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Non-Reportable

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 5101 OF 2016 (ARISING OUT OF SLP (CIVIL) NO. 19310 OF 2013

Om Prakash Sharma         ….Appellant

Versus

Ramesh Chand Prashar & Ors.     …. Respondents

J U D G M E N T  

Uday U. Lalit, J.

1. Leave granted.

2. This  appeal  by  special  leave  challenges  correctness  of  the

judgment and order dated 20.05.2013 passed by the High Court  of

Himachal Pradesh at Shimla in L.P.A. No.441 of 2012 affirming the

decision dated 14.08.2012 of the Single Judge of the High Court in

CWP No.1557 of 2010.

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3. On  03.11.2008,  an  advertisement  was  issued  by  Himachal

Tourism inviting bids from interested parties for outright purchase of

sites  located  at  three  places  in  Himachal  Pradesh  including  Café

Aabshar in District Solan situated at 3 kilometers from town named

Kandaghat.  The relevant conditions mentioned in the advertisement

were as under:- “A  Bidder  is  free  to  bid  for  one  or  more  than  one  cafes. However all bidders need to provide the following information for consideration of their EOI.

Area  of  business  interests  (please  enclose  firm  profile  or corporate brochure)

Annual  turnover  & Net  worth in  last  three (3)  years  (please submit audited financial statements and income Tax Return of last three financial years supporting this information).

Interest in particular café(s) and proposed usage. Offer to “Outright purchase of the café” (a separate rate will be quoted for each café).”

4. In so far as Café Aabshar was concerned, the appellant as well

as respondent No.1 participated in the bid process.  The bid submitted

by the appellant for Rs.27,15,000/- was the highest.  Respondent No.1

had given a bid of Rs. 17,00,000/- which was the  4th highest.  The bid

of the appellant having been found to be the highest, it was accepted

and Letter of Intent was issued on 02.03.2010.  Thereafter Sale Deed

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in  respect  of  the  Café  was executed  in  favour  of  the appellant  on

31.03.2010.

5. After the execution of the Sale Deed, respondent No.1 who has

been running a Dhaba next to the site, filed CWP No.1557 of 2010 in

the High Court of Himachal Pradesh submitting that the appellant had

not submitted his annual turnover and net worth for last three years as

stipulated  in  the  advertisement.   No  allegation  was  made  of  any

arbitrariness, bias, favoritism or malice in the auction process.  The

appellant filed his reply in opposition.  An affidavit in reply was also

filed by the State Government opposing the Writ Petition stating that

the highest bid submitted by the appellant was rightly accepted after

due  consideration  by  the  Committee  comprising  of  high  ranked

officials  and  that  the  entire  process  was  completely  fair  and

transparent.   

6. The aforesaid Writ Petition was allowed by Single Judge of the

High  Court  by  his  judgment  and  order  dated  14.08.2012.   It  was

observed that the condition regarding submission of the net worth was

mandatory  and  the  Committee  could  not  have  over-looked  such

condition.   It  was further  observed that  the Expert  Committee had

fixed the reserve price in respect of the Café at Rs.30,78,000/- while

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the bid submitted by the appellant  at  Rs.27,15,000/-  was  accepted.

Interestingly,  respondent  No.1  himself  had  given  a  bid  for

Rs.17,00,000/-,  far  below the  alleged  reserve  price.   However, the

Single Judge while accepting the submissions made on behalf of the

respondent No.1 allowed the Writ Petition and quashed the Letter of

Intent dated 02.03.2010 and Sale Deed dated 31.03.2010 and directed

the  authorities  to  re-do  the  entire  process  of  selling  said  Café  in

accordance with law.  

7. This  decision  of  the  Single  Judge  was  challenged  by  the

appellant by filing LPA No.441 of 2012.  The Division Bench upheld

the view taken by the Single Judge on both counts namely that offer of

the  appellant  was  below  the  reserve  price  and  that  the  condition

regarding submission of annual turnover and net worth for last three

years was not complied with by the appellant.  The Division Bench

thus dismissed LPA No.441 of 2012 by its order dated 20.05.2013.

8. This  appeal  challenges  the  correctness  of  the  decisions  so

rendered by the High Court.  While issuing notice, this Court by order

dated 04.07.2013 had directed that Status quo be maintained by the

parties.  By subsequent order dated 08.10.2014 the respondent No.1

was directed to deposit in this Court a sum of Rs.30,00,000/-, which

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the  respondent  had  offered  after  the  finalization  of  the  bid.   The

amount having been deposited by the respondent No.1, it now stands

invested in an interest bearing term deposit.

9. We have heard Mr. Tushar  Bakshi,  learned Advocate  for  the

appellant  and  Mr.  Mahavir  Singh,  learned  Senior  Advocate  for

respondent  No.1  and  Mr.  Suryanarayan  Singh,  Senior  Additional

Advocate General for the State.

10. Mr. Bakshi, learned Advocate is right in his submission that no

reserve price was fixed while inviting bids from interested parties.

The Expert Committee may have indicated a figure as reserve price,

however, the advertisement did not indicate any.  Precisely for this

reason,  even the  bid  given by respondent  No.1  was far  below the

figure  of  Rs.30,78,000/-.   The  High  Court  was  clearly  in  error  in

accepting this plea on behalf of respondent No.1

11. Now, the  question  that  remains  to  be  considered  is  whether

requirement to furnish Annual Turnover and Net Worth for last three

years was a mandatory condition for infraction of which the bid made

by the appellant had to be rejected.  In  Poddar Steel Corporation  v.

Ganesh  Engineering  Works  and  Others1,  this  Court  considered

1 (1991) 3 SSC 273

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conditions  which  are  essential  conditions  of  eligibility  and  those

which are ancillary or subsidiary with the main object to be achieved.

It was observed in para 6 of the decision as under:-

“…….As a matter of general proposition it cannot be held that an authority inviting tenders is bound to give effect  to every term mentioned in the notice in meticulous detail,  and is not entitled  to  waive  even a  technical  irregularity  of  little  or  no significance.   The  requirements  in  a  tender  notice  can  be classified  into  two  categories-those  which  lay  down  the essential  conditions  of  eligibility  and  the  others  which  are merely  ancillary  or  subsidiary  with  the  main  object  to  be achieved by the condition.  In the first case the authority issuing the tender may be required to enforce them rigidly.  In the other cases it must be open to the authority to deviate from and not to insist  upon the strict  literal  compliance of  the condition in a appropriate cases.”  

12. In  the  present  case,  the  site  in  question  was  to  be  sold  on

outright sale basis.  The advertisement or the stipulations therein did

not  contemplate  creation  and  or  continuation  of  any  relationship

between the parties calling for continued existence of any particular

level of financial parameters on part of the bidder, except the ability to

pay  the  price  as  per  his  bid.   The  condition  was  not  an  essential

condition at all but was merely ancillary to achieve the main object

that  was  to  ensure  that  the  bid  amount  was  paid  promptly.   The

advertisement  contemplated  payment  of  bid amount  whereafter  the

Sale  Deed would be  executed  and not  a  relationship  which would

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have continued for  considerable  period warranting  an assurance  of

continued ability on part of the bidder to fulfill his obligations under

the  arrangement.   Nor  was  this  condition  aimed  at  ensuring  a

particular level of financial ability on part of the bidder, for example

in cases where the benefit is designed to be given to a person coming

from a particular financial segment, in which case the condition could

well be termed essential.  The idea was pure and clear sale simplicitor.

As a matter of fact, the appellant did pay the entire bid amount within

the  prescribed  period and the  Sale  Deed  was  also  executed  in  his

favor.   In  the  circumstances  the  relevant  condition  in  the

advertisement would not fall in the first category of cases as dealt with

by this Court in  Poddar Steel Corporation (supra).  The authorities

could therefore validly deviate from and not insist upon strict literal

compliance.  The discretion so exercised by the authorities could not

have therefore been faulted.  Thus, the assessment made by the High

Court  that  the condition in  question was an essential  condition for

non-compliance  of  which,  the  bid  furnished  by  the  appellant  was

required to be rejected, in our view was not correct.

13. We,  therefore,  allow this  Appeal  and  set  aside  the  decisions

rendered by the Single  Judge and the Division Bench of  the  High

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Court in the present matter.  The Letter of Intent dated 02.03.2010 and

consequent Sale Deed dated 31.03.2010 in favor of the appellant are

held valid and correct.  The Writ Petition namely CWP No.1557 of

2010 preferred by respondent  No.1 stands  dismissed.   The amount

deposited  by the  respondent  No.  1  in  this  Court  pursuant  to  order

dated  08.10.2014  shall  be  returned  to  respondent  No.1  along  with

interest accrued therein.

14. The appeal is disposed of accordingly without any order as to

costs.

     ………………………..CJI.       (T. S. Thakur)

  ……………………..……...J.              (Uday Umesh Lalit)

New Delhi, May 13, 2016