'Public Interest Not Limited To Maximising Revenue For Govt; It Includes Fair & Transparent Process' : Supreme Court

While hearing a bunch of appeals, a Division Bench of the Supreme Court, comprising Justices Hrishikesh Roy and Pankaj Mithal, held, "Public interest need not remain exclusively limited to ensuring maximum revenue accrual for the Government. Instead, public interest includes, without limiting itself to, a fair, transparent & stable process which any and all executive action must adhere to.”

The challenge in these appeals was to the judgment 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 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, was struck down by the Division Bench of the High Court[Haryana State Industrial and Infrastructure Development Corporation Limited (HSIIDC) v. Ashish Jain and others]

Brief Background

HSIIDC issued an advertisement for the allotment of 1762 industrial plots of varying sizes in different industrial estates across the State of Haryana. E-auction was conducted for 352 of the offered plots. In course of the same, some of the participants made complaints alleging technical glitches in the e-auction process.

Pertinently, allotments were to be made per the Enterprises Promotion Policy of the State Government and the Corporation's Estate Management Procedure (EMP)/Allotment Procedure. As per Clause 3.4 (ii)(a) and (c) of the EMP, allotments were to be made through limited e-auction amongst the applicants.

However, due to the above-mentioned technical glitches, the Corporation conducted a manual auction, concerning the 130 plots, by discarding the bids obtained during the e-auction.

Court’s Observations

After hearing the Counsels for both parties, the Court observed that “when the HSIIDC as the authority deciding to allot industrial plots had laid down a particular procedure which will ensure fairness and transparency amongst the participants, they cannot depart from the notified process particularly when there was no technical report available with authority to confirm technical fault in the e-auction process.”

Further, the Court declared such departure to be arbitrary and unfair. It elucidated, "Since the decision is not founded on any acceptable reasoning, it would suffer from the vice of irrationality and unreasonableness.”

Contours of judicial review in administrative matters

The Apex Court also reiterated principles relating to judicial review in administrative matters. The Court relied upon several judgments, including Tata Cellular v. Union of India, (1994) 6 SCC 651 (77), where the grounds upon which an administrative action is subject to control by judicial review were classified 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 the case Union of India v. International Trading Co., (2003) 5 SCC 437, where the Court held:

“It is trite law that Article 14 of the Constitution applies also to matters of governmental policy and if the policy or any action of the Government, even in contractual matters, fails to satisfy the test of reasonableness, it would be unconstitutional.

While the discretion to change the policy in exercise of the executive power, when not trammelled by any statute or rule is wide enough, what is imperative and implicit in terms of Article 14 is that a change in policy must be made fairly and should not give the impression that it was so done arbitrarily or by any ulterior criteria.”

Based on the above observations, Court held that decision of the authorities is arbitrary and also irrational. It also pointed out the fact that that the bidding during the e-auction was conducted plot-wise, the exercise of clubbing together all the plots in one category for manual auction was arbitrary.

Moving Forward, it opined that when e-auction was opted for allotment of the industrial plots, the authority could not have departed from the notified procedure. The shift to manual auction would make the earlier process of e-auction an exercise in futility. It would also undermine the finality of the auction process where the bidding must conclude by the stipulated time and the winner is determined by the highest last bid.

In view of the same, the Court refused to interfere with the decision of the High Court and categorically held: “We are conscious of the limited power of judicial review. However, when it is seen that the decision of the authority is arbitrary, irrational, and disproportionate, having regard to complaints received only with regard to a few plots and yet all 130 plots being put to manual auction after abandoning the e-auction process, the intervention by the High Court with the decision of the authority cannot, in our view, be faulted.”

Additional Solicitor General Aishwarya Bhati appeared for the appellant. Senior Advocates Mr. Neeraj Kishan Kaul, Mr. Nidhesh Gupta, Mr. Gopal Sankaranarayanan, and Mr. Dama Seshadri Naidu represented the respondents.

Case Title: HARYANA STATE INDUSTRIAL AND INFRASTRUCTURE DEVELOPMENT CORPORATION LIMITED v. ASHISH JAIN & ORS. ETC., CIVIL APPEAL NOS. 4856 – 4865 OF 2023

Citation : 2023 LiveLaw (SC) 654

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