R.D. Sharma Vs. the Punjab Housing Development Board 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 - it was clearly mentioned that the type of hig-i and hig-ii houses will be either single storeyed or double storeyed flats or duplex types independent houses. khosla representing the respondents, however, from the words 'this house does not suit us' endeavoured his very best to make out a case for request of the petitioner for cancellation of the allotment already made to him. the board while cancelling the allotment made to the petitioner, thus, clearly erred. it is by now well settled proposition of law that every action of state must be subject to rule of law and must be followed by reasons. it is well settled that there can be malice in law. 9. before i part with the judgment i would like to note the objection raised by mr. 'the allotment was made in his favour on 27th of january, 1986 and the petitioner had to deposit the amount aforesaid on 28th of february, 1986. the petitioner failed to deposit the said amount and that in itself entitled the respondent-board to cancel the dwelling unit allotted to the petitioner. 11. i would also like to mention that during the pendency of the writ petition on the asking of the court, the petitioner filed representation for considering his case in a new scheme dated 10.3.1989 (annexure p-9), which has been rejected without giving any reason whatsoever.v.k. bali, j.1. in this petition filed by r.d. sharma, retired executive engineer the complaint is of cancellation of allotment of a dwelling unit in a wholly arbitrary and illegal manner. the cause of the petitioner is sought to be opposed and denied by and large on technical plea that the petitioner should rake by this controversy a civil court. before, however, grounds both of attack and defence in cancelling the order of the dwelling unit of the petitioner are noticed, it shall be usual to give a brief resume of the facts culminating in a filing of the present petition.2. respondent punjab housing development board is a statutory authority created under the punjab housing development board act, 1972. in the year 1980, this board advertised a scheme for constructing beautiful developed houses to be constructed at various stations including sahibzada ajit singh nagar (mohali). according to the scheme the cities were divided into two categories i.e. (a) and (b). for (a) category of cities earnest money was required to be deposited and for (b) category only nominal registration fee was to be deposited. mohali was in (a) category and houses were to be allotted the basis of first come first serve. ambitious, desirous and obviously in need petitioner applied in response to the advertisement referred to above a hig-ii type of house at mohali and deposited an earnest money of rs. 4,000/- vide bank draft dated 18th of may, 1980. it was accepted by the board vide receipt dated 31st of may, 1980. petitioner was allotted registration no. 325/- mohali/80. the total cost of the hig-ii house was rs. 1,00,000/-. rupees 25,000/- were to be paid on allotment with a monthly installment of rs. 1,226.20 p. the accommodation was to be comprised of two bed rooms, drawing-cum- dining, a kitchen, garage and two toilets. it was clearly mentioned that the type of hig-i and hig-ii houses will be either single storeyed or double storeyed flats or duplex types independent houses. after six years of petitioner's application, in the year 1986, the respondent-board issued allotment letter to him on 27th of january, 1986, allotting a dwelling unit bearing flat no. 785-c of hig located on the 3rd floor at mohali on hire purchase basis. it is the positive case of the petitioner that it was totally in variance of the scheme advertised in 1980 and the cost was also arbitrarily increased from rs. 1,00,000/- to rs. 1,40,724/-. the petitioner was asked to deposit a sum of rs. 35,818.35p in lumpsum within thirty days from the date of allotment letter or within 60 days if the payment was to be made in full. the allotment letter dated 27th of january 1986 was placed on record as annexure p-2. on receipt of above said allotment letter, petitioner sent a registered letter dated 24th of february, 1986 within stipulated time for depositing the installment as mentioned in the allotment letter to respondents 1 and 2 stating therein that the flat allotted to him was not suitable to him due to old age and due to his wife being asthamatic for the last 20 years. he also mentioned that the scheme against which he applied in 1980 was for a single storey house according to his requirements and circumstances and accordingly prayed for allotment of independent single storey house or some ground floor flat. no reply was received by the petitioner for a long time, constraining him to make number of visits in the office of the respondent-board and making several representations. however in october 1988, to his dismay and total disappointment, he received the information that even the flat allotted to him on 3rd floor, has been cancelled. this was conveyed to him vide letter dated 5.5.1986 (r-1/1). it is this letter/order which has been called in question in the present writ petition.3. on the facts as has been mentioned above, mr. amarjit markan learned counsel representing the petitioner vehemently contends that there was absolutely no justification for the respondent- board to cancel the allotment made to the petitioner on a simple request that he should be accommodated on a ground floor. while passing the impugned order, no notice was issued to the petitioner nor he was heard in the matter further contends the learned counsel.4. the cause of the petitioner had been opposed in the written statement filed by the respondents and it has been basically pleaded that the allotment made to the petitioner has been cancelled on his own request as also that this being a case of breach of contract and the terms thereof, the only remedy available to the petitioner is to seek his redressal in civil court. in consonance with the pleadings of the respondent-board mr. khosla learned counsel representing the respondents has raised the same very issues.5. after hearing the learned counsel for the parties and after going through the records of the case, this court is of the view that the case of the petitioner is meritorious and, therefore, this petition must succeed. the basic question that arises for determination is as to whether the petitioner made a request for accommodating him on ground floor or he really asked for cancellation of the allotment already made to him and that in view of this court can be decided by having a look at the request made by the petitioner vide his letter dated 24.2.1986. the relevant portion of the letter reads thus :-'i am to state that hig house no. 785-c at sas nagar has been allotted to me as conveyed vide letter under reference. at the time of my application i applied for independent single storey house as my wife was suffering from asthama for the last 20 years. now i have come to know that the house no. 785-c is located on the 3rd floor. so this house does not suit us. myself is also about 60 years and has since been retired.so kindly keeping in view my difficulties i may be allotted some ground floor flat in place of 3rd floor and inform me accordingly.'6. a reading of the contents of the letter reproduced above, in view of this court do not tantamount to a request for cancellation of the allotment already made to the petitioner. petitioner has expressed his difficulties and explained the position with the only object of accommodating him on ground floor. there is nothing mentioned in the letter from where it can be made out that the request for cancellation was made. no word to that effect has been mentioned in the letter. mr. khosla representing the respondents, however, from the words 'this house does not suit us' endeavoured his very best to make out a case for request of the petitioner for cancellation of the allotment already made to him. in the context of the contents of the letter such an intention cannot possibly be gathered. on the contrary all that can be gathered is that the petitioner wanted to be allotted a ground floor. the respondent-board, in view of this court, on receipt of the letter written by the petitioner for accommodating him on the ground floor at the most could inform him that his said request could not be acceded to but in no circumstances, it could straightaway cancel the allotment made to him. the board while cancelling the allotment made to the petitioner, thus, clearly erred. that apart, it is conceded position between the parties that before passing the impugned order annexure r-1/1, no hearing at all was afforded to the petitioner.7. in so far as the plea of the respondent-board with regard to this being a case of violation of a term of contract and therefore, the petitioner should approach the civil court is concerned, even in the matter of grant or non-grant thereof, if the complaint is of arbitrariness, this court can always entertain and adjudicate upon the issue in writ jurisdiction. it is by now well settled proposition of law that every action of state must be subject to rule of law and must be followed by reasons. whatever he the activity of a public authority, it must meet the test of articles 14 and 16 of the constitution of india. the apex court while dealing with such a situation in mahabir auto stores v. indian oil corporation, a.i.r. 1990 s.c. 1031 held:-'the state acts in its executive power under article 298 of the constitution entering or not entering in contracts with individual parties. article 14 of the constitution would be applicable to these exercise of power. therefore, the action of state organ can be checked under article 14. every actions of the state executive authority must be subject to rule of law and must be informed by reason. so whatever be the activity of the public authority, it should meet the test of article 14 of the constitution. if a government action even in the matters of entering or not entering into contracts, fails to satisfy the test of reasonableness, the same would be unreasonable and discrimination, rules of fair play and natural justice are part of the rule of law applicable in situation or action of state instrumentality in dealing with citizens. even though the rights of the citizens are in the nature of contractual rights, the manner, the method and motive of a decision of entering into a contract, are subject to judicial review on that touch stone of relevance and reasonableness, fair play, natural justice, equality and non-discrimination. it is well settled that there can be malice in law.'8. mr. rupinder khosla learned counsel representing the respondent-board on the other hand has placed reliance on the decision of the supreme court in bareilly development authority v. ajay pal singh, air 1989 s.c. 1980. the complaint was with regard to increase in the tentative price of the houses allotted to the petitioners in the said case. the judgment rendered in bareilly development authority's case (supra) is distinguishable from the facts of this case.9. before i part with the judgment i would like to note the objection raised by mr. kholsa at the fag end of his arguments. he contends that petitioner was supposed to deposit rs. 35,318.35 p within a month from the date of allotment. 'the allotment was made in his favour on 27th of january, 1986 and the petitioner had to deposit the amount aforesaid on 28th of february, 1986. the petitioner failed to deposit the said amount and that in itself entitled the respondent-board to cancel the dwelling unit allotted to the petitioner. this contention of the learned counsel deserves to be straightaway rejected. concededly, the impugned order has not been passed on the ground that the petitioner did not deposit the amount by a particular date as envisaged under the terms of contract. on the other hand, the only ground for cancelling the dwelling unit allotted to the petitioner appears to be that he made such a request vide annexure p-3. that apart, the petitioner made an application for giving him an alternative accommodation on the ground floor prior to the date fixed for depositing the amount of rs. 35,318.35p. obviously, he entertained some hope that his request would be accepted to. if his request was to be accepted, he had to deposit an amount more than rs. 35,318.35 as concededly, for a ground floor price payable was more. he could, thus, very legitimately expect the respondent-board to pass an order before he was to deposit the amount but as mentioned above the respondent-board took more than three months. there was absolutely no occasion for the petitioner to deposit the remaining amount after cancellation of the dwelling unit.10. for the reason recorded above, this petition is allowed. a direction is issued to the respondent-board to allot a dwelling unit to the petitioner in pursuance of the allotment letter dated 27th of january, 1986. at this stage mr. khosla informs the court that the said dwelling unit is not available with the respondent, the same having been allotted to some other person. that being so, the petitioner he allotted a similar dwelling unit elsewhere, wherever the same may be available at mohali at present either in the scheme which may be in existence or if there is no such scheme at present, then in scheme that might come into being in future. it is made clear that the petitioner will be charged the price that was mentioned in his allotment letter dated 27th january, 1986 as it was none of his fault that for such a long time i.e. for about a decade, that even after allotment he finds himself without a house.11. i would also like to mention that during the pendency of the writ petition on the asking of the court, the petitioner filed representation for considering his case in a new scheme dated 10.3.1989 (annexure p-9), which has been rejected without giving any reason whatsoever. all that is mentioned therein is that the representation of the petitioner has been considered and rejected.