MUNICIPAL COUNCIL NEEMUCH versus MAHADEO REAL ESTATE AND ORS. on 17 September 2019

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SUPREME COURT REPORTS

[2019] 12 S.C.R.

AMUNICIPAL COUNCIL NEEMUCH

v.

MAHADEO REAL ESTATE AND ORS.

(Civil Appeal No. 7319-7320 of 2019)

BSEPTEMBER 17, 2019

[ARUN MISHRA, M. R. SHAH AND B. R. GAVAI, JJ.]

Constitution of India – Art.226– Administrative action–Judicial review of – Appellant invited tenders for allotment of landon lease, for 30 years – Bid of respondent no.1 found to be highestC– Objection raised with regard to the tender process– Respondentno.3-Divisional Revenue Commissioner, Ujjain passed order dtd.03.07.10 that the tenders invited were not competitive as there wasno adequate publicity and there was possibility of cartel of bidders– Direction to invite the tenders again by publishing the NoticeDInviting Tender (NIT) in at least one National level Englishnewspaper and one State level reputed Hindi newspaper– High Courtquashing the order dtd. 03.07.10, directed respondent no.3 to grantapproval on behalf of the State Government for allotment of theland on lease in favour of respondent no.1 – Review – Dismissed –On appeal, held: Under clause (iii) of sub-sec.3 of s.109, no land,Eexceeding fifty thousand rupees in the value shall be sold orotherwise conveyed without the previous sanction of the StateGovernment – In the present case, before inviting the bids, priorapproval of the State Government as required u/s.109 of the 1961Act was not taken – Division Bench of the High Court by onlyFreferring to the communication dtd. 21.12.09 came to the conclusionthat the sanction contemplated u/s.109 was granted by the StateGovernment – Commissioner, instead of blindly accepting thedirections contained in the communication dtd. 21.12.09, acted inlarger public interest so that the Municipal Council earns higherrevenue by enlarging the scope of the competition – StateGGovernment also, after the Commissioner pointed out anomalies,re-examined the issue and authorised the Commissioner to passappropriate orders including invalidating the tender process anddirecting initiation of fresh tender process – In this background, H

the finding of the Division Bench that the action of the Commissioneris arbitrary and illegal, is not correct – High Court, while exercisingits powers of judicial review of administrative action, could nothave interfered with the decision unless the decision suffers fromthe vice of illegality, irrationality or procedural impropriety – Both,the Commissioner as well as the State Government acted in the largerpublic interest – Scope of judicial review of an administrative actionis very limited – Interference by the High Court was improper –Impugned orders set aside – However, appellant to refund the amountdeposited by respondent no.1 with interest @ 6% p.a.– MadhyaPradesh Municipality Act, 1961– ss.109, 323– MunicipalCorporation (Transfer of Immovable Property) Rules, 1994– rr.3,7– Principle of Wednesbury Unreasonableness.

Allowing the appeals, the Court

Conclusion

Allowing the appeals, the Court

HELD: 1.1 No land, exceeding fifty thousand rupees in thevalue shall be sold or otherwise conveyed without the previoussanction of the State Government. The immovable property whichyields or is capable of yielding an income shall not be transferredby sale or otherwise conveyed, except to the highest bidder atthe public auction or by inviting offers in a sealed cover. No doubt,with the previous sanction of the State Government such a transfercould be effected without public auction or inviting offers in asealed cover. The second proviso further provides that, theCorporation may, with the previous sanction of the StateGovernment and for the reasons to be recorded in writing, transferany immovable property to a bidder other than the highest bidder. It is thus amply clear that, whenever any land which is having avalue exceeding fifty thousand rupees is to be sold the samecannot be done without the previous sanction of the StateGovernment. The scope of judicial review of an administrativeaction is very limited. Unless the Court comes to a conclusion,that the decision maker has not understood the law correctlythat regulates his decision-making power or when it is found thatthe decision of the decision maker is vitiated by irrationality andthat too on the principle of “Wednesbury Unreasonableness” orunless it is found that there has been a procedural impropriety inthe decision-making process, it would not be permissible for the A

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AHigh Court to interfere in the decision making process. It is notpermissible for the Court to examine the validity of the decisionbut this Court can examine only the correctness of the decision-making process. An interference by the High Court would bewarranted only when the decision impugned is vitiated by anapparent error of law, i.e., when the error is apparent on the faceBof the record and is self evident. The High Court would beempowered to exercise the powers when it finds that the decisionimpugned is so arbitrary and capricious that no reasonable personwould have ever arrived at. The test is not what the courtconsiders reasonable or unreasonable but a decision which theCcourt thinks that no reasonable person could have taken. Notonly this but such a decision must have led to manifest injustice.[Paras 12, 13, 15 & 17] [541-B-E; 542-F-H; 544-A-B]

1.2 Undisputedly, in the present case, before inviting thebids, prior approval of the State Government as is required underDSection 109 of the Madhya Pradesh Municipality Act, 1961 wasnot taken. Two municipal counsellors raised objections beforethe Collector under the provisions of Section 323 of the said Act.The Collector, who initially granted stay on 18.07.2008, vide orderdated 23.12.2008 directed the Municipal Council to seek approvalof the State Government to the said proposal. Vide communicationEdated 21.12.2009, the State Government directed respondent No.3-Revenue Commissioner to hand over the possession of theland to respondent No. 1. While doing so, the State Governmentdirected the Commissioner to inspect as to whether the land wasbeing put for use as per the development plan. On receipt of theFcommunication, the Divisional Commissioner addressed acommunication to the State Government on 03.03.2010 thereby,specifically pointing out that no proper publicity was given to theNIT and that the rates were not competitive as per the marketvalue. It was specifically observed that there was a cartel amongthe tenderers and, therefore, sought clear orders of the StateGGovernment in view of Section 109 of the said Act. He alsoproposed to reject the proposal with further direction to invitefresh tenders by giving adequate publicity. In response to thesaid communication, the State Government re-examined the issue H

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and by communication dated 18.05.2010 authorised theCommissioner for transferring the land in question. The StateGovernment authorised the Commissioner to take necessarydecision with regard to grant of sanction under the provisions ofSection 109 of the said Act and Rule 7 of the MunicipalCorporation (Transfer of Immovable Property) Rules, 1994.[Paras 18, 22] [544-C; 545-G-H; 546-A-D]

1.3 The Division Bench of the High Court by only referringto the communication dated 21.12.2009 came to the conclusionthat the sanction contemplated under Section 109 of the said Actwas granted by the State Government. However, it totally ignoredthe subsequent correspondence between the State Governmentand the Commissioner. Perusal of the subsequent communicationreveals that the Commissioner had pointed out the infirmities inthe proposal of the Municipal Council and advised the StateGovernment to reject the said proposal with a direction to theMunicipal Council to invite fresh tenders. The Commissioner,instead of blindly accepting the directions contained in thecommunication dated 21.12.2009, has acted in larger publicinterest so that the Municipal Council earns a higher revenue.Not only this, but the State Government, after the Commissionerpointing out anomalies to its notice, has re-examined andreconsidered the issue and authorised the Commissioner to passappropriate orders including invalidating the tender process anddirecting initiation of fresh tender process. In the background ofthis factual situation, the finding of the Division Bench of theHigh Court that the action of the Commissioner is arbitrary andillegal, is neither legally or factually correct. The High Court,while exercising its powers of judicial review of administrativeaction, could not have interfered with the decision unless thedecision suffers from the vice of illegality, irrationality orprocedural impropriety. [Paras 23, 24] [546-E-G; H; 547-A-C]

1.4 The Commissioner had acted rightly as a custodian ofthe public property by pointing out the anomalies in the proposalof the Municipal Council to the State Government and the StateGovernment has also responded in the right perspective byauthorising the Commissioner to take an appropriate decision.

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ABoth, the Commissioner as well as the State Government, haveacted in the larger public interest. The decision of theCommissioner which is set aside by the High Court is undoubtedlyin larger public interest, which would ensure that the MunicipalCouncil earns a higher revenue by enlarging the scope of thecompetition. By no stretch of imagination, the decision of theBState Government or the Commissioner could be termed asillegal, improper, unreasonable or irrational, which parametersonly could have permitted the High Court to interfere.Interference by the High Court when none of such parametersexist was totally improper. It is the High Court, which has failedCto take into consideration relevant material. In the result, theimpugned Orders are not sustainable in law. The impugned ordersdated 31.08.2017 and 05.07.2018 are quashed and set aside. Thepetition of respondent No.1 stands dismissed. However, theMunicipal Council is directed to refund the amount deposited byrespondent No.1 herein along with interest at the rate of 6% perDannum forthwith. [Paras 25-27] [547-C-D; G-H; 548-A-C]

Tata Cellular v. Union of India(1994) 6 SCC 651 :[1994] 2 Suppl. SCR 122 ;West Bengal Central SchoolService Commission v. Abdul Halim2019 SCC OnLineSC 902 – relied on.E

Case Law Reference

[1994] 2 Suppl. SCR 122relied on Para 14

CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 7319-7320 of 2019.FFrom the Judgment and Order dated 05.07.2018 of the MadhyaPradesh High Court, Bench at Indore in Review Petition No. 1072 of2017 and order dated 31.08.2017 in W.P. No. 12204 of 2010.

Harsh Parashar, Adv. for the Appellant.

GKalyan Banerjee, Sr. Adv., Uday Gupta, Ms.Shivani Lal, HirenDasan, M. K. Tripathi, Hemant Kushwalia, Mrs. Sarla Chandra, AvishkarSinghvi, Nipun Katyal, Rahul Kaushik, Advs. for the Respondents.

The Judgment of the Court was delivered by

B. R. GAVAI, J.

1. Leave granted.

2. The present appeals challenge the Judgment and Order passedby the Division Bench of the Madhya Pradesh High Court, Bench atIndore, dated 31.08.2017 thereby allowing the writ petition filed byrespondent No. 1 herein and the subsequent Order dated 05.07.2018thereby, rejecting the Review Petition filed by the appellant.

3. The factual background, in brief, giving rise to the present appealsis as under.

The appellant, which is a Municipal Council, duly constituted underthe Madhya Pradesh Municipality Act, 1961 (hereinafter referred to asthe “said Act”) had invited tenders for allotment of land on lease, for aperiod of 30 years. The land was ad-measuring 163176 sq. ft. situated inScheme No.1A (Commercial-cum-Residential Use), Neemuch. TheNotice Inviting Tenders (“NIT” for short) was published in the dailynewspapers, viz., Nai Duniya, Dainik Bhaskar, Free Press and DashpurExpress. Respondent No.1, which is a registered partnership firm alongwith other bidders had submitted the tender thereby giving an offer ofRs.5,81,00,106/-. It had also deposited the earnest money amounting toRs. 47,00,000/-. The bids of the participants were opened in presence ofthe representatives of all the bidders. The bid of respondent No. 1herein was found to be highest.

4. The appellant issued a letter dated 27.09.2008 thereby informingrespondent No. 1 that its bid was accepted. Respondent No.1 was directedto deposit an amount of Rs.1,45,25,050/-, i.e., 25% of the bid amountwithin a period of seven days. Respondent no.1 in accordance therewithdeposited the aforesaid amount on 01.10.2008.

5. It appears that an objection was raised by two members of theMunicipal Council under the provisions of Section 323 of the said Actbefore the Collector with regard to the said tender process. It furtherappears, that the Collector vide Order dated 18.07.2008 had stayed furtherproceedings of the tender process. Vide Order dated 23.12.2008, theCollector disposed of the proceeding observing therein, that the proposalbe sent for approval of the State Government in the Urban Administrative A

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Aand Development Department, respondent No. 2 herein, under theprovisions of Section 109 of the said Act.

6. Thereafter, it appears that, there was certain correspondencebetween the Urban Administrative and Development Department, onone hand, and the Divisional Revenue Commissioner of Ujjain, respondentBNo.3 herein, on the other hand. Finally, respondent No.3 passed an orderdated 03.07.2010 observing therein that, the tenders invited in connectionwith transfer of the said land were not competitive. He further observedin the said Order, that the NIT was published only in Indore edition oftwo Hindi Newspapers at Indore and as such there was no widecirculation. As such, he rejected the proposal of the Municipal CouncilCand returned the same with the direction to invite the tenders again bypublishing the NIT in at least one National level English newspaper andone State level reputed Hindi newspaper. Being aggrieved thereby,respondent No. 1 herein approached the Madhya Pradesh High Court inWrit Petition No.12204 of 2010. The Division Bench vide Order datedD31.08.2017 allowed the writ petition thereby quashing and setting asidethe Order dated 03.07.2010 passed by respondent No.3 and furtherdirecting him to grant approval on behalf of the State Government forallotment of the land on lease in favour of respondent no.1. The appellant,thereafter, preferred Review Petition No. 1072 of 2017. The same wasrejected. Hence, the present appeals challenging both the Orders datedE31.08.2017 and 05.07.2018.

7. We have heard Mr. Harsh Parashar, learned counsel appearingon behalf of the appellant and Mr. Kalyan Banerjee, learned seniorcounsel appearing on behalf of the respondents.F8. For appreciating the rival controversy, it will be relevant torefer to the provisions of Section 109 of the said Act. Section 109 readsas follows.

“109. Provisions governing the disposal of Municipal propertyvesting in or under the management of Council.- No streets, landGpublic places, drains or irrigation channels shall be sold, leased orotherwise alienated, save in accordance with such rules as maybe made in this behalf.-

(2) Subject to the provisions of sub-section (1)- (a)the Chief Municipal Officer may, in his discretion, grant aHlease of any immovable property belonging to the Council, including any right of fishing or of gathering and taking fruits,flowers and then like, of which the premium or rent, orboth, as the case may be, does not exceed two hundredand fifty rupees for any period not exceeding twelve monthsat a time:

Provided that every such lease granted by the ChiefMunicipal Officer, other than the lease of the class in respectof which the President-in-Council has by resolutionexempted the Chief Municipal Officer from compliance withthe requirements of this proviso, shall be reported by him tothe President-in-Council within fifteen days after the samehas been granted.

(b) with the sanction of the President-in-Council, the ChiefMunicipal Officer may, by sale or otherwise grant a leaseof immovable property including any such right as aforesaidfor any period not exceeding three years at a time of whichthe premium, or rent, or both, as the case may be, for anyone year does not exceed one thousand five hundred rupees;

(c) with the sanction of the Council, the Chief Municipal Officermay lease, sell or otherwise convey any immovable propertybelonging to the Council.

(3) The sanction of the President-in-Council or of the Councilunder sub-section (2) may be given either generally for anyclass of cases or specially in any particular case:

Provided that-

(i) no property vesting in the Council in trust shall be leased,sold or otherwise conveyed in a manner that is likely toprejudicially effect the purpose of the trust subject to whichsuch property is held;

(ii) no land exceeding fifty thousand rupees in value shallbe sold or otherwise conveyed without the previous sanctionof the State Government and every sale or other conveyanceof property vesting in the Council shall be deemed to besubject to the conditions and limitations imposed by this Actor by any other enactment for the time being in force.”

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A9. It could thus be seen that, the aforesaid provision governs thedisposal of municipal property vesting in or under the management ofthe Municipal Council. Clause (ii) of sub-section (3) of Section 109 ofthe said Act would be the most relevant provision. It provides that, noland exceeding fifty thousand rupees in value shall be sold or otherwiseconveyed without the previous sanction of the State Government. ItBfurther provides that, every sale or other conveyance of property vestingin the Council shall be deemed to be subject to the conditions andlimitations imposed by the said Act or by any other enactment for thetime being in force.

10. It will also be relevant to refer to Rule 3 of the MunicipalCCorporation (Transfer of Immovable Property) Rules, 1994 (hereinafterreferred to as the “said Rules”), which reads thus:

“3. No immovable property which yields or is capable of yieldingan income shall be transferred by sale, or otherwise conveyedexcept to the highest bidder at a public auction or by inviting offersDin a sealed cover:

Provided that if the Corporation is of the opinion that it is notdesirable to hold a public auction or to invite offers in sealed coversthe Corporation may, with the previous sanction of the StateGovernment, effect such transfer without public auction or invitingEoffers in sealed covers:

Provided further that the Corporation may with the previoussanction of the State Government and for the reasons to berecorded in writing, transfer any immovable property to a bidderother than the highest bidder:FProvided also that for any such transfer by lease a reasonablepremium shall be payable at the time of granting the lease andannual rent shall also be payable in addition during the total periodof the lease.”

11. A perusal of the aforesaid Rule 3 of the said Rules wouldGreveal, that no immovable property which yields or is capable of yieldingan income shall be transferred by sale, or otherwise conveyed, except tothe highest bidder at a public auction or by inviting offers in a sealedcover. The proviso thereof provides that if the Corporation is of theopinion that it is not desirable to hold a public auction or to invite offers inH

sealed covers, the Corporation may, with the previous sanction of theState Government, effect such transfers without public auction or invitingoffers in sealed covers. The second proviso also provides that theCorporation may, with the previous sanction of the State Governmentand for the reasons to be recorded in writing, transfer any immovableproperty to a bidder other than the highest bidder.

12. It is thus amply clear that, no land, exceeding fifty thousandrupees in the value shall be sold or otherwise conveyed without theprevious sanction of the State Government. The perusal of the aforesaidRule further makes it clear that the immovable property which yields oris capable of yielding an income shall not be transferred by sale orotherwise conveyed, except to the highest bidder at the public auction orby inviting offers in a sealed cover. No doubt, with the previous sanctionof the State Government such a transfer could be effected without publicauction or inviting offers in a sealed cover. The second proviso furtherprovides that, the Corporation may, with the previous sanction of theState Government and for the reasons to be recorded in writing, transferany immovable property to a bidder other than the highest bidder.

13. It is thus amply clear that, whenever any land which is havinga value exceeding fifty thousand rupees is to be sold the same cannot bedone without the previous sanction of the State Government.

14. In the present case, the learned Judges of the Division Benchhave arrived at a finding that such a sanction was, in fact, granted. Wewill examine the correctness of the said finding of fact at a subsequentstage. However, before doing that, we propose to examine the scope ofthe powers of the High Court of judicial review of an administrativeaction. Though, there are a catena of judgments of this Court on the saidissue, the law laid down by this Court in the case of Tata Cellular Vs.Union of India reported in (1994) 6 SCC 651 lays down the basic principleswhich still hold the field. Paragraph 77 of the said judgment reads thus:

“77. The duty of the court is to confine itself to the question oflegality. Its concern should be:

1. Whether a decision-making authority exceeded its powers?

2. Committed an error of law,

3. committed a breach of the rules of natural justice, A

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542SUPREME COURT REPORTS

A4. reached a decision which no reasonable tribunal would havereached or,

5. abused its powers.

Therefore, it is not for the court to determine whether aparticular policy or particular decision taken in the fulfilmentof that policy is fair. It is only concerned with the manner inwhich those decisions have been taken. The extent of the dutyto act fairly will vary from case to case. Shortly put, the groundsupon which an administrative action is subject to control byjudicial review can be classified as under:

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(i) Illegality : This means the decision-maker mustunderstand correctly the law that regulates his decisionmaking power and must give effect to it.

(ii) Irrationality, namely, Wednesbury unreasonableness.

(iii) Procedural impropriety.

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The above are only the broad grounds but it does not rule outaddition of further grounds in course of time. As a matter offact, in R. v. Secretary of State for the Home Department, exBrind, (1991) 1 AC 696, Lord Diplock refers specifically toone development, namely, the possible recognition of theEprinciple of proportionality. In all these cases the test to beadopted is that the court should, ‘consider whether somethinghas gone wrong of a nature and degree which requires itsintervention’”.

15. It could thus be seen that the scope of judicial review of anFadministrative action is very limited. Unless the Court comes to aconclusion, that the decision maker has not understood the law correctlythat regulates his decision-making power or when it is found that thedecision of the decision maker is vitiated by irrationality and that too onthe principle of “Wednesbury Unreasonableness” or unless it is foundGthat there has been a procedural impropriety in the decision-makingprocess, it would not be permissible for the High Court to interfere in thedecision making process. It is also equally well settled, that it is notpermissible for the Court to examine the validity of the decision but thisCourt can examine only the correctness of the decision-making process.

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16. This Court recently in the case of West Bengal Central SchoolService Commission vs. Abdul Halim reported in 2019 SCC OnLineSC 902 had again an occasion to consider the scope of interferenceunder Article 226 in an administrative action.

“31. In exercise of its power of judicial review, the Court is tosee whether the decision impugned is vitiated by an apparent errorof law. The test to determine whether a decision is vitiated byerror apparent on the face of the record is whether the error isself-evident on the face of the record or whether the error requiresexamination or argument to establish it. If an error has to beestablished by a process of reasoning, on points where theremay reasonably be two opinions, it cannot be said to bean error on the face of the record, as held by this Courtin Satyanarayan v. Mallikarjuna reported in AIR 1960 SC 137. Ifthe provision of a statutory rule is reasonably capable of two ormore constructions and one construction has been adopted, thedecision would not be open to interference by the writ Court. It isonly an obvious misinterpretation of a relevant statutory provision,or ignorance or disregard thereof, or a decision founded on reasonswhich are clearly wrong in law, which can be corrected by thewrit Court by issuance of writ of Certiorari.

32. The sweep of power under Article 226 may be wide enoughto quash unreasonable orders. If a decision is so arbitrary andcapricious that no reasonable person could have ever arrived at it,the same is liable to be struck down by a writ Court. If the decisioncannot rationally be supported by the materials on record, thesame may be regarded as perverse.

33. However, the power of the Court to examine thereasonableness of an order of the authorities does not enable theCourt to look into the sufficiency of the grounds in support of adecision to examine the merits of the decision, sitting as if in appealover the decision. The test is not what the Court considersreasonable or unreasonable but a decision which the Court thinksthat no reasonable person could have taken, which has led tomanifest injustice. The writ Court does not interfere, because adecision is not perfect.

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A17. It could thus be seen that an interference by the High Courtwould be warranted only when the decision impugned is vitiated by anapparent error of law, i.e., when the error is apparent on the face of therecord and is self evident. The High Court would be empowered toexercise the powers when it finds that the decision impugned is so arbitraryand capricious that no reasonable person would have ever arrived at. ItBhas been reiterated that the test is not what the court considers reasonableor unreasonable but a decision which the court thinks that no reasonableperson could have taken. Not only this but such a decision must have ledto manifest injustice.

18. In the light of the aforesaid principles, let us examine the factsCof the present case. Undisputedly, in the present case, before invitingthe bids, prior approval of the State Government as is required underSection 109 of the said Act was not taken. It appears, that only after thetender process was finalized and the Municipal Council had taken adecision to accept the bid of Respondent No.1, two municipal counsellorsDraised objection under the provisions of Section 323 of the said Act,before the Collector, Neemuch. The Collector, Neemuch on 18.07.2008had granted stay to the proceedings. Finally, the Collector, vide Orderdated 23.12.2008 held that for granting the said land on lease for a periodof 30 years, the approval of the State Government is necessary. Pursuantto the said order by the Collector, the matter was sent to respondent No.E2- State Government. The Principal Secretary to the Government ofMadhya Pradesh addressed a communication to the Commissioner, UjjainDivision, Ujjain (hereinafter referred to as “the Commissioner”) therebyauthorising him to transfer the land in question. While doing so, the StateGovernment also directed the Commissioner to inspect that the utilisationFof the land was for the purposes as provided under NeemuchDevelopment Plan 2011.

19. However, the Commissioner addressed a communication dated03.03.2010 to the State Government thereby, pointing out that the rightsfor transferring the property having a value more than fifty thousandGrupees is with the State Government. He has, therefore, solicited guidancefrom the State Government seeking clear orders in view of the provisionsof Section 109 of the said Act and Rule 7 of the said Rules. He alsopointed out to the State Government that the Municipal Council hadpublished the NIT only in two daily newspapers of Hindi language andas such there was no sufficient competition. He also pointed out that, asH

such tenders were filled up by only four bidders. He specifically observed,that after noticing the rates offered, it appears that there is cartel amongstthe tenderers. He further pointed out that, had the NIT been published inEnglish and Hindi newspapers at the National and State level, then therewould have been a wider competition and the higher rates could havebeen offered. He, therefore, proposed that while rejecting the proposalas submitted to the Council it will be appropriate to direct the MunicipalCouncil, Neemuch, to invite the tenders again.

20. In response to the aforesaid communication dated 03.03.2010,respondent No. 2-State Government addressed another communicationdated 18.05.2010 to the Commissioner. The said communication statesthat after re-examination the State Government has authorised theCommissioner for transferring the land in question. The saidcommunication specifically states that if the proposal submitted by theMunicipal Council was not agreeable to the Commissioner then whileinvalidating the proposal by the Municipal Council, he may give order forinitiation of proceedings afresh. In pursuance of the aforesaidcommunication dated 18.05.2010, the order impugned herein is passedby the Commissioner dated 03.07.2010.

21. The Commissioner in the Order dated 03.07.2010 has foundthat the bids were not found to be competitive. He further found that theNIT was published only in two Hindi newspapers and as such there wasno sufficient competition. He has, therefore, rejected the proposal of theMunicipal Council and while doing so, returned back the same with thedirection to invite the tenders again and get the NIT published in at leastone National level English newspaper and one State level Hindinewspaper.

22. The situation that emerges is thus. Initially the MunicipalCouncil, Neemuch, invited tenders for allotment of the said land onlease for 30 years. This was done without taking prior approval of theState Government as in required under Section 109 of the said Act. Twomunicipal counsellors raised objections before the Collector under theprovisions of Section 323 of the said Act. The Collector, who initiallygranted stay on 18.07.2008, vide order dated 23.12.2008 directed theMunicipal Council to seek approval of the State Government to the saidproposal. Vide communication dated 21.12.2009, the State Governmentdirected respondent No. 3-Revenue Commissioner to hand over thepossession of the land to respondent No. 1. While doing so, the State A

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AGovernment directed the Commissioner to inspect as to whether theland was being put for use as per the development plan. On receipt ofthe communication, the Divisional Commissioner addressed acommunication to the State Government on 03.03.2010 thereby,specifically pointing out that no proper publicity was given to the NITand that the rates were not competitive as per the market value. It wasBspecifically observed that there was a cartel among the tenderers and,therefore, sought clear orders of the State Government in view of Section109 of the said Act. He also proposed to reject the proposal with furtherdirection to invite fresh tenders by giving adequate publicity. In responseto the said communication, the State Government re-examined the issueCand by communication dated 18.05.2010 authorised the Commissionerfor transferring the land in question. It is further clear from the saidcommunication that, the State Government authorised the Commissionerto take necessary decision with regard to grant of sanction under theprovisions of Section 109 of the said Act and Rule 7 of the said Rules. Itspecifically observed that, if the Commissioner does not agree with theDproposal of the Municipal Council he may while invalidating the proposalof the Municipal Council give orders for initiation of proceedings afresh.It is in view of this authorisation that the Divisional Commissioner haspassed the orders which were impugned before the Madhya PradeshHigh Court.

E23. We are at pains to say, that the Division Bench of the HighCourt by only referring to the communication dated 21.12.2009 came tothe conclusion that the sanction contemplated under Section 109 of thesaid Act was granted by the State Government. However, the DivisionBench has totally ignored the subsequent correspondence between the FState Government and the Commissioner. Perusal of the subsequentcommunication reveals that the Commissioner had pointed out theinfirmities in the proposal of the Municipal Council and advised the StateGovernment to reject the said proposal with a direction to the MunicipalCouncil to invite fresh tenders. On the objection of the Commissioner, the State Government re-examined and reconsidered the issue andGauthorised the Commissioner to exercise powers under Section 109 ofthe said Act to take appropriate decision, including rejecting the proposaland directing the process of re-tendering.

24. It could thus be clearly seen that, the Commissioner, insteadof blindly accepting the directions contained in the communication datedH

21.12.2009, has acted in larger public interest so that the Municipal Councilearns a higher revenue. Not only this, but the State Government, afterthe Commissioner pointing out anomalies to its notice, has re-examinedand reconsidered the issue and authorised the Commissioner to passappropriate orders including invalidating the tender process and directinginitiation of fresh tender process. In the background of this factualsituation, the finding of the Division Bench of the High Court that theaction of the Commissioner is arbitrary and illegal, in our view, is neitherlegally or factually correct. As discussed hereinabove, the High Court,while exercising its powers of judicial review of administrative action,could not have interfered with the decision unless the decision suffersfrom the vice of illegality, irrationality or procedural impropriety.

25. In the present case, we find that the Commissioner had actedrightly as a custodian of the public property by pointing out the anomaliesin the proposal of the Municipal Council to the State Government andthe State Government has also responded in the right perspective byauthorising the Commissioner to take an appropriate decision. We are ofthe considered view that, both, the Commissioner as well as the StateGovernment, have acted in the larger public interest. We are unable toappreciate as to how the High Court, in the present matter, could havecome to a conclusion that it was empowered to exercise the power ofjudicial review to prevent arbitrariness or favouritism on the part of theState authorities, as has been observed by it in paragraph 13. We arealso unable to appreciate the finding of the High Court in para 17 whereinit has observed that the impugned decision of the authorities are foundnot to be in the public interest. We ask the question to us, as to whetherdirecting re-tendering by inviting fresh tenders after giving wide publicityat the National level so as to obtain the best price for the public property,would be in the public interest or as to whether awarding contract to abidder in the tender process where it is found that there was no adequatepublicity and also a possibility of there being a cartel of bidders, wouldbe in the public interest. We are of the considered view that the decisionof the Commissioner which is set aside by the High Court is undoubtedlyin larger public interest, which would ensure that the Municipal Councilearns a higher revenue by enlarging the scope of the competition. By nostretch of imagination, the decision of the State Government or theCommissioner could be termed as illegal, improper, unreasonable orirrational, which parameters only could have permitted the High Court AB

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Ato interfere. Interference by the High Court when none of suchparameters exist, in our view, was totally improper. On the contrary, wefind that it is the High Court, which has failed to take into considerationrelevant material.

26. In the result, the impugned Orders are not sustainable in law.BThe appeals are, accordingly, allowed and the impugned orders dated31.08.2017 and 05.07.2018 are quashed and set aside. The petition ofrespondent No. 1 stands dismissed.

27. However, the Municipal Council is directed to refund theamount deposited by respondent No. 1 herein along with interest at theCrate of 6% per annum forthwith.

28. In the facts and circumstances of the case, there shall be noorder as to costs.

DDivya Pandey

Appeals allowed.

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