REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.  7243       OF 2019 (ARISING OUT OF SLP (CIVIL) NO. 4990 OF 2018)

THE BIHAR STATE HOUSING BOARD & ORS. .....APPELLANT(S)

VERSUS

RADHA BALLABH HEALTH CARE AND  RESEARCH INSTITUTE (P) LTD. .....RESPONDENT(S)

J U D G M E N T

HEMANT GUPTA, J.

1) Leave granted.

2) The challenge in the present appeal is to an order passed by the

Division  Bench  of  the  High  Court  of  Judicature  at  Patna  on

November 21, 2017, whereby, the Letters Patent Appeal against an

order passed by the learned Single Bench on September 19, 2016

was dismissed.

3) The appellant published an advertisement on May 10, 2008 inviting

applications for allotment of plot for health center in Lohia Nagar

Housing Colony, Patna measuring 43000 sq. feet at the price of

Rs.1,71,89,057/-.   Rs.1,00,000/-  was  the  earnest  money.  The

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respondent applied for such plot along with the amount of earnest

money. It was mentioned in the advertisement that upon receipt of

more than one application, allotment shall be made by draw of lots

and that the Chairman-cum-Managing Director of the appellant has

the power to cancel allotment without assigning any reason.  The

respondent herein was the sole applicant for seeking allotment of

plot advertised for health center but no such plot was allotted to

the respondent, may be for the reason that the respondent being

the sole applicant.  

4) The respondent filed writ petition before the High Court in the year

2009 challenging the action of the appellant in not accepting the

application  of  the  respondent  for  the  reason  that  it  had  not

submitted  the  documents  of  recognition  from  the  State

Government.  In view of the stand taken, the High Court directed

the  appellant  to  take  a  decision  on  the  application  of  the

respondent within a period of one month.  Subsequently, contempt

petition was filed wherein; the Court was informed that the request

of  the  respondent  for  allotment  of  plot  was  not  accepted.  The

respondent  was  given  liberty  to  challenge  the  decision  of  the

appellant by way of a fresh writ petition.

5) The  respondent  again  filed  writ  petition  before  the  High  Court

contending that the respondent approached the Managing Director

of  the  appellant,  who  agreed  to  the  proposal  of  allotment  of

alternative plots for construction of hospital in lieu of original plot

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offered,  though  with  much  less  area  than  the  plot  advertised

earlier.  The  respondent  submitted  the  technical  and  financial

proposal also stating that the plot, which was advertised, was of an

area  of  43000 sq.  feet  for  a  consideration  of  Rs.  1,71,89,057/-,

thus, there should be proportionate reduction of price on account

of lesser area being offered. The respondent sought allotment on

the terms and conditions of the advertisement itself.  The two plots

offered as alternative to the earlier plot, were plot nos.  G-5 and G-

6  measuring  an  area  of  10,000  sq.  feet  and  14000  sq.  feet

respectively situated near Rajendra Nagar Over Bridge in Patna.

However, the Board took a decision to allot the aforesaid plots on

the  basis  of  Swiss  Challenge  Method.  The  said  decision  was

communicated to the respondent on December 14, 2011.   

6) The said writ petition was decided on May 10, 2013 holding that

the advertisement cannot be given a go by adopting a method of

allotment other than what was described in the advertisement. As

such, Swiss Challenge Method cannot be applied in the case of the

respondent.  However,  change of  plot  was not  interfered with in

view of the fact that the respondent agreed for the offered plots.

The appellant was directed to consider issuing an allotment letter

in favour of the respondent in terms of the advertisement but with

respect to plot Nos. G-5 and G-6 in place of the original plot, as

mentioned in the advertisement, on the same terms and conditions

with proportionate cost reduction on account  of  the area of  the

plots having been reduced. The High Court passed the following

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order:

“In view of the reasons and discussions made above, the decision of the board to allot the Plot Nos. G-5 and G-6 in favour of the petitioner vide office order no. 160 of  2009  as  contained  in  Memo  No.  10792  dated 09.12.2011 (Annexure-16) as also the Letter No. 10871 dated 14.12.2011 (Annexure-17) on the basis of Swiss Challenge Method is hereby quashed.  The respondent – Board  is  directed  to  consider  the  letter  dated  3rd of January,  2012,  written  by  the  petitioner  to  the respondent-Board and on considering the same, issue allotment  letter  in  terms  of  the  advertisement,  as contained in Patna High Court CWJC No.9744 of 2012 (5) 10 Annexure – 1 with respect to the plot nos. G-5 and 6 in lieu of the original plot as mentioned in the advertisement on the same terms and conditions with proportionate cost on account of the area of the plots being reduced.”  

7) Such  order  was  modified  at  the  instance  of  the  appellant  on

January 9, 2014 that in view of the condition in the advertisement

that if the allotment letter is issued after May 31, 2008, the price of

the allotted plot will  be on the updated rates as on the date of

allotment.  The Court held as under:

“It  is  submitted that  advertisement  states  that  if  the allotment letter is issued after 31st May, 2008 the price of the allotted plot would be on updated rate as on the date  of  allotment  as  per  the  terms  of  advertisement contained in Annexure-1 to the writ  application.   The order  dated  10.05.2013 passed in  CWJC  No.  9947 of 2012  is  clarified  to  the  above  extent.   After  such clarification it goes without saying that the Board upon considering the letter dated 3rd January 2012 written by the petitioner is  to issue the allotment letter,  and as such, the same be issued within a period of two months from today.”

8) It is thereafter on February 14, 2014, the respondent was called

upon to deposit up to date price of Rs.13,09,95,041/-.   The said

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price  was  not  deposited  by  the  respondent,  instead  respondent

replied vide letter dated February 19, 2014 that the said demand is

contrary to the direction issued by the High Court and requested

the Board to  calculate  the  updated price  as  per  the  terms and

conditions.

9) On  March  13,  2014,  the  appellant  revised  price  to

Rs.10,58,91,736/- and raised demand for payment of such amount

to  be  deposited  by  March  31,  2014.   In  response  to  such

communication, the respondent on March 21, 2014 communicated

its acceptance.  The said communication reads as under:

“With reference to your letter No. 1902 dated 13/3/2014 directing us to deposit Rs.10,58,91,736.00 for plot no. GC 5, GC 6, Kankarbagh Patna allotted to Radha Ballabh Health Care & Research Institute Pvt. Ltd.  

We need to inform you that the Board may measure the exact Area of the Land to be delivered before the Representatives of both sides and thereafter handover the  vacant  possession  of  the  land  erecting  boundary wall, the cost of which shall be borne by us.

The  amount  (money),  directed  to  be  deposited  for the said  plot  is  against  the directions  of  the  Hon’ble High Court Patna.  We have raised this issue of price in our letter dt. 19/02/2014 however subject to our right and without prejudice, we are ready to take the land (Plt no. GC 5 & GC 6) Under protest.

We propose the following payment plan.

We will deposit a token advance of Rs. 40 lakhs at the outset.  Once we get vacant possession of the land, with boundary wall erected (the cost of which will borne by  us)  we  will  deposit  up  to  20%  of  the  total  cost (subject to final measurement of the Land).

The remaining amount will be paid in Four Quarterly

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Installments per annum in three years.  Once again we would  emphasize  that  if  we  do  not  get  the  vacant possession of the land within two (2) months of token advance  deposit,  the  Housing  Board  shall  be  held responsible  and  will  have  to  bearing  bank  interest levied on us by the bank/borrower.   

Kindly approve our proposal at the earliest and let us know your bank with account number, so that we can proceed with the payment process.”  

10) Again,  the  appellant  sought  the  consent  of  the  respondent  on

April 1, 2014 seeking advance payment of Rs.40,00,000/- and that

the  balance  payment  of  Rs.8,47,93,330/-  was  payable  in  12

quarterly installments in three years.  The communication of the

appellant reads as under:

“Reference:- Yours letter no.-zero dated 21.03.2014.

Sir,

Review  is  made  of  your  letter  regarding  aforesaid subject.  In course of review for the payment, following payment list is prepared.

(a) Total price on the date 31.03.2014 – Rs. Illegible. (b) Advance payment – Rs.40,00,000/- (c) Earlier deposited earnest amount-Rs.1,00,000/- (d) 20 percent of total amount-Rs.2,11,98,400/- (e) Deducted advance payment and earnest amount-

Rs.41,00,000/- (f) Rest preliminary amount to be deposited prior to

deed of agreement – Rs.1,70,98,400/- (g) Rest amount of the Price-Rs.8,47,93,330/- (h) Amount  of  instalment  payable  in  12  quarterly

instalments in three years- (i) Normal with interest @14% Rs.87,74,750/- (ii) By delay with interest @18% Rs.92,98,962/-

So if  you are  willing for  the allotment  in  question, please give your consent on aforementioned schedule, otherwise it shall be deemed that you are not willing for the allotment.”

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11) The  respondent  communicated  on  April  2,  2014  accepting  the

payment schedule under protest subject to final measurements of

the plot.  Such communication reads as under:

“Ref:  Housing  Board’s  Letter  No.  2445  Dated 01/04/2014

Dear Sir,

Received the Board’s aforesaid Letter regarding the payment  schedule  for  plot  No.  GC  5  &  GC  6, Kankarbagh, Patna.   

As  stated  earlier  and  in  the  light  of  our  letter  dt. 21/03/2014,  we  accept  the  payment  schedule,  under Protest subject to the final measurement of the plots.

We are enclosing herewith two Banker’s cheques of Rs.40,00,000/- (Rs. Forty Lacs),

1.  Banker’s  Cheque  no.  021879  for  Rs.20,00,000/- (Rs.Twenty Lacs) and

2. Banker  Cheque  No.  021880  of  Rs.20,00,000/- (Rs.Twenty Lacs) Drawn at Patna dated 02/04/2014 as advance payment.

Please  ensure  the  possession  of  Plot/Land,  with boundary wall erected (at our cost) at its earliest.”

12) It  is  thereafter,  a  formal  letter  of  allotment  was  issued  on

December 11, 2014 acknowledging that Rs.41 lakh stand deposited

and  that  20%  of  the  interim  price  of  the  land  amounting  to

Rs.2,11,98,400/- be paid within thirty days.  Such amount was paid

by the respondent.  It is thereafter, an Agreement was executed on

March 12, 2015 between the appellant and the respondent.  Thus,

a  concluded  contract  came  into  existence  with  deposit  of  the

amount demanded by the appellant and paid by the respondent.  

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13) After  accepting  the  allotment  on  the  price  as  per  the

communication  referred  to  above,  the  respondent  filed  a  writ

petition disputing the allotment price.  The learned Single Bench

allowed the writ petition on the basis that proportionate price of

the plot advertised in Lohia Nagar alone can be claimed by the

appellant.

14) The High Court has sought the basis of fixation of price of the plot

during the proceedings before it.  The proportionate price claimed

by the appellant was found to be arbitrary.  The High Court, vide

order dated September 19, 2016, issued the following directions:

“In my considered view, only that procedure could have been followed for updation of price of allotment.  Thus, it is held that the Board has acted in arbitrary manner in fixing the price of the plots concerned due to which the petitioner has been fastened with a liability to pay a price several times higher than which could have been charged.  It has also to be kept in mind that due to the delay caused by the Board, the allotment could not be finalized  on  the  date  fixed.   Accordingly,  this  writ petition  is  allowed.   The  price  fixed  by  the  Board  is quashed and set aside.   The Board is  directed to re- calculate  the  cost  of  the  plots  of  the  petitioner  in accordance  with  the  procedure  adopted  under Annexure H appended with the counter affidavit within a  period  of  three  months  from  the  date  of receipt/production of a copy of this order and return the excess  amount,  if  any,  having  been  paid  by  the petitioner in terms of the calculation done by the Board. If the same is not done within the aforesaid period of three  months,  the  petitioner  would  be  entitled  for interest  @14% per  annum on the said  amount to  be calculated  from  the  date  of  expiry  of  the  aforesaid period  of  three  months  till  Patna  High  Court  CWJC No.17694 of 2015 dt.19-09-2016 20/20 the date of final payment.”

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15) In terms of the directions of the High Court, the appellant has paid

back a sum of Rs.3,31,94,435.53.  

16) It is the said order of the learned Single Judge, which was affirmed

in the Letters Patent Appeal, on the ground that the Board could

only claim up to date rate and not the market rate as claimed in

the letter of allotment.   

17) The respondent in the counter affidavit in the present appeal has

referred to the decision taken by the appellant in its 193rd Meeting

dated February 10, 2000 on the basis of  which office order was

issued on March 2,  2001 to fix reserve price for the purpose of

auction of the Plots/Houses/Flats.  The decision is as under:

“(i) The auction price of such Plots/Houses/Flats, having taken within one last preceding year.

(ii)  The updated price of the Commercial rate fixed by the Board.

(iii)   The  rate  prescribed  by  the  Collector  for  the purpose of Registration.

In addition to this the Managing Director of the Bihar State Housing Board was authorized to have discretion keeping the place, time and circumstances.”

18) It is also pointed out that on June 13, 2013, the market value was

determined for calculation of premium for the Financial Year 2013-

2014 and that on the basis of such calculation, the price of the plot

allotted has been fixed.

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19) Mr. Ranjit Kumar, learned senior counsel for the appellant, argued

that the decision of the Appellant is based upon rational basis in

terms of the decision of the Board taken earlier. It is argued that

after accepting the offer of allotment and paying initial amount, the

respondent is estopped to dispute the allotment price.

20) The argument of  Mr.  Neeraj  Kishan Kaul,  learned senior  counsel

appearing for  the respondent,  is  that  the advertisement inviting

applications for allotment of plot contemplated charging of up to

date cost/price which is not the same as market price, therefore,

the appellant cannot charge market price of the plot.  It was argued

that the decision of June 13, 2013 is in respect of sale of the plot by

the allottee to third person so as to pay 50% of the market value to

the  appellant.   Therefore,  such  decision  has  rightly  not  been

accepted by the High Court.   It  is  also argued that office order

dated March 2,  2001 deals  with  fixation  of  reserve price  in  the

event of decision of the Board to auction the plot.  Therefore, the

High  Court  has  rightly  fixed  price  of  the  plot  on  the  basis  of

calculations given by the appellant alone. Thus, the order of the

High Court does not warrant any interference in an appeal under

Article 136 of the Constitution of India.  

21) We find that the entire approach of the High Court is erroneous and

not sustainable.  Plot Nos. G-5 and G-6 located in Rajinder Nagar

Over  Bridge  were  never  advertised.   The  allotment  of  the

alternative  plots  was  made by  the  appellant  in  lieu  of  the  plot

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advertised in Lohia Nagar, Kankarbagh, Patna measuring 43000 sq.

feet.  The location and the size of the alternative plots are different.

22) Firstly, we need to examine as to whether, the appellant could allot

plots  without  advertisement.  This  Court  in  a  judgment  in  Akhil

Bhartiya Upbhokta Congress v. State of Madhya Pradesh &

Ors.1 deprecated  the  practice  of  allotment  of  plots  dehors  an

invitation or  advertisement  by the State or  its  instrumentalities.

The Court held as under:

“66.   We  may  add  that  there  cannot  be  any  policy, much less, a rational policy of allotting land on the basis of  applications  made  by  individuals,  bodies, organisations  or  institutions  dehors  an  invitation  or advertisement  by  the  State  or  its agency/instrumentality.  By  entertaining  applications made  by  individuals,  organisations  or  institutions  for allotment  of  land  or  for  grant  of  any  other  type  of largesse the State cannot exclude other eligible persons from lodging competing claim. Any allotment of land or grant  of  other  form  of  largesse  by  the  State  or  its agencies/instrumentalities by treating the exercise as a private  venture  is  liable  to  be  treated  as  arbitrary, discriminatory  and  an  act  of  favouritism  and/or nepotism  violating  the  soul  of  the  equality  clause embodied in Article 14 of the Constitution.

67.  This, however, does not mean that the State can never  allot  land  to  the  institutions/organisations engaged in educational, cultural, social or philanthropic activities or are rendering service to the society except by  way  of  auction.  Nevertheless,  it  is  necessary  to observe  that  once  a  piece  of  land  is  earmarked  or identified  for  allotment  to  institutions/organisations engaged  in  any  such  activity,  the  actual  exercise  of allotment must be done in a manner consistent with the doctrine of equality. The competent authority should, as a  matter  of  course,  issue  an  advertisement

1  (2011) 5 SCC 29

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incorporating therein the conditions of eligibility so as to  enable  all  similarly  situated  eligible  persons, institutions/organisations to participate in the process of allotment, whether by way of auction or otherwise. In a given case the Government may allot  land at a fixed price but in that case also allotment must be preceded by a wholesome exercise consistent with Article 14 of the Constitution.”

23) In another judgment in  Institute of Law, Chandigarh & Ors. v.

Neeraj Sharma & Ors.2, this Court upheld the order of the High

Court  setting aside  allotment  of  land  in  favour  of  the  appellant

institute without giving any public notice and in the absence of a

transparent policy and any objective criteria.   

24) Further, in  Meerut Development Authority  v.  Association of

Management Studies & Anr.3, this Court held that a tender is an

offer.  It  is  an  invitation  to  seek  communication  to  convey

acceptance. This Court held as under:

“26.  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 person with a view to eliminate  all  others  from participating  in  the  bidding process.

27.    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

2  (2015) 1 SCC 720 3  (2009) 6 SCC 171

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inviting tenders in a transparent manner and free from hidden agenda.  One cannot  challenge  the  terms and conditions  of  the  tender  except  on  the  abovestated 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.

28.   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.”

25) Therefore, the respondent does not get any right of allotment of a

plot  merely  because  it  has  applied  for  allotment  earlier.   The

response to an advertisement does not lead to any obligation on

the appellant to allot any plot. Admittedly, there was no allotment

in pursuance of the offer submitted by the respondent.  Mere fact

that the respondent had applied for allotment of a plot does not

confer any legal or equitable right to seek allotment of any plot.

26) The appellant  was more  than indulgent  in  allotting  two plots  of

24000 sq. feet without any advertisement advertising such plots

merely on the basis of the fact that the respondent had applied for

allotment at an earlier stage in respect of another plot.  The public

property could not be disposed of without any advertisement and

without giving opportunity to eligible persons to apply and seek

consideration of allotment of public property in a transparent and

non-discriminatory manner.   

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27) Therefore, the very allotment of two plots, on the basis of direction

given by the High Court to consider the claim of the respondent, is

against the public interest.  However, the fact remains that after

allotment,  the  respondent  has  constructed  hospital  which  is

operational  therefore;  it  is  too  late  in  the  day  to  cancel  the

allotment of the plot allotted to the respondent.   

28) The  question  raised  before  the  High  Court  was  whether  the

appellant is entitled to updated price or the market price.  We find

that  such  discussion  by  the  High  Court  is  totally  irrelevant

inasmuch  as  the  respondent  has  accepted  the  price  on  three

occasions;  firstly  on  March  21,  2014,  then  on  April  2,  2014

whereby,  the respondent  remitted a sum of  Rs.40 lakhs by two

cheques  as  well.   The  respondent  has  accepted  the  payment

schedule  but  subject  to  final  measurements  of  plots.   It  is

thereafter  the  letter  of  allotment  was  issued  on  December  11,

2014.   Thirdly,  the  respondent  remitted  another  sum  of

Rs.1,71,00,000/- vide three separate cheques in January, 2015 so

as to complete 20% of the interim price of letter of allotment dated

December 11, 2014.  It is thereafter an agreement was executed

on March 12, 2015 unequivocally and categorically accepting the

offer of the appellant.  It was not open to the respondent to dispute

the price of allotment offered by the appellant. The respondent is

estopped to dispute the allotment price in these circumstances.

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29) Recently, in a judgment of this Court in  Uttar Pradesh Housing

and Development Board  v.  Ramesh Chandra Agarwal4,  the

appeal  was  allowed  against  an  order  passed  by  the  National

Consumer Disputes Redressal Commission for allotment of a plot

for the reason that the complainant has applied for allotment of a

plot way back in 1982.  It was held that there was no contractual

entitlement for allotment of a flat at a specified price.  The Court

held as under:

“13.   The  appellant  is  governed  by  the  terms  and conditions advertised in its Registration Booklet and by the  1979 Rules.  Clause  5  of  the  Registration  Booklet indicates that mere registration does not confer a right for allotment. Rule 15 makes a provision to the effect that the Board is not bound to allot a house or plot to every registered holder. Rule 30 indicates that after the Board  advertises  the  availability  of  a  scheme  in  the newspaper,  every registered applicant  is  at  liberty  to submit a consent letter for participation in the draw of lots.  Mere registration does not oblige the authority to include every registered applicant in the draw of lots. The applicant must show readiness and willingness to participate in a draw of  lots in respect of a specified scheme.  This  is  evident  from  Rule  30(2).  A  set  of priorities is provided in Rule 30(5). In view of the clear position  in  the  brochure  and  the  1979  Rules,  the respondent had no vested right to seek an allotment. As a registered applicant, the respondent was at liberty to seek to participate in the draw of lots by indicating his consent to the appellant. After paying an initial sum of Rs 500 in 1982 and a further sum of Rs 500 in 1985, the respondent  did  not  pursue  any  remedies  until  1993 when he moved the District  Forum. The order of  the District Forum gave liberty to the respondent to seek allotment at the current market value under any of the schemes  of  the  appellant. NCDRC was  manifestly  in error in issuing a direction to the appellant to make an allotment  to  the  respondent  for  a  total  sum  of  Rs 2,50,000 in any of  the flats  available  in the Mandola

4  (2019) 6 SCC 554

15

Vihar  Yojna,  Ghaziabad.  There  is  no  rational  basis  or justification for the amount of Rs 2,50,000 which has been fixed by NCDRC. This direction proceeds purely on the basis of the ipse dixit of the forum.  The appellant, as a public authority, could not have been compelled to enter into a contract with the respondent. There was no contractual  entitlement  of  the  respondent  to  the allotment  of  a  flat  much  less  for  an  allotment  at  a specified price. In its effort to render justice, NCDRC has adopted a view which is contrary to the basic principles of contract governing the law on the subject.”

(emphasis supplied)

30) The appellant as a State is required to act fairly in fixation of price

for allotment of a plot.  The order of the High Court to direct the

appellant to charge the price proportionate to the price advertised

earlier has no legal basis.  It is a commercial decision taken by the

appellant fixing the price of the plot.  In the matter of fixation of

price, the Board has a right to fix such price, more so, when such

price was accepted by the respondent on three different occasions

as mentioned above.

31) The action of the respondent to dispute the allotment price after

accepting the price is neither fair nor reasonable and cannot be

accepted.

32) In terms of judgment of this Court in Style (Dress Land) v. Union

Territory, Chandigarh & Anr.5,  the appellant is  entitled to the

allotment price along with interest on the delayed payment even if

there  is  stay  by  the  Court.   But,  keeping  in  view the  cause  of

allotment  of  plot  i.e.  hospital,  we  order,  in  exercise  of  our

5  (1999) 7 SCC 89

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jurisdiction under Article 142 of the Constitution, that the interest

for the period from the date of filing of the writ petition before the

High Court till the date of order of this Court shall not be charged

from the respondent provided respondent pays the entire balance

sale consideration in terms of the condition of allotment within six

months from today.   

33) In view of the above, we find that the order of the High Court is not

sustainable  in  law,  thus,  the  order  is  set  aside.   The  appeal  is

accordingly allowed.

.............................................J. (L. NAGESWARA RAO)

.............................................J. (HEMANT GUPTA)

NEW DELHI; SEPTEMBER 13, 2019.

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