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State not bound to accept highest bid in auction: Supreme Court

A Bench of Justices Ajay Rastogi and Abhay S Oka ruled that the acceptance of the highest bid is provisional, subject to its confirmation by the competent authority that is the best judge in the matter.

This Court has examined right of the highest bidder at public auctions in umpteen number of cases and it was repeatedly pointed out that the State or authority which can be held to be State within the meaning of Article 12 of the Constitution, is not bound to accept the highest tender of bid. The acceptance of the highest bid or highest bidder is always subject to conditions of holding public auction and the right of the highest bidder is always provisional to be examined in the context in different conditions in which the auction has been held,” the Court held.

Pertinently, the Supreme Court held that courts should show restraint while interfering with the decision of the executive in such commercial and contractual matters.

” … the High Court was not supposed to interfere in the opinion of the executive who were dealing on the subject, unless the decision is totally arbitrary or unreasonable, and it was not open for the High Court to sit like a Court of Appeal over the decision of the competent authority and particularly in the matters where the authority competent of floating the tender is the best judge of its requirements, therefore, the interference otherwise has to be very minimal.

The top court in the present case ruled that that under the Chapter III of the Punjab Package Deal Properties (Disposal) Rules, if the public auction has been completed to the highest bidder, no right is accrued till the confirmation letter is issued.

Source: Barandbench

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