Karnataka HC Upholds Power Of Bangalore Development Authority To Reject Auction Bid Without Giving Reasons Under Commercial Site Rules

A division bench of Justice Anu Sivaraman and Justice G Basavaraja said, “The act and conduct of the BDA appears to be bona fide and in the interest of public and also to the benefit of BDA, which in turn, is for the benefit of the general public.”

The authority had approached the court questioning the order of the single judge bench which allowed the plea filed by respondent Sachin Nagarajappa and quashed the intimation letter rejecting his bid issued by the authority and directed BDA to confirm the bid of the respondent as per the tender at Rs.1,54,000 per square metre.

The authority argued that the order passed is contrary to BDA (Disposal of corner sites and commercial sites) Rules, 1984. The State Government has framed the aforesaid Rules and has empowered the BDA to accept or reject the highest bid without assigning any reason to the highest bidder and the BDA has followed the Rules.

Further, it was said the purpose of auctioning of public properties is to get the best possible prices for the properties. There is absolutely no illegality in cancelling the auction bid when the authority decides that the price offered by the bidder is inadequate, it said. 

The finding of the learned Single Judge for cancellation is illegal, erroneous and contrary to the Rules and accordingly, the same is liable to be set aside, it contended. 

The bench referred to Rule 7 and General Terms and Conditions for e-Auction Notification issued by the BDA. It then said, “Rule does not provide for hearing before rejection of the bid. Further, as per the terms and conditions notified in the eAuction Notification, the BDA reserves the right to accept or reject the bid made by the successful bidder, without assigning any reasons”.

It further observed that it is a settled law that Courts cannot sit in judgment over the "wisdom" of the policy evolved by the legislature and the subordinate regulations making body.

It further said that the respondent had not challenged the constitutional validity of Rule 7 of the BDA (disposal of corner sites and intermediate sites) Rules. The rule states that the authority shall have the right to confirm or cancel any sale in auction without assigning any reason and when the sale is cancelled, the amount received from theauction purchaser as deposit shall be refunded to him.

"Having accepted General Terms and Conditions of the e-Auction, the respondent has participated in the e-Auction and the e-Auction Committee has rejected the bid offered by the respondent. As the BDA has got right to reject the bid under Rule 7 of the Rules without assigning any reasons, so also, the respondent having accepted the general terms and conditions of e-Auction and participated in the auction proceedings, now he is estopped from saying anything against the general terms and conditions of the Auction as also with regard to Rule 7 of the Rules," it said. 

Noting that BDA has sold the property under e-auction for more than Rs.10.00 crore, which is profitable to BDA the court said that Rule 7 must be given a "pragmatic interpretation".

 It said that under the given set of circumstances, there was no material to show any allegations of fraud or collusion or cartel or any other material irregularity or illegality in the action of the BDA in rejecting the bid. It further said that there were no pleadings as to the "arbitrariness or favourism" of the BDA in rejecting the bid of the respondent. 

"In view of the said Rule, the BDA reserves the right to accept or reject the bid made by a successful bidder without assigning any reasons. We do not find any arbitrariness, irrationality, bias, mala fide or perversity on the part of the BDA in rejecting the highest bid offered by the respondent," it held.

The court also opined that the principle of 'casus omissus'–that a matter which should have been done, but has not been provided for in a statute, cannot be supplied by Courts as to do so will be legislation and not construction–will squarely apply to the case on hand.

Accordingly it allowed the appeal and set aside the single judge bench's order.

Case Title: Bangalore Development Authority & Anr and Sachin Nagarajappa and another matter

Appearance: Senior Advocate G.S Kannur a/w K Krishna for Appellant.

Advocate Vijaykumar R for Respondent.

Citation No: 2024 LiveLaw (Kar) 436

Case No: WRIT APPEAL NO. 593 OF 2024 (BDA) C/W WRIT APPEAL NO. 883 OF 2022