view i am taking in the matter.8. for the reasons recorded above, the writ petition is allowed, the orders of the financial commissioner, dated 24th april, 1980 annexure p-3) and that of the administrator, dated 28th april, /9?8 (annexure p-l), are set aside. however, there will be no order as to costs.