DDA cannot reject bid or annul tender process at any stage arbitrarily: Delhi High Court

The Delhi High Court recently held that the Delhi Development Authority (DDA) cannot arbitrarily reject any bid or annul the tender process and that the authority’s decision to withdraw a plot of land from auction at any stage must satisfy the requirements of Article 14 of the Constitution [York Tech Pvt Ltd v Delhi Development Authority]..Single-judge Justice Sachin Datta observed that DDA’s decision must be dictated by reasons and cannot be tainted by the vice of arbitrariness or extraneous or irrelevant considerations.“The right conferred under the tender conditions… is subject to these basic requirements and therefore cannot be said to be untrammelled or unrestricted,” the Court held..Justice Datta was dealing with a petition by a firm named York Tech Private Limited challenging DDA’s decision to withdraw a plot of land in city’s Kirti Nagar area from auction due to ‘administrative reason’.The DDA told the court that withdrawal was due to the variation in plot size, as it was auctioned with an area size 400 sq m, but the actual area was approximately 330 sq m, and the variation was found to be more than the permissible limit of 15 percent i.e. 17.5 percent..However, the petitioner argued that once the letter of intent has been issued and the bid of the petitioner accepted by the respondent, a concluded contract came into existence between the parties and the bid cannot be rejected..After considering the arguments of the parties, the Court held that in the present case, arbitrariness and irrationality in the decision-making process was writ large in the facts and circumstances of the case.Justice Datta said that once there was an unequivocal acceptance of the bid in question, there can be no occasion for the DDA being permitted to reject the bid or to withdraw the plot from the auction process..The judge further stated that in the circumstances where the e-auction of plots was on “as is where basis”, where the bid of the highest bidder was more than twice the reserve price and where the bidder is agreeable to make the entire payment despite the deficit in area, the DDA withdrawing the plot from auction was unjustified and tainted with arbitrariness..“Clearly, no prejudice was caused to the respondent/DDA as a result of the area of the said plot being smaller than what was mentioned in the e-auction notice,” the Court said. It added,“Arbitrariness is also writ large from the manner in which the respondent/DDA has proceeded in the matter. This is evident from the fact that although the impugned communication, whereby the said plot was sought to be withdrawn from the e-auction, was issued on 01.06.2022, it was only on 08.06.2022 that a joint inspection notice was issued by the DDA stating that a joint inspection is scheduled to be held on 10.06.2022 to measure exact area/dimensions of the said plot.”.Therefore, the Court quashed the DDA’s order and directed it to issue a demand cum allotment order to the petitioner and to call upon them to remit the balance 75 percent amount/premium of the bid offered within a period of 90 days..“Once the petitioner pays the said amount, the respondent/DDA may thereafter proceed to hand over the vacant physical possession to the petitioner and to execute the conveyance deed as contemplated in the tender conditions, subject to compliance with all applicable formalities in this regard,” the Court ordered..Senior Advocate Sandeep P Agarwal along with advocates Priyanka Tiwary, Ritika Priya and Tanya Chanda appeared for the petitioner.DDA was represented through its standing counsel Prabhsahay Kaur..[Read Order]