Municipal Council Neemuch vs Mahadeo Real Estate and Ors.

03.07.10 that the tenders invited were not competitive as there was no adequate publicity and there was possibility of cartel of bidders – Direction to invite the tenders again by publishing the Notice Inviting Tender (NIT) in at least one National level English newspaper and one State level reputed Hindi newspaper– High Court quashing the order dtd. 03.07.10, directed respondent no.3 to grant approval on behalf of the State Government for allotment of the land 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, exceeding fifty thousand rupees in the value shall be sold or otherwise conveyed without the previous sanction of the State Government – In the present case, before inviting the bids, prior approval of the State Government as required u/s.109 of the 1961 Act was not taken – Division Bench of the High Court by only referring to the communication dtd. 21.12.09 came to the conclusion that the sanction contemplated u/s.109 was granted by the State Government – Commissioner, instead of blindly accepting the directions contained in the communication dtd. 21.12.09, acted in larger public interest so that the Municipal Council earns higher revenue by enlarging the scope of the competition – State Government also, after the Commissioner pointed out anomalies, re-examined the issue and authorised the Commissioner to pass appropriate orders including invalidating the tender process and directing initiation of fresh tender process – In this background, the finding of the Division Bench that the action of the Commissioner is arbitrary and illegal, is not correct – High Court, while exercising its powers of judicial review of administrative action, could not have interfered with the decision unless the decision suffers from the vice of illegality, irrationality or procedural impropriety – Both, the Commissioner as well as the State Government acted in the larger public interest – Scope of judicial review of an administrative action is very limited – Interference by the High Court was improper – Impugned orders set aside – However, appellant to refund the amount deposited by respondent no.1 with interest @ 6% p.a.– Madhya Pradesh Municipality Act, 1961– ss.109, 323– Municipal Corporation (Transfer of Immovable Property) Rules, 1994– rr.3, 7– Principle of Wednesbury Unreasonableness.

Allowing the appeals, the Court

HELD: 1.1 No land, exceeding fifty thousand rupees in the value shall be sold or otherwise conveyed without the previous sanction of the State Government. The immovable property which yields or is capable of yielding an income shall not be transferred by sale or otherwise conveyed, except to the highest bidder at the public auction or by inviting offers in a sealed cover. No doubt, with the previous sanction of the State Government such a transfer could be effected without public auction or inviting offers in a sealed cover. The second proviso further provides that, the Corporation may, with the previous sanction of the State Government and for the reasons to be recorded in writing, transfer any immovable property to a bidder other than the highest bidder. It is thus amply clear that, whenever any land which is having a value exceeding fifty thousand rupees is to be sold the same cannot be done without the previous sanction of the State Government. The scope of judicial review of an administrative action is very limited. Unless the Court comes to a conclusion, that the decision maker has not understood the law correctly that regulates his decision-making power or when it is found that the decision of the decision maker is vitiated by irrationality and that too on the principle of “Wednesbury Unreasonableness” or unless it is found that there has been a procedural impropriety in the decision-making process, it would not be permissible for the High Court to interfere in the decision making process. It is not permissible for the Court to examine the validity of the decision but this Court can examine only the correctness of the decisionmaking process. An interference by the High Court would be warranted only when the decision impugned is vitiated by an apparent error of law, i.e., when the error is apparent on the face of the record and is self evident. The High Court would be empowered to exercise the powers when it finds that the decision impugned is so arbitrary and capricious that no reasonable person would have ever arrived at. The test is not what the court considers reasonable or unreasonable but a decision which the court thinks that no reasonable person could have taken. Not only 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 the bids, prior approval of the State Government as is required under Section 109 of the Madhya Pradesh Municipality Act, 1961 was not taken. Two municipal counsellors raised objections before the Collector under the provisions of Section 323 of the said Act. The Collector, who initially granted stay on 18.07.2008, vide order dated 23.12.2008 directed the Municipal Council to seek approval of the State Government to the said proposal. Vide communication dated 21.12.2009, the State Government directed respondent No. 3-Revenue Commissioner to hand over the possession of the land to respondent No. 1. While doing so, the State Government directed the Commissioner to inspect as to whether the land was being put for use as per the development plan. On receipt of the communication, the Divisional Commissioner addressed a communication to the State Government on 03.03.2010 thereby, specifically pointing out that no proper publicity was given to the NIT and that the rates were not competitive as per the market value. It was specifically observed that there was a cartel among the tenderers and, therefore, sought clear orders of the State Government in view of Section 109 of the said Act. He also proposed to reject the proposal with further direction to invite fresh tenders by giving adequate publicity. In response to the said communication, the State Government re-examined the issue and by communication dated 18.05.2010 authorised the Commissioner for transferring the land in question. The State Government authorised the Commissioner to take necessary decision with regard to grant of sanction under the provisions of Section 109 of the said Act and Rule 7 of the Municipal Corporation (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 referring to the communication dated 21.12.2009 came to the conclusion that the sanction contemplated under Section 109 of the said Act was granted by the State Government. However, it totally ignored the subsequent correspondence between the State Government and the Commissioner. Perusal of the subsequent communication reveals that the Commissioner had pointed out the infirmities in the proposal of the Municipal Council and advised the State Government to reject the said proposal with a direction to the Municipal Council to invite fresh tenders. The Commissioner, instead of blindly accepting the directions contained in the communication dated 21.12.2009, has acted in larger public interest so that the Municipal Council earns a higher revenue. Not only this, but the State Government, after the Commissioner pointing out anomalies to its notice, has re-examined and reconsidered the issue and authorised the Commissioner to pass appropriate orders including invalidating the tender process and directing initiation of fresh tender process. In the background of this factual situation, the finding of the Division Bench of the High Court that the action of the Commissioner is arbitrary and illegal, is neither legally or factually correct. The High Court, while exercising its powers of judicial review of administrative action, could not have interfered with the decision unless the decision suffers from the vice of illegality, irrationality or procedural impropriety. [Paras 23, 24] [546-E-G; H; 547-A-C]

1.4 The Commissioner had acted rightly as a custodian of the public property by pointing out the anomalies in the proposal of the Municipal Council to the State Government and the State Government has also responded in the right perspective by authorising the Commissioner to take an appropriate decision. Both, the Commissioner as well as the State Government, have acted in the larger public interest. The decision of the Commissioner which is set aside by the High Court is undoubtedly in larger public interest, which would ensure that the Municipal Council earns a higher revenue by enlarging the scope of the competition. By no stretch of imagination, the decision of the State Government or the Commissioner could be termed as illegal, improper, unreasonable or irrational, which parameters only could have permitted the High Court to interfere. Interference by the High Court when none of such parameters exist was totally improper. It is the High Court, which has failed to take into consideration relevant material. In the result, the impugned Orders are not sustainable in law. The impugned orders dated 31.08.2017 and 05.07.2018 are quashed and set aside. The petition of respondent No.1 stands dismissed. However, the Municipal Council is directed to refund the amount deposited by respondent No.1 herein along with interest at the rate of 6% per annum 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 School Service Commission v. Abdul Halim 2019 SCC OnLine SC 902 – relied on.