IN THE SUPREME COURT OF INDIA  CIVIL APPELLATE JURISDICTION  

CIVIL APPEAL No.    2619         OF 2009 (Arising out of SLP (C) No.3215 of 2008)

Meerut Development Authority      …Appellant  

Versus

Association of Management Studies  & Anr.       …Respondents

WITH  CIVIL APPEAL Nos.            2620-2621        OF 2009

(Arising out of SLP (C) No.1602-1603 of 2008)

Pawan Kumar Agarwal      …Appellant  

Versus

Meerut Development Authority  & Anr.       …Respondents

J U D G M E N T  

B.SUDERSHAN REDDY, J.

Leave granted.

2. Both these appeals can be dealt with under a common

judgment  since  one  and  the  same  issue  requires  to  be

decided.   The  brief  facts  relevant  for  the  purposes  of

disposing of these appeals may be stated.

3. Association of Management Studies (for short ‘AMS’) is

a Society registered under  the provisions  of  the Societies

Registration Act, 1860.  It is stated to be managing various

educational  institutions  imparting  education  such as MBA,

MCA, Engineering etc., the details of which are not required

to be noted.   

4. Meerut Development Authority  (for short  ‘MDA’) has

been constituted as an Authority called as the Development

Authority  by the U.P. State Government under Section 3 of

the  Uttar  Pardesh  Urban  Planning  and  Development  Act,

1973.    The  said  Act,  has  been  enacted  to  provide  for

development of certain areas of Uttar Pardesh according to

plan and for matters ancillary thereto.  The main object and

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reasons  for  the  enactment  was  to  tackle  resolutely  the

problems of town planning and urban development in the

State of Uttar Pardesh.   

FACTUAL MATTERS :

5. On  12.05.2000,  MDA  allotted  a  plot  of  land

admeasuring  20,000 sq.mts. situated in Pocket ‘O’ Ganga

Nagar Residential Scheme at the rate of Rs.560/- per sq.m.

to AMS for construction of buildings meant to be utilised for

educational purposes. The reserved price has been fixed in

terms of G.O. dated 19.04.1996 which provides that plots

for  educational  institutions/engineering  colleges  shall  be

sold  at 50% of the sector rate.  The AMS has requested to

allot an additional  land of 20,000 sq mts. and 37,000 sq.

mts. in Ganga Nagar Residential Scheme for establishment

of  engineering  college  and  other  degree  colleges,  e.g.

masters’ course such as   MBA, MCA etc.  It is noteworthy

that the land use of the above mentioned land in the Meerut

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Master Plan 2001 has been shown as ‘Residential  medium

Density’.  The MDA having considered the request and other

relevant factors resolved to invite tenders from interested

persons to allot the land admeasuring 20,000 sq.mts. and

another extent of land admeasuring 37,000 sq. mts. located

in  the said residential  scheme available  to be utilised  for

educational  use.   The  reserved  price  has  been  fixed  at

Rs.690/- per sq.m. for 20,000 sq.mts. and for the remaining

extent of  37,000 sq.  mts.  of  land at Rs.500/-  per sq.m.;

both being 50% of sector rate.

6. MDA issued advertisement inviting tenders in respect

of  several  plots  meant  for  educational  institutions  within

various residential schemes including the aforesaid two plots

in Ganga Nagar.  The tenders were required to be submitted

on 18.08.2001.  In response to the advertisement inviting

tenders AMS submitted its tender @ Rs.500/- for the plot of

land admeasuring 37,000 sq. mts.  and Rs.560/- for the plot

admeasuring 20,000 sq. mts.  The MDA having considered

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the tenders so submitted informed AMS vide letter dated 3rd

September, 2001 that the commercial offer @ Rs.560/- per

sq. m. was less than that of the reserved rate of Rs.690/-

per sq. m. in respect of 20,000 sq.  mts. of land, out of the

reserved 57,000 sq mts. of land meant for the engineering

colleges.  AMS was put on notice to give its consent within

one week if it was desirous of getting 20,000 sq.m. of land

@ Rs.690/-  per  sq.m.   MDA  was  willing  to  consider  the

allotment of entire land admeasuring 57,000 sq.mts. for the

establishment of engineering colleges provided the institute

was willing to pay the reserved price @ 690/- per sq.m. in

respect of 20,000 sq.m. of land.  AMS in response to the

said letter requested the Authority to allot 37,000 sq.m. of

land @ Rs.500/- per sq.m. offered by them in their tender.

It  is  noteworthy  that  AMS in  clear  and categorical  terms

stated that the other land of 20,000 sq.m; ‘may be deleted

from  ---- offer as the cost of that land is not viable for ----.

However, we are ready to purchase the same @ Rs.560/-

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per sq.m. as quoted by us which is the same rate as we

have already purchased the part of that land.’

7. MDA having considered the response of AMS vide its

letter  dated  27.11.2001  informed  AMS  that  only  37,000

sq.m.  of  land  has  been  allotted  for  the  establishment  of

engineering college with the condition that the construction

of the engineering college is made in accordance with the

norms of  the  A.I.C.T.I.;  and deposit  of  required  amounts

within the stipulated time.  This was accepted by AMS and

they took the allotment of only 37,000 sq.mts. of land.  In

all fairness the matter should have ended there. But it did

not.

8. AMS having  accepted  the  offer  of  37,000 sq.mts.  of

land, raised an objection stating  injustice has been done by

the Authority  in fixing the reserved price  @ Rs.690/- per

sq.m. even though adjoining plots were allotted @ Rs.500/-

and  Rs.560/-  per  sq.m.   MDA  in  its  meeting  held  on

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15.03.2002  has  decided  that  the  disposal  of  the  land  be

made through Open Tender-cum-Auction for residential use

after  giving  wide  publicity.   The  Authority  considered  the

offer  stated to have been made on behalf  of  the officer’s

Class Housing Society of the Canal Colony to purchase the

bulk  of  land  admeasuring  20,000  sq.m.  @  Rs.775/-  per

sq.m. and as well  as the letter dated 04.03.2002 sent by

AMS.  Since this letter reflects the attitude and conduct of

AMS, it is required to be noted in its entirety:

“The Chairman,                            Dated 04.3.2002 Meerut Developmetn Authority,  MEERUT.

Subject :- ALLOTMENT OF LAND AT GANGA NAGAR.

Hon’ble Sir,

Following  facts  are  submitted  for  your

honour’s kind consideration:-

1. That  M.D.A.  on  19.9.2001  floated  a  tender  for allotment of two pieces of land measuring 37,000 and 20,000 sqm bulk scale for Technical Institute after getting the approval of rates from Board viz Rs.500/- and 690/- respectively.

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2. We deposited 25% of a sum as first installment for 37000 sqm of land as demanded on 27.11.2001.

3. That due to paucity funds, we could not deposit the 25%  of  amount  for  20,000  sqm  land  on 27.11.2001.

4. That now we are ready to deposit  the demanded amount and kindly condone the delay and oblige.

With Regards,

Yours faithfully,

(YOGESH MOHAN)  Chairman.”

9. AMS  vide  its  letter  dated  27.03.2002  requested  the

Authority to allot the said land @ Rs.690/- per sq.m. or in

the alternative, the topography of the  land be so adjusted

that both the 20,000 sq.m. of land and 37,000 sq.m. of land

already allotted to the Society may be made contiguous to

each other so that the entire land can be fruitfully utilised by

it for  educational purposes.

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10. On 15.04.2002,  MDA got  issued  fresh  advertisement

inviting  applications  in  newspapers  for  allotment  of  the

aforementioned plot of land of 20,000 sq. m. inviting bids

from foreign  direct  investors,  building  developers  etc.  for

housing purposes with the reserved price  of  Rs.885/- per

sq.m.  and  earnest  money  of  Rs.5.50  lakhs.   AMS  filed

C.M.W.P.No.18578/02  in  the  High  Court  of  judicature  at

Allahabad on 01.05.2002 with the following prayers:

(i) to  issue  a  Writ  Order  or  direction  in  the nature  of  certiorari  quashing  the advertisement dated 15.4.2002 issued in the newspaper Amar Ujala of the said date.

(ii) To  issue  a  Writ,  Order  or  direction  in  the nature  of  mandamus  restraining  the respondent from changing the use of the plot of  land  in  question  from  being  used  for Engineering college to residential purpose.

(iii) To  issue  a  Writ,  Order  or  direction  in  the nature  of  mandamus  directing  the respondent to allot  the said plot  of land to the petitioner  society  at  the reserved price fixed by it i.e. Rs.690/- per sq.metre and the interest  till  the  payment  of  the  amount  by the petitioner or in the alternative direct the respondent  to  consolidate  the  two  plots  of land  already  demised  in  favour  of  the petitioner society into one.

(iv) To  issue  any  other  suitable  writ,  order  or direction which the Hon’ble Court may deem

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fit  and  proper  in  the  circumstances  of  the case.

(v) To  award  cost  of  this  petition  to  the petitioner.    

11. The  High  Court  vide  its  interim  order  dated

07.05.2002, permitted MDA to allot the land in pursuance of

the advertisement dated 15.04.2002 “but the allotment shall

be subject to the decision of this Writ Petition.  It shall  also

be mentioned in the allotment order, if issued by MDA to the

allottee.”

12. In the auction  Pawan Kumar Aggarwal, the appellant

in C.A.Nos.  2620-2621/09     arising out of SLP ( C ) No.

1602-03/2008   became the highest bidder @ Rs.1365/- per

sq.m. and the bid was accepted.  He has deposited only the

earnest money of Rs.5.50 lakhs.  The balance consideration

was  required  to  be  paid  in  installments.   But  during  the

pendency of the Writ Petition, the MDA vide its order dated

14.05.2007,  cancelled  the  auction  and  the  decision  of

allotment  to  Pawan  Kumar  Aggarwal.   He  filed  the  Writ

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Petition  No.3007  of  2007  challenging  the  order  of

cancellation.    The  High  Court  by  the  impugned  order

allowed the Writ  Petition  filed  by AMS and dismissed  the

Writ Petition filed by Pawan Kumar Aggarwal.  Hence these

appeals.

SUMMARY OF SUBMISSIONS :

13. We have heard the  learned  senior  counsel  Shri  P.S.

Patwalia  for  the  appellant  –  MDA,   Shri  Rakesh  Dwivedi

appearing on behalf  of the appellant – Shri  Pawan Kumar

Aggarwal   and  Shri  Sunil  Gupta,  learned  senior  counsel

appearing for AMS.  Elaborate submissions were made by

the counsel for the respective parties.  The following is the

summary of contentions urged by respective senior counsel

which are critical and crucial to decide the case.

14. The principal objection of MDA is that the High Court

was not justified in scrutinising its action and the tendering

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process in such great detail as if it was hearing an appeal

against its decision in the matter. The High Court virtually

acted as more than the appellate court and went into the

merits  in  evaluating  the  decision  making  process  of  the

MDA.   It  was  submitted  that  the  High  Court  practically

converted itself into an Enquiry Commission and heard the

Writ Petition in such a way as if it was making an enquiry

into the affairs of the MDA which is impermissible in law. It

was submitted MDA was left with no option except to invite

fresh bids after rejecting the offer made by AMS which  was

less than that of the reserved price.  Shri Rakesh Dewedi,

learned  senior  counsel  appearing  for  appellant  –  Pawan

Kumar Aggarwal submitted that MDA acted fairly and it did

not commit any error in not accepting the tender of  AMS.

The  decision  making  process  according  to  him  does  not

suffer from any vice of illegality or unconstitutionality.  He,

however  submitted  that  the  MDA  was  not  justified  in

cancelling the auction and its decision to allot land in favour

of  appellant  –  Pawan Kumar  Aggrwal.   Shri  Sunil  Gupta,

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learned senior counsel for the respondent - AMS submitted

that  the  decision  of  MDA  in  not  allotting  the  land  was

unreasonable, whimsical, capricious  and violative of Article

14 of the Constitution.  The decision is not in public interest.

MDA committed mistakes in the matter of depiction of rates

in  the  notice  inviting  tenders  as  is  evident  from  their

supplementary  counter  affidavit  filed  in  the  High  Court.

There  was  some  confusion  as  regards  reserved  price  in

respect of disputed plot of land which led AMS to offer bid at

a  lesser  rate  than  the  reserved  price.   It  was  further

submitted that MDA’s decision to put the disputed plot of

land to reauction in spite of willingness on the part of AMS

to  pay  the  reserved  price  is  unsustainable  in  law.   The

decision to reauction the land by changing the land use from

that of ‘educational’ to ‘residential’ is motivated and inspired

by  extraneous  considerations.   Public  interest  requires

allotment of the said land in favour of AMS which is catering

the  needs  of  public  at  large  in  imparting  education  in

engineering courses.  

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These contentions are culled out from the storms of

submissions  made  during  the  course  of  hearing  of  these

appeals.  

ISSUES REQUIRING RESOLUTION :

15.  Shorn  of  all  the  details  and  embellishments  and

notwithstanding the display of forensic skills by the senior

counsel,  the substantial  question that really arises for our

consideration  in  these  appeals  is  whether  the  decision  of

MDA dated 15.03.2002 resolving to invite fresh tenders and

making the land available  for residential  use suffers  from

any legal or constitutional infirmities ?

16. Having regard to the above submissions, we propose to

deal with the matter from the following four aspects:

a) what  is  the  nature  of  rights  of  a  bidder

participating in the tender process?

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b) the  scope  of  judicial  review  in  contractual

matters;

c) whether the decision of the Authority is vitiated by

any arbitrariness and therefore hit by Article 14 of

the Constitution of India? and  

d) whether the decision is not in public interest?  

WHAT  IS  THE  NATURE  OF  RIGHTS  OF  A  BIDDER PARTICIPATING IN THE TENDER PROCESS?

17. A tender is an offer.  It is something which invites and

is  communicated  to  notify  acceptance.   Broadly  stated  it

must  be  unconditional;  must  be  in  the  proper  form,  the

person by whom tender is made must be  able to and willing

to perform his obligations.  The terms of the invitation to

tender  cannot  be  open  to  judicial  scrutiny  because  the

invitation to tender is in the realm of contract.  However, a

limited judicial review may be available in cases where it is

established that the terms of the invitation to tender were

so  tailor  made  to  suit  the  convenience  of  any  particular

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person with a view to eliminate all others from participating

in  the  biding  process.   The  bidders  participating  in  the

tender  process  have  no  other  right  except  the  right  to

equality and fair  treatment in the matter of evaluation of

competitive bids offered by interested persons in response

to notice inviting tenders in a transparent manner and free

from hidden agenda.  One cannot challenge the terms and

conditions of the tender except on the above stated ground,

the reason being the terms of the invitation to tender are in

the realm of the contract.  No bidder is entitled as a matter

of right to insist the Authority inviting tenders to enter into

further  negotiations  unless  the  terms  and  conditions  of

notice so provided for such negotiations.

18. It is so well-settled in law and needs no restatement at

our hands that disposal of the public property by the State

or its instrumentalities partakes the character of a trust. The

methods to be adopted for disposal of public property must

be  fair and transparent  providing an opportunity to all the

interested  persons  to  participate  in  the  process.   The

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Authority  has the right  not to accept the highest  bid and

even to prefer  a tender  other  than the  highest  bidder,  if

there exist good and sufficient reasons, such as, the highest

bid not representing the market price but there cannot be

any  doubt  that  the  Authority’s  action  in  accepting  or

refusing  the  bid  must  be  free  from  arbitrariness  or

favoritism.

WHETHER  ANY  RIGHT  OF  AMS  HAS  BEEN INFRINGED ?

19. A mere look at the tender notice in the present case

makes  it  abundantly  clear  that  the  two  plots  of  land

admeasuring  37,000  and  20,000  sq.mts.  meant  for

establishing  engineering   colleges  were  advertised  as  a

single  item,  though  the  specified  reserved  price  was

different.   The  reserved  price  of  20,000  sq.  mts.  was

expressly  and  clearly  mentioned  at  Rs.690/-  per  sq.m.

There is no ambiguity nor any confusion in this regard.  AMS

itself mentioned different and separate bids in their tender

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and made a bid at Rs.560/- per sq.m. for 20,000 sq.mts plot

which  was  less  than  that  of  the  reserved  price.   The

Authority  was  not  under  any  legal  or  constitutional

obligation to entertain the bid which was much below the

reserved price.  The plea that there was some vagueness,

uncertainity and misunderstanding in the matter of depiction

of rates is clearly an after thought.  AMS never sought any

clarification whatsoever from the Authority as regards the

fixation of reserved price in respect of 20,000 sq. mts. of

plot.  This plea is   not raised even in the Writ Petition filed

by the AMS.

20. Be  that  as  it  may,  the  MDA  though  not  under  any

obligation, provided a further opportunity to the Society and

expressed  its  willingness  to  part  away  with  the  land

provided AMS agreed to pay the reserved rate of Rs.690/-

per sq.m.  AMS did not avail this opportunity.  Even at this

stage AMS did not say that it was under some confusion as

regards  the specified  reserved price.   No objections  were

raised whatsoever in this regard. Instead it made a request

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that  the  two  plots  be  segregated  and  37,000 sq.mts.  be

allotted to it while the other plot of 20,000 sq.mts “may be

deleted  from  ……….offer  as  the  cost  of  that  land  is  not

viable……..”   It  expressed  its  desire  to  purchase  the  said

land @ Rs.560/- per sq.m. only.  It is difficult to discern as

to on what basis AMS asserted its right and insisted that the

Authority should part away with its valuable land at a price

lesser than that of the reserved price.  AMS proceeded on

the  assumption  as  if  it  has  some  unassailable  right  in

respect of the said plot of land merely because it had earlier

got allotted adjoining plot of land for the construction of its

buildings.   Had the Authority  conceded to the request  so

made by AMS it  would have been an unfair  and arbitrary

decision and the courts may have interfered with the same

in  exercise  of  judicial  review  power.  The  tender  process

actually stood terminated with the letter of the MDA dated

27.11.2001 allotting 37,000 sq.mts. of land alone.      The

rights of AMS, if any came to an end when it informed the

Authority – MDA that it was not claiming any right over the

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land  admeasuring  20,000  sq.mts.  and  made  a  further

request to delete its offer in respect of the said land.

21.   The subsequent letters sent by AMS at its own choice

is of no consequence.  The MDA did not make any promise

that the suggestion of AMS to allot the plot at Rs.560/- per

sq.m. was under its consideration.  Many a letters including

the letter dated 03.01.2002 of  the Society makes it  clear

that  there  was  no  confusion  whatsoever  with  regard  to

reserved price fixed at Rs.690/- per sq.m.  Once it is clear

that there was no vagueness, uncertainty or any confusion

with regard to the reserved price there is no scope for any

interference  in  the  matter  by  this  court.   The  terms and

conditions  of  tender  were  expressly  clear  by  which  the

authority  as  well  as  the  bidders  were  bound  and  such

conditions are not open to judicial scrutiny unless the action

of  the  tendering  authority  is  found  to  be  malicious  and

misuse of its statutory powers.  

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[See: Tata Cellular vs. UOI1, Air India Ltd. vs. Cochin International  Airport  Ltd.2,  Directorate  of  Education vs.  Educomp  Datamatic  Ltd.3,  Association  of Registration Plates vs. UOI4,   Global  Energy Ltd.  vs. Adani Exports5, and Purvanchal Projects Ltd. vs. Hotel Venues6.]

22. The bids offered by AMS received their due attention in

a  fair  and transparent  manner  free  from any bias  at  the

hands of MDA.    No rights of AMS have been infringed by

MDA in  not  giving  opportunity  to involve  itself  in  lengthy

negotiations.  The Authority was free to make its choice and

to invite fresh bids after the Society relinquished its claim in

respect  of  the  disputed plot  vide  letter  dated 17.09.2001

which was accepted by MDA.  The decision of the Authority

was duly communicated to the AMS by MDA vide its letter

dated  27.11.2001.   The  decision  so  taken  by  the  MDA

resolved in infringement of rights of AMS.

1 [1994 (6) SCC 651], 2 [2000 (2) SCC 617], 3 [ 2004 (4) SCC 19], 4 [2005 (1) SCC 676] 5 [2005(4) SCC 435]

6 [2007(10) SCC 33].             

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 SCOPE  OF  JUDICIAL  REVIEW  IN  CONTRACTUAL MATTERS:

23.  In  Tata  Cellular  (supra)  this  Court  observed  that

“Judicial quest in administrative matters is to strike the just

balance  between  the  administrative  discretion  to  decide

matters as per government policy, and the need of fairness.

Any unfair action must be set right by judicial review.”

24. In  Chief  Constable  of  North  Wales  Police  Vs.

Evans7,  Lord  Hailsham stated:  “The  underlying  object  of

judicial review is to ensure that the authority does not abuse

its power and the individual receives just and fair treatment

and not to ensure that the authority reaches a conclusion

which is correct in the eyes of the court.”  

25. Large numbers of authorities have been cited before us

in  support  of  the  submission  that  even  in  contractual

matters  the State or  “other  authorities”  are bound to act

7  [(1982) 3 AIIER 141],

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within the legal limits and their actions are required to be

free from arbitrariness and favourtism. The proposition that

a decision  even in the matter of  awarding or  refusing  a

contract  must  be  arrived  at  after  taking  into  account  all

relevant  considerations,  eschewing  all  irrelevant

considerations cannot for a moment be doubted. The powers

of the State and other authorities are essentially  different

from those of private persons.  

The action or the procedure adopted by the authorities

which can be held to be State within the meaning of Article

12,  while  awarding  contracts  in  respect  of  properties

belonging to the State, can be judged and tested in the light

of Article 14.  Once the State decides to grant any right or

privilege to others, then there is no escape from the rigour

of Article 14.  These principles are settled by the judgments

of this Court in the cases of Ramana Dayaram Shetty vs.

International  Airport  Authority  of India8,  Kasturi  Lal

8  [1979 (3) SCC 489],   

23

Lakshmi Reddy vs. State of J & K9, Ram and Shyam Co.

vs. State of Haryana10, Mahabir Auto Stores vs. Indian

Oil Corporation11, Sterling Computers Ltd. vs. M & N

Publications12 and A.B. International Exports vs. State

Corporation  of  India.13  Executive  does  not  have  an

absolute discretion, certain principles have to be followed,

the public interest being the paramount consideration.  

It has been stated by this Court in Kasturi Lal’s case

(supra):  

“It must follow as a necessary corollary from this proposition that the Government cannot act in a manner which would benefit a private party at the cost of the State, such an action would be both unreasonable and contrary to pubic interest.  The government, therefore, cannot, for example, give a contract or sale or lease out its property for a consideration  less  than the  highest  that  can  be obtained from it, unless of course, there are other considerations which render it  reasonable and in public interest to do so.”   

9  [1980 (4) SCC 1], 10 [1985 (3) SCC 267], 11 [1990 (3) SCC 752], 12 [1993(1) SCC 445] 13 [2000(3) SCC 553].   

24

 The law has been succinctly  stated by Wade in  his

treatise, Administrative Law:  

“The powers  of  public  authorities  are therefore essentially  different  from  those  of  private persons.  A man making his will may, subject to any  rights  of  his  dependants,  dispose  of  his property just as he may wish.  He may act out of malice or a spirit of revenge, but in law this does not affect his exercise of his power.  In the same way a private person has an absolute power to allow whom he likes to use his land, to release a debtor,  or,  where  the  law  permits,  to  evict  a tenant,  regardless  of  his  motives.   This  is unfettered discretion.  But a public authority may do none of these things unless it acts reasonably and in good faith and upon lawful and relevant grounds  of  public  interest.   So  a  city  council acted unlawfully when it refused unreasonably to let  a  local  rugby  football  club  use  the  city’s sports ground, though a private owner could of course have refused with impunity.  Nor may a local authority arbitrarily release debtors, and if it evicts tenants, even though in accordance with a contract, it must act reasonably and ‘within the limits of fair dealing’.  The whole conception of unfettered discretion is inappropriate to a public authority,  which  possesses  powers  solely  in order  that  it  may  use  them  for  the  public good.”14  

14   Administrative Law, 9th Edition,H.W.R.Wade & C.F.Forsyth

25

There is no difficulty to hold that the authorities owe a

duty  to  act  fairly  but  it  is  equally  well  settled  in  judicial

review,  the  court  is  not  concerned  with  the  merits  or

correctness of the decision,  but with the manner in which

the  decision  is  taken  or  the  order  is  made.   The  Court

cannot  substitute  its  own  opinion  for  the  opinion  of  the

authority  deciding  the  matter.   The  distinction  between

appellate  power  and  a  judicial  review  is  well  known  but

needs reiteration.

By way of judicial review, the court cannot examine the

details of the terms of the contract which have been entered

into by the public bodies or the State.  Courts have inherent

limitations on the scope of any such enquiry.  If the contract

has been entered into without ignoring the procedure which

can be  said  to  be basic  in  nature  and after  an  objective

consideration  of  different  options  available  taking  into

account the interest of the State and the public,  then the

court  cannot act  as  an appellate  court  by substituting its

26

opinion in respect of selection made for entering into such

contract.   But  at  the  same time the  courts  can  certainly

examine whether ‘decision making process’ was reasonable,

rational,  not  arbitrary  and  violative  of  Article  14.  [See:

Sterling Computers Ltd.  (supra)].

It  may  be  worthwhile  to  notice  the  leading  judicial

review case in relation to grant of licences, by competitive

tender  reported  in  R.  vs.  Independent  Television

Commission,  ex  p.  TSW  Broadcasting  Limited.15 The

leading speeches in the House of Lords were delivered by

Lord Templeman and Lord Goff.  Lord Templeman stated:

“Where Parliament has not provided for an appeal from a decision maker the courts must not invent an  appeal  machinery.   In  the  present  case Parliament has conferred powers and discretions and imposed duties on the ITC.  Parliament has not provided any appeal machinery.  Even if the ITC  make  mistakes  of  fact  or  mistakes  of  law, there is no appeal from their decision.  The courts have invented the remedies of judicial review not to  provide  the  appeal  machinery  but  to  ensure that the decision maker does not exceed or abuse his powers… But the rules of natural justice do not

15 [1996 JR 185 and 1996 EMLR 291]

27

render  a  decision  invalid  because  the  decision maker or his advisers make a mistake of fact or a mistake of law.  Only if the reasons given by the ITC  for  the  decision  to  reject  the  application… disclosed  illegality,  irrationality  or  procedural impropriety.. could the decision be open to judicial review.”

In the concluding section of his speech, he added:

“Of  course  in  judicial  review  proceedings,  as  in any other proceedings, everything depends on the facts.  But judicial review should not be allowed to run  riot.   The  practice  of  delving  through documents  and  conversations  and  extracting  a few sentences which enable a skilled advocate to produce doubt  and confusion  where none exists should not be repeated.”

One has to bear in mind the caution administered by

Lord Scarman in  Nottinghamshire  Country Council  Vs.

Secretary of State for the Environment16 that: “ ‘Judicial

review’ is a great weapon in the hands of the judges; but

the judges must observe the constitutional limits set by our

parliamentary  system upon the exercise  of  this  beneficial

power.”  It  is  equally  necessary  that  the  following

16 [ (1986)  1 AIIER 199]

28

observations of Benjamin Cardozo,  should always be kept in

mind:  

“The  Judge,  even  when  he  is  free,  is  still  not wholly free.  He is not to innovate at pleasure.  He is not a knight-errant roaming at will in pursuit of his own ideal of beauty or of goodness. He is to draw his inspiration from consecrated principles. He  is  not  to  yield  to  spasmodic  sentiment,  to vague  and  unregulated  benevolence.   He  is  to exercise  a  discretion  informed  by  tradition, methodized  by  analogy,  disciplined  by  system, and subordinated to ‘the primodical  necessity of order  in  the  social  life’.  Wide  enough  in  all conscience is the field of discretion that remains.” [The Nature of Judicial Process, P. 141].  

26. There  cannot  be  any  disagreement  that  unjustified

discriminations  violate  the  Constitution  and  unreasonable

decisions are susceptible to be interfered with and corrected

in judicial  review proceedings. But general propositions do

not  decide  concrete  cases  as  has  been  famously  put  by

Justice  Oliver  Wendell  Holmes   in  Lochner   Vs.   New

York.17 It  remains  to  be  decided  which  acts  of

discrimination are justified  and which are not.  It is for the

court to decide in the given facts and circumstances whether 17 [198 U.S. 45,76 (1995)].   

29

the action complained of is unreasonable?  How to do that is

always  a  complex  and  complicated  one.  It  would  be

unnecessary to burden this judgment of ours with various

precedents and super-precedents cited at the bar in support

of the general propositions that the authority’s action must

be  free  from  arbitrariness.  It  always  depends  upon  the

contextual  facts.   In  law,  context  is  everything.  We shall

bear  these parameters in mind and proceed to determine

the question whether the decision of the Authority is vitiated

by any abuse of power.

WHETHER  THE  DECISION  OF  THE  AUTHORITY  IS VITIATED BY ANY ARBITRARINESS AND THEREFORE HIT  BY  ARTICLE  14  OF  THE  CONSTITUTION  OF INDIA :

27. It was submitted on behalf of AMS that the decision of

MDA  dated  15.3.2002  undoing  its  earlier  decision  dated

7.7.2002 and changing land use of the disputed plot from

‘educational’ to ‘housing’ is unreasonable, unprincipled and

capricious  and violative of  Article  14 of the Constitution.

30

This was done for making higher financial  gain and profit

and  that  too,  at  the  instance  of  an  alleged  unverified

extraneous  person  overlooking  the  demands  of  public

interest as well as law and order problems that may arise on

account  of  peculiar  location  of  the  plot  in  the  midst  of

existing higher education campuses belonging to AMS.  We

find no merit in this submission. The claim of AMS, in our

considered opinion came to an end on 17.9.2001 when it

had intimated the MDA to delete its offer in respect of the

disputed plot  on the ground that the cost of that land as

stipulated is not a viable one.  This was followed by its letter

dated 3.1.2002, once again stating that it was injustice to

fix  Rs.  690/-  per  sq.  meter  for  the  disputed  land  while

adjoining plots were allotted  for Rs. 500/- per sq. meter

and Rs.  560/-  per  sq.  meter  respectively.  There  were no

further negotiations and any response from MDA to the said

letter dated 3.1.2002.  The letter dated 4.3.2002 from AMS

to MDA indicating the acceptance of Rs. 690/- per sq. meter

only  after  one  Harpal  Singh  Chowdhary  on  behalf  of  the

31

Officer’s Class Housing Society had mentioned a higher price

of Rs. 775/- per sq. meter in his representation.  There is

nothing on record  to suggest  that  impugned decision  has

been taken only for making higher financial gain and profit.

But what is wrong even if any such effort was made by MDA

to augment its financial resources. We are, however, of the

opinion that   the effort, if any, made by MDA to augment its

financial resources and revenue itself cannot be said to be

unreasonable decision.   It is well said that the struggle to

get for the State the full value of its resources is particularly

pronounced in the sale of State owned natural assets to the

private sector.  Whenever the Government or the authorities

get less than the full value of the asset, the country is being

cheated;  there  is  a  simple  transfer   of  wealth  from  the

citizens  as  a  whole  to  whoever  gets  the  assets  ‘at  a

discount’.  Most of the times the wealth of a State goes to

the  individuals  within  the  country  rather  than  to  multi-

national corporations; still, wealth slips away that ought to

belong to the nation as a whole.  

32

Society’s  repeated  representations  are  of  no

consequence  and  the  MDA  was  not  under  any  legal

obligation  to  reopen  the  tender  process  which  otherwise

stood  terminated.    The  MDA,  in  its  meeting  dated

15.3.2002 considered the request of the Society as well as

the alternative offer but neither of them was accepted.   The

MDA after careful deliberation decided to dispose of the land

through fresh tender-cum-auction  for  residential  use after

giving wide publicity.    

28. The learned senior counsel relied upon the decision in

Bangalore Medical Trust  Vs.  B.S. Muddappa18 in which

this Court observed: “Financial gain by a local authority at

the  cost  of  public  welfare  has  never  been  considered  as

legitimate purpose even if the objective is laudable. Sadly

the law was thrown to winds for a private  purpose.”  The

observations  were  made  in  the  context  where  this  Court

found the entire proceedings before the State Government

18 [(1991) 4 SCC 54]

33

suffered from absence of jurisdiction. Even the exercise of

powers  was  vitiated  and  ultra  vires.   The  orders  of  the

Government to convert the site reserved for public park to

civic amenity and to allot it for private nursing home was

null, void and without jurisdiction and when the same was

sought to be justified on the ground of financial gain; the

court made the observations in that context.  The impugned

action of  the authority  in  the present  case did not  suffer

from absence of jurisdiction nor was vitiated and ultra vires.

Financial gain was not at the cost of any social welfare.  

29. In Padma Vs. Hiralal Motilal Desarda & Ors.,19 this

Court found that CIDCO’s decision to part with the chunk of

developable land was obviously in departure from the policy

of  serving  on  “no-profit-no-loss”  basis  to  such  people  as

were craving for a roof over their heads. It is in that context

the  Court  observed;  the  land  acquired  and  entrusted  to

CIDCO cannot just be permitted to be parted with guided by

the  sole  consideration  of  money making.  CIDCO is  not  a 19 [(2002) 7 SCC 564]

34

commercial  concern whose performance is  to be assessed

by the amount  it  earns.  Its  performance would  be better

assessed by finding out the number of needy persons who

have been able to secure shelter through CIDCO and by the

beauty of the township and the quality of life for the people

achieved  by  CIDCO  through  its  planned  development

schemes.  It was in that context the court observed;  there

should  have  been  no  hurry  on  the  part  of  CIDCO  in

disposing of  the balance land and that too guided by the

sole consideration of earning more money.  The allotment of

the land in favour of various organizations and individuals

was found to be without following any procedure and almost

in secrecy. The court further observed even that object  of

raising revenue has not been  achieved  since at the end it

has  parted  with  land  at  a  price  less  than  Rs.1500/-  per

sq.m. – the reserved price.  “Even if a sale of left over land

was felt necessity it should satisfy at least two conditions:

(i) a well considered decision at the highest level; and (ii) a

sale by public auction or by tenders after giving more wide

35

publicity  than  what  was  done  so  as  to  attract  a  larger

number  of  bidders”.  The  observations  so  made  in  those

given circumstances cannot be torned out of context to be

applied to the fact situation in hand. On the other hand, the

ratio of judgment fully supports the decision taken by the

MDA in the present case.  The MDA having considered the

representation made by an individual  to allot the land for

residential purpose at the rate of Rs.775/- per sq.m. and as

well  as  a  proposal/request  of  AMS  to  allot  the  land  @

Rs.690/-  per  sq.m.  rejected  both  the  suggestions  and

invited  tenders  after  giving  wide  publicity.   We  fail  to

appreciate  as  to  how  the  decision  of  MDA  could  be

characterized  as  an  unreasonable  one.  In  our  considered

opinion that was the only course left open to the Authority.

The money  to be realised by the sale of public auction is

required  to  be  applied  towards  meeting  the  expenses

incurred by the Authority in the administration of the Act

which  mainly  includes  securing  the  development  of  the

development area.  

36

30.  The  expression  ‘arbitrary  and  capricious’  etc.

employed  by  the  learned  senior  counsel  for  the  AMS  to

characterise  the  decision  of  the  MDA does  not  carry  any

special  significance.  The  real  question  is  whether  the

decision  measures  up  to  the  legal  standard  of

reasonableness?  The  meaning  of  all  such  expressions  as

arbitrary and capricious, frivolous or vexatious is necessarily

the same, since the true question must always be whether

the  statutory  powers  have  been  abused?   In  refusing  to

accept the tender of the AMS on the ground that the offer

made  by  it  was  lower  than  that  of  the  reserved  price  is

legal,  valid  and  by  no  stretch  of  imagination  can  be

characterised as an illegal one. In fact, there was no option

available to the MDA but to reject the tender of the AMS as

the offer made was much below than the reserved price.  In

fairness, the matter should have rested at that but for the

unwarranted repeated representations by the AMS without

any lawful claim; the MDA if at all committed an error it was

37

by  entertaining  such  representations  and  entering  into

avoidable correspondence with the AMS.  

CHANGE OF LAND USE :

31. Now, we proceed to deal with the question whether the

decision  to  change  the  land  use  is  unreasonable?  It  was

submitted  that  the  decision  of  the  MDA on  15.3.2002 to

upturn the decision of 7.7.2001 and change the land use of

the disputed plot  from educational  to housing  and not  to

allot  the  same  to  AMS  is  ex  facie arbitrary  and

unreasonable.  We  find  no  merit  in  this  submission.   The

disputed land in the Master Plan is reserved for ‘Residential’

purpose.  The  residential  category  of  use  is  a  category  in

contrast  with  industrial,  agricultural,  commercial,

recreational, green belt, or institutional category in use.  It

does not mean exclusive use for housing on every inch of

the land.  The expression residential use in the Master Plan

means that the land can be used for housing, various other

kinds of uses such as institutional, commercial etc. At any

38

rate this argument need not detain us any further since a

categorical  statement  is  made  during  the  course  of  the

hearing of this appeal on behalf of the MDA that the land

shall still be made available for educational use and as well

as residential.   The MDA had earlier  relaxed the use and

made it for ‘educational’ purpose though it is earmarked for

residential  use  in  the  Master  Plan.   There  is  nothing

unreasonable  in changing the land use and earmarking it

again for ‘Residential’ use. It was submitted that MDA never

gave any  reason for  change  of  land  use  in  its  resolution

dated 15.3.2002 nor any reasons were communicated. Once

it is clear that the land in the Master Plan was reserved for

residential use where educational institutions could also be

permitted within that area, it cannot be said that there has

been a change of land use as such. At any rate in view of

the statement made there is no further controversy that the

land  in  question  can  be  put  to  both  residential  and

educational use.  

39

PUBLIC INTEREST:

32. The learned senior  counsel  relied on the decisions of

this Court in Unni Krishnan, J.P.  Vs.  State of A.P.20 and

TMA  Pai  foundation  Vs.  State  of  Karnataka21  to

highlight the importance of private educational institutions

and their  entitlement  to get assistance from the State or

other authorities in the form of various concessions.   The

allotment  of  land  at  a  reasonable  rate  according  to  the

learned senior counsel subserves public interest. We find no

relevance of those judgments to decide the case on hand.

AMS may have established Engineering Colleges to impart

education  and  may  have  a  role  to  play  in  providing

education  in  engineering  courses;  but  it  cannot insist  the

MDA to provide land at the rate chosen by it for itself.  

The object of the Act under which MDA is constituted

was to provide for development of certain areas according to

20 [(1993) 1 SCC 645] 21 [ (2002) 8 SCC 481]

40

plan  and  for  matters  ancillary  thereto.   It  is  mainly

concerned  with  an  orderly  development  of  the  areas  and

balanced use of the available land within the development

area.  The Authority in law is not entitled to gift or freely

make  available  any land or  at  a  rate  lesser  than that  of

reserved price.  

The MDA in terms of the directions of the Government

vide G.O.  dated 19.04.1996 has already decided to make

the lands available to the institutions imparting education in

engineering at a concessional  rate i.e.  to say 50% of the

sector rate and accordingly fixed reserve price @ Rs. 690/-

per  sq.  meter.  The  public  interest  parameters  have been

duly taken into  consideration  by the Government itself  in

directing  MDA to make the lands available  to educational

institutions  at  a  concessional  rate.   It  is  difficult  to

appreciate  as  to  what  more  the  AMS  expects  from  the

Authority. The Society in fact availed that assistance from

MDA on an earlier occasion but failed to avail the facility this

41

time for which the AMS has to blame itself.  The AMS having

failed  to  offer  at  least  the  reserved  price  cannot  be

permitted to turn round and ask for a mandamus to allot the

land in its favour based on self-serving representations.  The

AMS indulged to say the least in speculative litigation. We

accordingly  find  no  merit  in  the  submission  of  the  AMS

placing reliance upon the Directive Principles of State Policy

and more particularly, Article 41 of the Constitution of India

which  says  that  the  State  shall,  within  the  limits  of  its

economic  capacity  and  development,  make  effective

provision for securing the right to work, to education and

public  assistance  in  cases  of  unemployment,  old  age,

sickness and disablement and in other cases of undeserved

want.  The State  had already made effective  provision  for

securing right to education by resolving to make the land

available  at  concessional  rate  to  educational  institutions

imparting education in engineering courses. Obviously, such

a decision was taken only with the view to give effect to the

Directive Principles of State Policy enshrined under Article

42

41 of  the Constitution of  India.  The AMS has no legal  or

constitutional  right  to  make  any  perpetual  demands  and

dictate terms to the MDA to allot any particular land at the

chosen rate.  

33. It was lastly contended on behalf of the AMS the relief

in the present case needs to be moulded with two aspects in

mind: (a) Public interest & (b) Equity.  Reliance has been

placed by the learned senior  counsel  for  the AMS on the

findings  of  the High Court  in this  regard.  The High Court

recorded  the  findings  including  that  AMS  is  performing

public  service  by   providing  higher  education,  has

established  different  technical  institutes  by  constructing

huge  buildings  on  adjoining  plots  in  which  Engineering,

Computer  Science,  Business  Administration  are  already

running;  as  6,000  students  are  studying;  facilities  for

students  such as hostel, library, parking, open space etc.

are required; the sandwiched location of the plot between

pre-existing educational campuses would make housing use

43

of the plot detrimental to the interest of the students as well

as  the  prospective  residents.   The High Court  also  found

that  MDA  has  not  pleaded  or  proved  such  surplusage  of

educational need or such acute shortage of accommodation

in Meerut that even the disputed plot cannot be spared.

The expression ‘public interest’ if it is employed in a

given statute is to be understood and interpreted in the light

of the entire scheme, purpose and object of the enactment

but  in the absence of the same it cannot be pressed into

service  to confer  any right  upon a person who otherwise

does not possess any such right in law. In what manner this

Court has to arrive at any conclusion that MDA’s decision in

calling  for  fresh  tender  from  the  interested  persons  for

making the land available for residential use is not in public

interest?  Repeated attempts were made before us to say

that providing the land in question for educational use will

be  more  appropriate  and  sub-serve  public  interest  than

making it available for residential use.  Public interest floats

44

in a vast, deep-ocean of ideas, and “imagined experiences”.

It would seem to us wise for the courts not to venture into

this unchartered minefield.  We are not exercising our will.

We  cannot  impose  our  own  values  on  society.  Any  such

effort would mean to make value judgments.  

The  impugned  judgment  illustrates  “the  danger  of

judges wrongly though unconsciously substituting their own

views  for  the  views  of  the  decision  maker  who  alone  is

charged and authorized by law to exercise discretion.” With

respect, we find that the High Court virtually converted the

judicial  review proceedings  into  an inquisitorial  one.   The

way proceedings went on before the High court suggest as if

the  High  Court  was  virtually  making  an  inquiry  into  the

conduct and affairs of the MDA in a case where the court

was  merely concerned with the decision making process of

the MDA in  not  accepting  the offer/tender  of  the  AMS in

respect of the disputed plot on the ground that the offer  so

made was less than that of the reserve price fixed by the

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MDA.  We express our reservation in the manner in which

the High Court dealt with the matter.  The High Court went

to the extent of holding that there was a concluded contract

between MDA and AMS. Of course, learned senior counsel

Shri Sunil Gupta, did not support the findings so recorded

by the High Court.  

34. Finally,  it  was  submitted  that  equity  requires  the

allotment of land to AMS as the disputed land can be put to

most beneficial use and for a public purpose for imparting

education in engineering courses.   The AMS expressed its

willingness to pay such reasonable price as may be fixed by

this Court. It is brought to our notice that the prices of the

land in the vicinity of area  have gone up many times and as

at   present  prevailing  rates  are  very  high.  We  do  not

propose to indulge in any guess work and direct allotment of

land  to  the  AMS  by  fixing   the  land  price  by  ourselves.

Equity is not a one way street. The conduct of the AMS does

not entitle it to get any such relief in equity.  

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35. For  all  the  aforesaid  reasons,  we  find  it  difficult  to

sustain the impugned judgment.   

36.        Civil Appeal Nos.  2620-2621/09   arising out of SLP  (c)  Nos.  1602-1603  of  2008   preferred  by   Pawan Kumar Agarwal :  

On  15.4.2002,  MDA  got  fresh  advertisement  issued

inviting bids to acquire the land for housing purposes at the

reserve price Rs. 885/- per sq. meter.  The auction was held

on 2.8.2002.    Pawan Kumar’s  bid of  Rs.  1365/-  per  sq.

meter  was  the  highest.  He  deposited  a  sum  of  Rs.

5,50,000/-  towards earnest  money.   The highest  bid  was

approved  by  the  MDA  by  its  letter  dated  17.8.2002.

However, further amounts were not accepted as the matter

was pending in the High Court.  Be it noted, the High Court

never issued any orders restraining MDA from accepting the

bid amount.  The only restraint was that the auction would

be subject to further orders to be passed in the writ petition.

The fact remains there was no demand from MDA requiring

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the appellant to pay any amount nor did the appellant on his

own  deposited  any  amount  towards  installments  except

requesting the MDA to initiate proceedings for transferring

the  land.   The  MDA  informed  the  appellant  that  it  was

making efforts to get the writ petition decided and the letter

of allotment would be issued only after the disposal of the

writ petition.  

37. AMS challenged the fresh advertisement in which the

appellant was the highest bidder but without impleading the

appellant. Number of affidavits and supplementary affidavits

were exchanged between the parties in the High Court. On

2.4.2007, the High Court allowed impleadment application

of the appellant-Pawan Kumar Agarwal. During the course of

hearing,  the  High  Court  on  8.5.2007  directed  the  Vice-

Chairman,  MDA  to  file  additional  affidavit  inter  alia

explaining as to why allotment in favour of appellant-Pawan

Kumar  Agarwal  was  not  cancelled  when  it  has  deposited

only  earnest  money  and  not  the  balance  of  total

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consideration  and  whether  the  earnest  money  could  be

forfeited  by  MDA?  MDA,  obviously  was  reeling  under  the

pressure and took decision to cancel the auction of the plot

by its order dated 14.5.2007 on the grounds stated therein.

Thereafter,  MDA  filed  supplementary  affidavit  mentioning

about cancellation of auction.  The appellant-Pawan Kumar

Agarwal  filed Writ  Petition No. 30074 of  2007 challenging

the cancellation of auction.  The High Court vide common

impugned judgment dismissed the appellant-Pawan Kumar

Agarwal’s writ petition.   

38. We find some merit in the submission made by learned

senior counsel Shri Rakesh Dwivedi that the cancellation of

the  auction  was  not  tenable.   But  the  fact  remains  the

appellant  deposited  only  an  amount  of  Rs.  5,50,000/-

towards  earnest  money  out  of  huge  amount  of  total

consideration. Having regard to the totality of the facts and

circumstances,  we  are  not  inclined  to  exercise  our

jurisdiction under Article 136 of the Constitution of India and

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interfere with the order of cancellation passed by MDA on

14.5.2007.  

RESULT

39. It  is  needless  to  observe  that  the  MDA  shall  be  at

liberty to call for fresh tenders in accordance with law but

duly  notifying  the  land  use  for  both  ‘educational’  and

‘residential’ and invite bids accordingly. It shall permit AMS

and other educational institutions intending to participate in

the auction. In view of the  undertaking given by MDA to

this Court  it shall not raise any objection for the use of the

land for educational  purposes  in case if  any educational

institution  is  found  to  be  the  successful  bidder.  The  bids

shall  obviously be invited from the intending bidders  duly

notifying the ‘residential’ and ‘educational’ use.  

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40. In  the  result,  Civil    Appeal No.  2619/09   arising

out of SLP (c) No. 3215 of 2008 preferred by MDA is allowed

with costs.  Advocate’s fee quantified at Rs. 50,000/-.  

Civil   Appeal  Nos.     2620-2621/09   arising out of

SLP  (c)  Nos.  1602-1603/08  shall  stand  dismissed  but

without any order as to costs.  

……………………………………J.      (Lokeshwar Singh Panta)

……………………………………J.      (B. Sudershan Reddy)

New Delhi;  April 17, 2009

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