NOOR MUHAMMAD vs CHIEF ENGINEER WORKS & SERVICES DEPARTMENT
This petition for leave to appeal arises from the dismissal of a writ petition by the Peshawar High Court, which challenged the rejection of the petitioner's bid in a government auction. The petitioner, a contractor, participated in an auction for iron and steel conducted by the Works and Services Department, Government of NWFP, offering the highest bid. The Department subsequently rejected the bid, citing that it fell below the reserved price of Rs. 18,000 per ton. The core legal question was whether the Department was legally obligated to accept the highest bid despite it being below the reserved price, and whether the rejection without a hearing was unlawful. The Supreme Court upheld the High Court's decision, holding that the Department acted within its rights as the auction notice explicitly reserved the authority to reject any bid without assigning reasons. The Court affirmed that where auction terms grant the competent authority the right to reject bids without explanation, the authority cannot be compelled to accept a bid below the reserved price, nor is it required to provide a hearing before such rejection.
- Can a government department reject the highest bid in a public auction if it falls below the reserved price?
- Does a bidder have a legal right to a hearing before a government authority rejects their bid in an auction?
- Is a clause in an auction notice allowing the rejection of bids without assigning reasons legally enforceable?
Abdul Hameed Dogar, J.--Petitioner seeks leave to appeal against the judgment dated 1.7.2004 of a learned Division Bench of the Peshawar High Court, Peshawar, whereby Writ Petition No. 393 of 2004 filed by him was dismissed in limine
2. Briefly, stated the facts giving rises to the filing of instant petition are that the petitioner is a Contractor and deals in building material including iron and steel. On 15.2.2002 C&W department, Government of NWFP, advertised through various newspapers that some quantity of iron steel would be auctioned on 15.3.2002. The 'petitioner participated in the auction and offered the highest bid of Rs. 14,000/- per ton. He deposited Rs. 10,00,000/- as 25% down payment. But on 20.12.2003 the department informed petitioner that his bid has been rejected. Feeling aggrieved, petitioner filed writ petition before the learned High Court. The respondents filed their comments stating therein that reserved rate was Rs.18000/- per ton set as by the department whereas the petitioner's bid was lower than the reserved price, therefore, the Department would not accept the same under the rule and that acceptance of bid of the petitioner would have been objected by the auditors. The learned High Court dismissed the writ petition vide impugned judgment as stated above.
3. We have heard Mr. Muhammad Jamil Khan, learned ASC for the petitioner at length and have gone through the record and the proceedings of the case in minute particulars.
4. Mr. Muhammad Jamil Khan, learned ASC for the petitioner has argued that the petitioner's bid being highest should have been accepted. He argued that the order dated 20.12.2003 regarding rejection of the bid of the petitioner is illegal, unconstitutional and based on malafide and of no legal effect. According to him the bid offered by the petitioner is much higher than stipulated cost of the steel put for auction and therefore, there was no legal or factual justification for rejection of the bid offered by the petitioner to the department and the amount of Rs. 10,00,000/- 25% of the bid money deposited by the petitioner was returned by the department after more than one year without any justification. He contended that no valid reason has been assigned by the respondent for not accepting the highest bid offered by the petitioner. He further contended that no opportunity of hearing was provided to the petitioner by the respondent before cancellation of his highest bid.
5. It has been specifically mentioned in the auction/publicity notice of the bid that the competent authority has the right to reject the bid without assigning any reason, therefore, it cannot be forced to the respondent to accept the bid of the petitioner which is lower than the reserved price. There is also no provision in the auction/publicity bid notice that while cancelling the bid the petitioner will be given opportunity for hearing by the competent authority.
6. For what has been discussed above, we are of the considered opinion that the impugned judgment is based on valid and sound reasons and does not warrant any interference by this Court.
7. Accordingly, petition being devoid of force is dismissed and leave to appeal refused.