Om Prakash Sharma Vs. Ramesh Chand Prashar & Ors, on 13th May, 2016, Supreme Court of India – Read Judgement

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Om Prakash Sharma ….Appellant

Ramesh Chand Prashar & Ors. …. Respondents

Uday U. Lalit, J.
Leave granted.
This appeal by special leave challenges correctness of the judgment and
order dated 20.05.2013 passed by the High Court of Himachal Pradesh at
Shimla in L.P.A. No.441 of 2012 affirming the decision dated 14.08.2012 of
the Single Judge of the High Court in CWP No.1557 of 2010.
On 03.11.2008, an advertisement was issued by Himachal Tourism inviting
bids from interested parties for outright purchase of sites located at
three places in Himachal Pradesh including Café Aabshar in District Solan
situated at 3 kilometers from town named Kandaghat. The relevant
conditions mentioned in the advertisement were as under:-

“A Bidder is free to bid for one or more than one cafes. However all
bidders need to provide the following information for consideration of
their EOI.

Area of business interests (please enclose firm profile or corporate

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Annual turnover & Net worth in last three (3) years (please submit audited
financial statements and income Tax Return of last three financial years
supporting this information).

Interest in particular café(s) and proposed usage.
Offer to “Outright purchase of the café” (a separate rate will be quoted
for each café).”
In so far as Café Aabshar was concerned, the appellant as well as
respondent No.1 participated in the bid process. The bid submitted by the
appellant for Rs.27,15,000/- was the highest. Respondent No.1 had given a
bid of Rs. 17,00,000/- which was the 4th highest. The bid of the
appellant having been found to be the highest, it was accepted and Letter
of Intent was issued on 02.03.2010. Thereafter Sale Deed in respect of the
Café was executed in favour of the appellant on 31.03.2010.

After the execution of the Sale Deed, respondent No.1 who has been running
a Dhaba next to the site, filed CWP No.1557 of 2010 in the High Court of
Himachal Pradesh submitting that the appellant had not submitted his annual
turnover and net worth for last three years as stipulated in the
advertisement. No allegation was made of any arbitrariness, bias,
favoritism or malice in the auction process. The appellant filed his reply
in opposition. An affidavit in reply was also filed by the State
Government opposing the Writ Petition stating that the highest bid
submitted by the appellant was rightly accepted after due consideration by
the Committee comprising of high ranked officials and that the entire
process was completely fair and transparent.
The aforesaid Writ Petition was allowed by Single Judge of the High Court
by his judgment and order dated 14.08.2012. It was observed that the
condition regarding submission of the net worth was mandatory and the
Committee could not have over-looked such condition. It was further
observed that the Expert Committee had fixed the reserve price in respect
of the Café at Rs.30,78,000/- while the bid submitted by the appellant at
Rs.27,15,000/- was accepted. Interestingly, respondent No.1 himself had
given a bid for Rs.17,00,000/-, far below the alleged reserve price.
However, the Single Judge while accepting the submissions made on behalf of
the respondent No.1 allowed the Writ Petition and quashed the Letter of
Intent dated 02.03.2010 and Sale Deed dated 31.03.2010 and directed the
authorities to re-do the entire process of selling said Café in accordance
with law.
This decision of the Single Judge was challenged by the appellant by filing
LPA No.441 of 2012. The Division Bench upheld the view taken by the Single
Judge on both counts namely that offer of the appellant was below the
reserve price and that the condition regarding submission of annual
turnover and net worth for last three years was not complied with by the
appellant. The Division Bench thus dismissed LPA No.441 of 2012 by its
order dated 20.05.2013.
This appeal challenges the correctness of the decisions so rendered by the
High Court. While issuing notice, this Court by order dated 04.07.2013 had
directed that Status quo be maintained by the parties. By subsequent order
dated 08.10.2014 the respondent No.1 was directed to deposit in this Court
a sum of Rs.30,00,000/-, which the respondent had offered after the
finalization of the bid. The amount having been deposited by the
respondent No.1, it now stands invested in an interest bearing term
We have heard Mr. Tushar Bakshi, learned Advocate for the appellant and Mr.
Mahavir Singh, learned Senior Advocate for respondent No.1 and Mr.
Suryanarayan Singh, Senior Additional Advocate General for the State.
Mr. Bakshi, learned Advocate is right in his submission that no reserve
price was fixed while inviting bids from interested parties. The Expert
Committee may have indicated a figure as reserve price, however, the
advertisement did not indicate any. Precisely for this reason, even the
bid given by respondent No.1 was far below the figure of Rs.30,78,000/-.
The High Court was clearly in error in accepting this plea on behalf of
respondent No.1
Now, the question that remains to be considered is whether requirement to
furnish Annual Turnover and Net Worth for last three years was a mandatory
condition for infraction of which the bid made by the appellant had to be
rejected. In Poddar Steel Corporation v. Ganesh Engineering Works and
Others[1], this Court considered conditions which are essential conditions
of eligibility and those which are ancillary or subsidiary with the main
object to be achieved. It was observed in para 6 of the decision as under:-
“…….As a matter of general proposition it cannot be held that an authority
inviting tenders is bound to give effect to every term mentioned in the
notice in meticulous detail, and is not entitled to waive even a technical
irregularity of little or no significance. The requirements in a tender
notice can be classified into two categories-those which lay down the
essential conditions of eligibility and the others which are merely
ancillary or subsidiary with the main object to be achieved by the
condition. In the first case the authority issuing the tender may be
required to enforce them rigidly. In the other cases it must be open to
the authority to deviate from and not to insist upon the strict literal
compliance of the condition in a appropriate cases.”
In the present case, the site in question was to be sold on outright sale
basis. The advertisement or the stipulations therein did not contemplate
creation and or continuation of any relationship between the parties
calling for continued existence of any particular level of financial
parameters on part of the bidder, except the ability to pay the price as
per his bid. The condition was not an essential condition at all but was
merely ancillary to achieve the main object that was to ensure that the bid
amount was paid promptly. The advertisement contemplated payment of bid
amount whereafter the Sale Deed would be executed and not a relationship
which would have continued for considerable period warranting an assurance
of continued ability on part of the bidder to fulfill his obligations under
the arrangement. Nor was this condition aimed at ensuring a particular
level of financial ability on part of the bidder, for example in cases
where the benefit is designed to be given to a person coming from a
particular financial segment, in which case the condition could well be
termed essential. The idea was pure and clear sale simplicitor. As a
matter of fact, the appellant did pay the entire bid amount within the
prescribed period and the Sale Deed was also executed in his favor. In the
circumstances the relevant condition in the advertisement would not fall in
the first category of cases as dealt with by this Court in Poddar Steel
Corporation (supra). The authorities could therefore validly deviate from
and not insist upon strict literal compliance. The discretion so exercised
by the authorities could not have therefore been faulted. Thus, the
assessment made by the High Court that the condition in question was an
essential condition for non-compliance of which, the bid furnished by the
appellant was required to be rejected, in our view was not correct.

We, therefore, allow this Appeal and set aside the decisions rendered by
the Single Judge and the Division Bench of the High Court in the present
matter. The Letter of Intent dated 02.03.2010 and consequent Sale Deed
dated 31.03.2010 in favor of the appellant are held valid and correct. The
Writ Petition namely CWP No.1557 of 2010 preferred by respondent No.1
stands dismissed. The amount deposited by the respondent No. 1 in this
Court pursuant to order dated 08.10.2014 shall be returned to respondent
No.1 along with interest accrued therein.
The appeal is disposed of accordingly without any order as to costs.
………………………..CJI. (T. S. Thakur)

………………..…….J.(Uday Umesh Lalit)
New Delhi,
May 13, 2016
[1] (1991) 3 SSC 273

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