Page 1

1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No. 629 OF 2006

STATE OF PUNJAB                                ...APPELLANT

VERSUS

M/S. BANDEEP SINGH & ORS.                                …RESPONDENTS

WITH

C.A. No. 630 of 2006

PUNJAB STATE LEATHER DEVELOPMENT CORPORATION & ORS. ...APELLANTS

VERSUS

BANDEEP SINGH & ORS. ...RESPONDENTS

J  U  D  G  M  E  N  T

VIKRAMAJIT SEN, J.

1 These  Appeals  assail  the  Judgment  dated  20.9.2005  of  the  Division

Bench of the Punjab and Haryana High Court in CWP No. 9621 of 2004.  The

factual matrix is that pursuant to an Auction Notice dated 1.5.2004 issued by the

Managing  Director,  Punjab  State  Leather  Development  Corporation  Ltd.,

Page 2

2

several properties, of which we are only concerned with two, were to be put to a

public auction.  The salient terms as contained in the auction Notice required the

interested persons to deposit  an amount of  2,00,000/- as Earnest Money; the

successful  bidder would have to deposit  twenty five per  cent  of  the auction

amount at the conclusion of the bidding, and the remaining amount within thirty

days of the approval of the bid by the Government.  It is not disputed that the

two Respondents/Writ  Petitioners  had deposited  the  Earnest  Money together

with  twenty  five  per  cent  of  the  auction  bids  which,  admittedly, were  only

marginally above the reserve price fixed by the Competent Authority.  In respect

of  the  Hide  Flaying  and  Carcass  Utilization  Centre,  Jhabal  Road,  Village

Fathepur, Amritsar the reserve price was 45.50 lakhs and the highest (subject)

bid  was  46  lakhs;  and  for  Tanning  Centre  Jhabal  Road,  Village  Fathepur,

Amritsar the reserve price was 37.25 lakhs and the highest (subject) bid was  

38.10 lakhs.

2 However, the notings disclose that a certain person, referred to as Mr.

Walia  had  orally  complained  that  the  successful  bidders  had  promised  to

associate him in their venture as their partner, but had thereafter  resiled from

this commitment.  Shri Walia was obviously a disgruntled party, and any official

with  a  modicum  of  experience  would  not  require  superlative  sagacity  to

discount or ignore his complaint.   This is especially so since, admittedly, Shri

Page 3

3

Walia  had  been  called  upon  to  file  his  complaint  in  writing,  but  which  he

declined to do.

3 Without conveying to the Respondents the reasons for not accepting their

bids, being the highest offer received in the course of the auction process, a

decision was taken by the Appellant to re-auction the said two properties.  This

was despite the fact that the Chairman-cum-Managing Director of the Punjab

State Leather Development Corporation Ltd. had recorded, on 15.6.2004, that

the bids of the Respondents were not only the highest, but were also higher than

the reserve price.  The notings of the Chairman-cum-Managing Director in fact

do  not  recommend  that  the  offers  should  be  rejected;  instead  it  solicits

acceptance/approval  of  the  Government  through  its  Director,  Industries  and

Commerce. However, when the case was submitted to the Director, Industries

and Commerce,  he opined that  a re-auction should be conducted as the two

subject bids were only marginally higher than the reserve price.  Indubitably, the

Impugned Order mentions instances where bids were not accepted because they

were  only  marginally  higher  than  the  reserve  price;  but  failing  to  give  due

weightage and consideration to those instances where similar bids had in fact

been accepted.

4 There can be no gainsaying that every decision of an administrative or

executive nature must be a composite and self sustaining one, in that it should

contain all  the reasons which prevailed on the official taking the decision to

Page 4

4

arrive  at  his  conclusion.  It  is  beyond  cavil  that  any  Authority  cannot  be

permitted  to  travel  beyond  the  stand  adopted  and  expressed  by  it  in  the

impugned action. If precedent is required for this proposition it can be found in

the  celebrated  decision  titled Mohinder Singh Gill v. The  Chief  Election

Commissioner, New Delhi [1978] 2 SCR 272, of which the following paragraph

deserves extraction:

“8.  The  second  equally  relevant  matter  is  that  when  a  statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh reasons in the shape of affidavit or otherwise. Otherwise, an order bad in the  beginning  may,  by  the  time  it  comes  to  court  on  account  of  a challenge, get validated by additional grounds later brought out. We may here draw attention to the observations of Bose J. in Gordhandas Bhanji [1952] 1 SCR 135:

Public orders publicly made,  in exercise of  a statutory authority cannot be construed in the light of Explanations subsequently given by the officer making the order of what he meant,  or of what was in his mind, or what he intended to do. Public orders made by public authorities are meant to have public effect and are intended to affect the acting and conduct  of  those  to  whom they are  addressed and must  be  construed objectively with reference to the language used in the order itself.

Orders are not like old wine becoming better as they grow older”.

We must reproduce the noting dated 18.6.2004 of the Director, Industries and

Commerce since there is an endeavour by the Appellant to add grounds and

reasons thereto.  It reads as follows:

“Above office note  may kindly be perused.   In my opinion the highest bids offered are marginally higher than the reserved price and it would be appropriate not to confirm those bids and go for re-auction.”

Page 5

5

This noting will palpably clarify that the element of cartelization or grouping

was  not  one  of  the  reasons  for  taking  the  decision  to  re-auction  the  two

properties, which contention has been strenuously canvassed before us.    

5 As we have already mentioned, the auction notice itself stated that it is

the Government and not any other person, including the Managing Director of

the Punjab State Leather Development Corporation Ltd., which was to approve

the bid.  Any challenge to the position that it is the Government on whom is

reposed the final decision, is devoid of substance.  It  is pertinent to note the

judgement of this Court in Anil Kumar Srivastava Vs. State of U.P. (2004) 8

SSC 671, wherein it was held that the reserve price merely limits the power of

the Auctioneer by preventing a bid below this price from being accepted. This

Court approved the view taken in B. Susila Vs. Saraswathi Ammal AIR 1970

Mad  257,  which  held  that  “notwithstanding  the  fixation  of  upset  price  and

notwithstanding the fact that a bidder has offered an amount higher than the

reserve/upset price, the sale is still open to challenge on the ground that the

property has not fetched the proper price and that the sale be set aside.”   The

same principle  was  upheld  more  recently  in  Ram Kishun Vs.  State  of  U.P.

(2012) 11 SCC 511.  However, we must hasten to clarify that the Government

does not have a carte blanche to take any decision it chooses to; it cannot take a

capricious, arbitrary or prejudiced decision.  Its decision must be informed and

impregnated with reasons. This has already been discussed threadbare in several

Page 6

6

decisions  of  this  Court,  including  in  Sterling  Computers  Ltd.  v.  M  &  N

Publications Ltd. (1993) 1 SCC 445, Tata Cellular v. Union of India (1994) 6

SCC 651, Air India Ltd. v. Cochin International Airport Ltd. (2000) 2 SCC 617,

B.S.N.  Joshi  & Sons  Ltd.  v. Nair  Coal  Services  Ltd.  (2006)  11 SCC 548,

Jagdish Mandal v. State of Orissa (2007) 14 SCC 517.   

6 In the impugned Judgment, the High Court has rightly concluded that no

sustainable  justification  and  rationalization  was  recorded  in  writing  at  the

relevant  time for  ordering the re-auction of  only the two subject  properties.

However, we should not be understood to have opined that the Government is

bound in every case to accept the highest bid above the reserve price.   Needless

to  say, the presence  of  cartelization  or  “pooling” could be  a  reason for  the

cancellation of an auction process.  In addition, a challenge on the ground that

the property has fetched too low a bid when compared to the prevailing market

price,  would also be valid and permissible  provided this  approach has been

uniformly  adhered  to.  In  the  case  at  hand,  however,  while  the  latter  was

ostensibly the reason behind the decision for conducting a fresh auction,  no

evidence has been placed on the record to support this contention.  The highest

bids, marginally above the reserve price, have been accepted in the self-same

auction.  The factual scenario before us is clearly within the mischief which was

frowned upon in  Mohinder Singh Gill.   We therefore uphold the impugned

Judgment  for  all  the  reasons  contained  therein.   The  assailed  action  of  the

Page 7

7

Appellant is not substantiated in the noting, which ought at least to have been

conveyed to the Respondents.  

7 The bid of the Respondents is already over a decade old, which is the

period the present Appeal has been awaiting its turn in this Court.  We must,

therefore, balance the equities and interest of the adversaries before us.  It has

been submitted by the learned Senior Counsel for the Respondents that although

the Appellant had addressed a letter to the Respondents purporting to return the

sums received from them, the cheque for this amount was not enclosed with the

letter.  The fact remains that these sums continue to be in the coffers of the

Appellant.  It is also submitted by the learned Senior Counsel that the balance

sale consideration had been tendered by the Respondents to the Appellant, who

declined to accept it on the premise that their Appeal was pending in this Court.

Learned Senior Counsel suggested that in the endeavour to do justice to all the

parties before this Court, we may direct the Respondents to pay the price of the

land at the prevailing Circle Rates, which suggestion has readily been accepted

by the learned Counsel for the Appellant with alacrity. Since the Respondents

have succeeded in the High Court  as  well  as before us,  they should not  be

deprived of the fruits of the litigation and suffer the disadvantage of losing the

land for which they have successfully paid the earnest money and deposited

more than twenty five per cent of the sale consideration and have tendered the

entire remainder. Learned counsel appearing for the Appellant conceded that, in

Page 8

8

the facts of the present case, if the Respondents are directed to pay the circle

rates, as existing today, the ends of justice would be met.   Accordingly, in the

circumstances of the present case, we hold that if the Respondents tender the

price  of  the  land  equivalent  to  the  prevailing  Circle  Rate  minus  the  sums

already  paid  by  them  to  the  Appellant  within  ninety  days  from  today,  the

Appellant shall take all necessary steps to convey the land to the Respondents

within sixty days thereafter.

8 The Appeals are disposed of in these terms, with no order as to costs.

Stay granted by this Court on 16.1.2006 is vacated.

…………………………………J. [VIKRAMAJIT SEN]

…………………………………J. [SHIVA KIRTI SINGH]

New Delhi, August 25, 2015.