Delhi High Court Upholds DDA’s Decision to Reschedule E-Auction Due to Technical Glitches, Rejects Claim of Arbitrariness by Highest Bidder; Emphasizes “Fair Participation and Public Interest Take Precedence Over Procedural Rigidity”

Court’s Decision:

The Delhi High Court dismissed the appeal filed by the appellant challenging the re-auction of a residential plot by the Delhi Development Authority (DDA). The court upheld the DDA’s decision to extend the auction due to complaints of technical glitches, emphasizing that ensuring fair participation outweighs the appellant’s claim of being the highest bidder in the original auction. The court observed that the re-auction process adhered to principles of transparency and public interest.

Facts:

1. Auction Notification: The DDA invited bids through an e-auction notification dated 13.03.2022 for the sale of residential plots under the Delhi Development Authority (Disposal and Developed Nazul Land) Rules, 1981.
2. Original Auction: The appellant participated in the e-auction for Plot No. 97/2, Sector-17, Dwarka, with a reserve price of ₹1,98,58,070/-. The appellant submitted the highest bid of ₹2,07,08,070/- on 19.04.2022.
3. Technical Issues: During the auction, several participants complained about technical glitches, which prevented them from accessing the bidding portal.
4. Re-Auction Decision: In response to these complaints, the DDA extended the auction to 22.04.2022 by issuing a corrigendum on 19.04.2022.
5. Revised Outcome: The re-auction fetched a significantly higher bid of ₹4,41,58,070/- from another bidder, with the participation of 12 bidders and 205 bids being submitted.
6. Legal Challenge: The appellant challenged the DDA’s decision to reschedule the auction, alleging arbitrariness, but the writ petition was dismissed by the Single Judge, leading to the present appeal.

Issues:

1. Did the DDA’s decision to extend the auction process violate Rule 30 of the DDA Rules, 1981, which requires reasons for bid rejection to be recorded in writing?
2. Was the appellant’s right as the highest bidder in the original auction arbitrarily disregarded?

Petitioner’s Arguments:

1. Arbitrary Action: The appellant argued that the DDA’s decision to reschedule the auction after declaring the appellant as the highest bidder (H1) violated the rules and was arbitrary.
2. No Evidence of Technical Issues: The DDA failed to provide substantial evidence of the technical glitches it claimed.
3. Violation of Rule 30: According to Rule 30 of the DDA Rules, 1981, reasons for rejecting the highest bid must be recorded in writing and submitted to the Vice-Chairman. The appellant contended that no such reasons were provided.
4. Higher Price Not Justification: The appellant argued that the DDA’s aim of fetching a higher price cannot override procedural fairness. Relying on City and Industrial Development Corporation of Maharashtra Ltd. v. Shishir Realty (P) Ltd., the appellant emphasized that government authorities must ensure fairness and uphold the sanctity of contracts.
5. Contradictions: The appellant pointed out contradictions in the DDA’s justifications, as it cited both technical glitches and the market value of the plot as reasons for the re-auction.

Respondent’s Arguments:

1. Technical Glitches Justified Re-Auction: The DDA argued that the auction was extended, not canceled, to address technical complaints and allow fair participation.
2. Opportunity to Participate: The appellant was allowed to participate in the re-auction on 22.04.2022 but chose not to.
3. Higher Public Revenue: The re-auction fetched a significantly higher price, demonstrating that the process was in public interest and aligned with the authority’s objectives.

Analysis of the Law:

1. Rule 30 of DDA Rules, 1981: The court found that Rule 30, which governs bid rejection, was not violated because the auction was not canceled or annulled. Instead, it was rescheduled to ensure fair participation.
2. Fairness and Transparency: The court emphasized that public authorities are required to act fairly and transparently in contractual matters. Ensuring equal opportunity for all participants justified the DDA’s decision.
3. Precedent Applied: The court referred to City and Industrial Development Corporation of Maharashtra Ltd. v. Shishir Realty (P) Ltd. but distinguished it from the present case. Unlike the precedent, where the State unjustifiably prioritized higher revenue, the DDA’s decision in this case was backed by genuine technical concerns and public interest considerations.

Precedent Analysis:

• In City and Industrial Development Corporation, the Supreme Court held that fairness in contractual obligations by public authorities is paramount, and financial gain alone cannot justify overriding procedures.
• However, the court noted that the DDA acted reasonably and fairly by extending the auction to address technical complaints, making the precedent inapplicable.

Court’s Reasoning:

1. No Violation of Rule 30: The DDA did not reject the appellant’s bid but extended the auction, making Rule 30 inapplicable.
2. Transparency in Process: The corrigendum issued on 19.04.2022 was publicly announced, allowing all bidders, including the appellant, to participate in the re-auction.
3. Public Interest: The re-auction achieved a significantly higher price, benefiting public revenue without compromising fairness.
4. Appellant’s Inaction: Despite being aware of the re-auction, the appellant chose not to participate and cannot claim prejudice.

Conclusion:

The court dismissed the appeal, holding that the DDA’s decision to reschedule the auction was fair, transparent, and in public interest. It found no merit in the appellant’s claims of arbitrariness or procedural violation.

Implications:

This judgment reinforces the principle that public authorities can take reasonable steps to ensure fair participation in auctions, even if it involves rescheduling. It highlights that while maximizing public revenue is important, fairness and procedural transparency remain paramount. The case also sets a precedent for balancing public interest with the rights of participants in government auctions.

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