A Division Bench of the Supreme Court, comprised of Justices Hrishikesh Roy and Pankaj Mithal, ruled while hearing a number of appeals, “Public interest need not remain exclusively limited to ensuring maximal revenue accrual for the Government. Instead, the public interest encompasses, but is not limited to, a fair, transparent, and stable procedure that all executive actions must adhere to.”
The challenge in these appeals was to the judgement and order dated 13.02.2019 of the High Court of Punjab and Haryana, whereby the writ petitions filed by the respective parties were allowed, and the Division Bench of the High Court struck down the decision by the Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC) to conduct manual auction from the stage of the end of e-auction.
BREIF BACKGROUND
The Haryana State Industrial and Infrastructure Development Corporation (HSIIDC) advertised the allocation of 1,762 industrial plots of diverse sizes in various industrial estates throughout the state of Haryana. 352 of the available plots were auctioned off online.
During the course of the e-auction, some participants filed complaints alleging technical difficulties.
Allotments were to be made in accordance with the State Government’s Enterprises Promotion Policy and the Corporation’s Estate Management Procedure (EMP)/Allotment Procedure. According to Clause 3.4 (h)(a) and (c) of the EMP, allotments were to be made via limited electronic auction among applicants.
Due to the above-mentioned technical issues, the Corporation held a manual auction for the 130 plots, rejecting the proposals received during the electronic auction.
COURT’S OBSERVATIONS
After hearing the Counsels for both parties, the Court stated, “When the HSIIDC as the authority deciding to allot industrial plots had laid out a specific procedure to ensure fairness and transparency amongst the participants, they cannot deviate from the notified process, especially when there was no technical report available with authority to confirm a technical fault in the e-auction process.”
In addition, the Court ruled that this deviation was arbitrary and unjust. It explained, “Since the decision is not based on any valid reasoning, it would be irrational and unreasonable.”
Contours of judicial review in administrative matters
The Supreme Court reaffirmed the principles of judicial review in administrative matters. The Court relied on a number of decisions, including Tata Cellular v. Union of India, (1994) 6 SCC 651 (77), in which the circumstances on which an administrative action is subject to judicial review were categorised as:
1. “Illegality: This means the decision-maker must understand correctly the law that regulates his decision-making power and must give effect to it.
2. Irrationality, namely, Wednesbury unreasonableness.
3. Procedural impropriety.
The above are only the broad grounds, but it does not rule out addition of further grounds in course of time.”
The Court also cited Union of India v. International Trading Co., (2003) 5 SCC 437, in which it ruled:
“It is trite law that Article 14 of the Constitution pertains to matters of government policy, and if any policy or action of the government, even in contractual matters, fails to meet the reasonableness test, it is unconstitutional.
While the discretion to change policy in the exercise of the executive power, when not constrained by statute or regulation, is sufficiently broad, it is imperative and implicit under Article 14 that a policy change be made fairly and not give the impression that it was done arbitrarily or for ulterior motives.”
Based on the preceding observations, the court determined that the authorities’ decision was arbitrary and irrational. In light of the fact that bidding was conducted plot-by-plot during the electronic auction, the practise of grouping all plots in one category for manual auction was arbitrary.
Moving forward, the court opined that the authority could not have deviated from the prescribed procedure when it selected e-auction for the allocation of industrial sites. The transition to manual auctions would render the earlier e-auction process futile. It would also undermine the conclusiveness of the auction process, in which bidding must conclude by the specified time and the victor is determined by the highest final bid.
In light of this, the Supreme Court refused to overturn the decision of the High Court and stated categorically: “We are aware of the limited scope of judicial review. When it is clear that the authority’s decision is arbitrary, irrational, and disproportionate, considering that only a few plots were the subject of complaints, yet all 130 plots were put up for manual auction after abandoning the e-auction process, we cannot fault the High Court for interfering with the authority’s decision.”
Aishwarya Bhati, Additional Solicitor General, represented the appellant. The respondents were represented by senior advocates Neeraj Kishan Kaul, Nidhesh Gupta, Gopal Sankaranarayanan, and Dama Seshadri Naidu.
Case Title: HARYANA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION
LIMITED v. ASHISH JAIN & ORS. ETC., CIVIL APPEAL NOS. 4856 – 4865 OF 2023
