In a Civil Appeal before the Supreme Court bench comprising Justice Bela M. Trivedi and Justice Satish Chandra Sharma, set aside the Madhya Pradesh High Court's judgment, which had directed the Indore Vikas Praadhikaran (IDA) to allot land to Shri Humad Jain Samaj Trust (Trust), the highest bidder in a public auction. The Supreme Court held that bidders in a tender process have no vested rights other than the right to equality and fair treatment during the evaluation of competitive bids.

"In the absence of allotment letter and acceptance of highest bid, no relief could have been granted in favour of respondent No.1 as there was no concluded contract in the matter and the decision taken by the Tender Evaluation Committee to generate more revenues could not have been interfered with in the manner and method as has been done by the Division Bench of the High Court of Madhya Pradesh at Indore Bench. The bidder has no right in the matter of bid except of fair treatment and cannot insist for further negotiation as has been done in the present case.” The Bench observed.

The case concerns a land lease tender issued by the IDA in July 2020, where the highest bid of ₹25,671.90 per square meter was made by Shri Humud Jain Samaj Trust. However, the IDA rejected all bids due to an oversight regarding an outstanding property tax of ₹1.25 crore, which was not factored into the base price. It decided to reissue the tender with a revised base price of ₹26,000 per square meter. The Trust, dissatisfied with the rejection, filed a writ petition challenging the IDA's decision and issuance of a new tender. A learned Single Judge dismissed the petition, noting that no contract had been concluded and the IDA was empowered to reject any bids under the tender's terms. The Trust appealed, and a Division Bench ruled in its favor, directing the IDA to allot the land to the Trust if it agreed to pay ₹26,000 per square meter. The Bench noted that no higher bid was received in the reissued tender. The IDA, contesting this order, filed the current appeal before the court.

Senior Advocate Balbir Singh, for the appellant (IDA), argued that the Division Bench's order should be set aside as it effectively adjudicated a suit for specific performance in a writ appeal. He emphasized that Condition No. 6 of the Notice Inviting Tender (NIT) dated 17th July, 2020 granted IDA the discretion to accept or reject any or all bids. He explained that the respondent's bid was rejected after the Tender Committee discovered an outstanding property tax of ₹1.25 crore on the land. The decision to reject the bid was based on the potential for higher revenue after paying the tax and re-tendering the property. He further relied on State of Jharkhand v. CWE-SOMA Consortium (2016) and Haryana Urban Development Authority v. Orchid Infrastructure Developers (2017) to argue that IDA's actions were justified under the terms of the tender and relevant legal principles.

The counsel for respondent No. 1 (Trust) argued that since the Trust was the highest bidder under the NIT dated 17th July, 2020, its bid of ₹25,671.90 per square meter should have been accepted, and it should have been declared the successful bidder. The fact that the Trust did not participate in the second NIT dated 17th November, 2021 is irrelevant to the matter. The counsel contended that the Division Bench's order should not be set aside and relied on the Supreme Court judgment in Eva Agro Feeds Pvt. Ltd. v. Punjab National Bank and Anr. (2023) to support the argument that the highest bidder's rights should be recognized.

Taking into consideration the facts and submissions made, the Supreme Court held that the Division Bench erred by interfering in the tender process and modifying the terms, as courts are limited to reviewing procedural fairness without substituting administrative decisions. Referring to precedents cases like State of Jharkhand and others Vs. CWE-SOMA Consortium and Tata Cellular v. Union of India (1994), the Court emphasized that no mala fides were found in IDA's actions and the Division Bench's judgment was set aside.

The Court also referred to its decision in Haryana Urban Development Authority v. Orchid Infrastructure Developers Pvt. Ltd. (2017) wherein it was held, “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.”

The Supreme Court held that in the absence of an allotment letter and acceptance of the highest bid, “no relief could have been granted in favour of respondent No.1 as there was no concluded contract in the matter and the decision taken by the Tender Evaluation Committee to generate more revenues could not have been interfered with in the manner and method as has been done by the Division Bench of the High Court of Madhya Pradesh at Indore Bench.”

The Supreme Court also rejected Respondent No. 1's reliance on Eva Agro, clarifying that the facts of the current case were distinct. In Eva Agro, an auction was canceled arbitrarily without explanation, which was deemed manifestly unfair. However, in this case, the cancellation of the first NIT was justified to correct an error in the minimum rate as identified by the Divisional Commissioner of the IDA. Furthermore, Respondent No. 1 chose not to participate in the second NIT. The Court held that the Division Bench of the High Court exceeded its authority by fixing the price at ₹26,000 per square meter, undermining the auctioning authority's powers. Hence, the reliance on Eva Agro was deemed irrelevant.

Consequently, the Supreme Court allowed the appeal while ordering that, “the IDA is directed to issue a fresh NIT for disposal of the land in question enabling the IDA to generate more revenues in respect of the land in question. The appellant shall certainly be free to participate in the fresh NIT as and when issued by the IDA. It is made clear that the IDA shall not dispose of the land in question except by way of public auction/by issuing NIT in future.”

Case Details: Indore Vikas Praadhikaran (IDA) & Anr. v. Shri Humud Jain Samaj Trust & Anr. C. A. No. 13089 of 2024

Advocate for the Petitioner: Senior Advocate Balbir Singh; AOR Vanshaja Shukla

Advocate for the Respondent: AOR Rakesh Dahiya and Pashupathi Nath Razdan