THE VICE CHAIRMAN AND MANAGING DIRECTOR, CITY AND INDUSTRIAL DEVELOPMENT CORPORATION OF MAHARASHTRA LTD. vs. SHISHIR REALTY PVT LTD .

EPORTABLE R   I N   THE  S UPREME  C OURT   OF  I NDIA     C IVIL  A PPELLATE  J URISDICTION     C IVIL  A PPEAL  N OS . 3956­3957  OF  2017   HE ICE HAIRMAN ANAGING IRECTOR T  V  C  & M  D ,  ITY AND NDUSTRIAL EVELOPMENT ORPORATION C    I  D  C   O F  M AHARASHTRA  L TD .& A NR .                                …A PPELLANTS V ERSUS HISHIR EALTY RIVATE IMITED RS TC ESPONDENTS S  R  P  L  & O . E .      …R   WITH     C IVIL  A PPEAL  N OS . 3959­3961  OF  2017   ANJAY UMAR URVE PPELLANT S  K  S                  …A V ERSUS HE TATE OF AHARASHTRA RS TC ESPONDENTS T  S    M  & O . E .            …R   J UDGMENT     N. V. R AMANA , CJI   Signature Not Verified These   Civil   Appeals   arise   out   of   the   impugned   judgment 1. Digitally signed by Vishal Anand Date: 2021.11.29 17:47:00 IST Reason: dated 06.12.2013 passed by the High Court of Judicature at 1 Bombay in Writ Petition No. 702 of 2011, Writ Petition No. 5245 of 2011, and Public Interest Litigation No. 55 of 2011.  At the outset, a brief sketch of the facts is necessary for 2. determining   the   issue.   On   11.06.2008,   the   appellants   in Civil Appeal Nos. 3956­3957 of 2017 (City and Industrial Development   Corporation   of   Maharashtra,   for   short “ CIDCO ”)  called   for   a  tender   for   lease   of   land   within   its jurisdiction,   for   purposes   of   development   of   necessary infrastructure   such   as   Hotels   etc.,   around   Navi   Mumbai Airport. Respondent­ M/s   Metropolis Hotels   was one of the bidders. 3. Before approval of the tender, technical qualifications of the bidders were scrutinized and approved by the CIDCO’s legal team on 25.07.2008 in the following manner: “Metropolis   Hotels   is   a   Partnership   firm consisting of M/s Sun­n­Sand Hotel Pvt. Ltd. and Shishir Realty Pvt. Ltd having their share 30%   each.   A   short   question   arises   for   the determination is whether Board Resolution of the partnership firm is required to be annexed with the offer. It   appears   from   the   technical   bid   of   M/s Metropolis Hotels that the said bid is signed by both the partners jointly. Section 4 of the Indian 2 Partnership   Act   1932   defines   ‘Partner’   and ‘Partnership’   is   the   relation   between   persons who   have   agreed   to   share   the   profits   of   a business carried on by all or any of them acting for   all.   Persons   who   have   entered   into partnership   with   one   another   are   called individually “partners” and collectively “a firm”, and the name under which their business is carried   on   is   called   the   “Firm   Name”. Partnership is not created by status and arises from   contract.   In   the   Indian   Partnership   Act, 1932,   there   are   no   directors,   and   all   the partners are jointly and severally responsible for all the acts of the firm.   In view of this Board Resolution is not required. Therefore,   the   remarks   appearing   on   the scrutiny   sheet   at   Sr.   No.   19,   requires   to   be ignored   and   technical   offer   should   be accepted.” On 25.07.2008, the financial bids were opened, which stood as under:

3 4. On 25.07.2008, M/s. Indian Hotels Company Ltd., who were H2 in the bidding process, wrote to CIDCO, objecting to the eligibility of the highest bidder in the following manner: “3. We are informed that the highest bidder is a   partnership   firm   and   has   relied   on   the experience of one of this partners to satisfy the   eligibility   norm.   The   same   partner   has also bid on its own. This amounts to multiple bidder   with   the   same   experience   being concerned for more than one bid.” On 04.08.2008, these objections were considered by the law officers of the CIDCO and subsequently rejected. 5. On 07.08.2008, the CIDCO issued a letter of allotment in favour of M/s. Metropolis Hotels. Being the highest bidder, M/s. Metropolis Hotels was accordingly, allotted Plot No. 5, admeasuring about 47,000 sq. mtrs., for construction of a five­star hotel near the proposed Navi Mumbai Airport.  6. Thereafter,   on   29.12.2009,   M/s.   Metropolis   Hotels­ Respondent no.1, by way of a letter to CIDCO, applied for change   of   user   of   34,000   sq.   mtrs.   of   the   said   plot   to commercial­cum­residential   use.   On   11.02.2010,   this request   for   change/expansion   of   user   of   Plot   No.5   was 4 considered and subsequently permitted only for 23,000 sq. mtrs. On   11.03.2010,   M/s.   Metropolis   Hotels   requested   for 7. subdivision of the Plot No.5 into two, i.e. 24,000 sq. mtrs. for   the   five­star   hotel   and   23,000   sq.   mtrs.   for   the residential­cum­commercial plot. By way of a letter dated 29.03.2010, CIDCO demarcated the said plot as requested, forming Plot No.5 (admeasuring 24,000 sq. mtrs.) and Plot No.5A (admeasuring 22,999.08 sq. mtrs). M/s. Metropolis Hotels also requested assignment of their rights in respect of the plot on which the residential­cum­commercial user was permitted, i.e. Plot No.5A. Assignment of this plot to M/s. Shishir Realty Private Ltd. was approved by CIDCO in its letter   dated   30.03.2010,   wherein   it   referred   to   the   said assignee as one of the partners in the original allotment.   8. On   30.03.2010,   the   CIDCO   executed   two   separate   lease deeds in respect of the two plots, i.e. Plot No. 5 and Plot No. 5A. M/s. Shishir Realty Private Ltd. took further steps for mortgaging their plot with the permission of the CIDCO and obtained   loan   for   development   of   the   said   plot   for 5 commercial­cum­residential   user.   Third­party   rights   were also created.  As   complaints   were   made   regarding   irregularities   in 9. allotment of plots of land, change of user and deviation from the   terms   and   conditions   of   the   tender,   a   preliminary enquiry   was   held   by   the   Principal   Secretary,   Urban Development Department as per the directions of the State Government of Maharashtra. Based on such enquiry, the newly appointed Vice­ Chairman issued a show­cause notice dated   06.12.2010   to   M/s.   Metropolis   Hotels   and   M/s. Shishir Realty Private Ltd.(respondents­lessees) as to why the lease deeds which were executed in their favour should not be cancelled on account of breach of tender conditions by   M/s.   Metropolis   Hotels.   It   may   be   relevant   to   note observations made in the show cause notice which  inter alia read as under: “13. Since the tenders were invited for grant of lease   of   five­star   hotel   plot,   only   bidders interested   in   development   of   5­star   Hotel participated   in   the   bidding   process.   Had   the Corporation invited tenders with residential + commercial   use   of   the   plot,   several   bidders could have participated in the bidding process and the Corporation might have fetched higher 6 revenue.   Due   to   change   of   user   and   sub­ division of the plot contrary to the terms and conditions of invitation of offer, several eligible bidders   were   deprived   and   also   caused financial loss to the public exchequer. Besides this, due to change of user and sub­division of the plot, the basic object of development of 5­ star hotel is frustrated. 14. For the bench or benches  (sic)  of the terms and conditions of tender and letter of allotment dated   –   07.08.2008,   you   are   hereby   called upon to show cause as to why the Corporation should   not   cancel   or   revoke   the   agreements concluded   vide   Letter   of   Allotment   dated 07.08.2008   and   Agremeents   to   lease   dated 30.03.2010,   in   respect   of   Plot   No.5, 2 admeasuring   24,000   m   in   favour   of   M/s. Metropolis Hotels and Plot No.5A, admeasuring 2 23,000 m  in favour of M/s. Shishir Realty Pvt. Ltd.” 10. Vide order dated 16.03.2011, the Vice Chairman, CIDCO, cancelled   the   lease   deeds,   pursuant   to   the   enquiry.   The issues under consideration, as identified in the said order, are reproduced as under:

7

11. Pertaining   to   the   first   issue   of   the   eligibility   of   M/s. Metropolis Hotels to participate in the bidding process, the order held that Clause 4(c) of the tender document obligated the   bidders   to   have   a   registered   partnership   firm.   It concluded   that   since   M/s.   Metropolis   Hotels   was   not registered, on the date of submission of the bid, they were ineligible for bidding. Accordingly, their offer was   void ab 8 . The second reason provided was that M/s. Sun­N­ initio Sand Hotels, being partners in M/s. Metropolis Hotels, could not have submitted a separate bid, which also vitiated the bid made by Metropolis Hotels.  12. On   the   aspect   of   whether   sub­division   of   the   plots   and change   of   land   use   were   consistent   with   the   terms   and conditions of the tender document and letter of allotment, the   order   observed   that   offers   were   invited   for   five­star hotels and sub­division/change of use could not have been permitted as  such changes  were  not conducive to public interest   and   were   against   express   terms   and   conditions mentioned within the agreement. On the third issue of whether transfer of part of the sub­ 13. divided plot to Shishir Realty Pvt. Ltd was consistent with terms of the tender and letter of allotment or not, the order observed that the terms of the allotment letter read with the General   Terms   and   Conditions   clearly   showed   that   the transferee should fulfil all eligibility criteria prescribed in the invitation   of   offer.   As   there   was   nothing   on   record   to establish   that   M/s.   Shishir   Realty   Pvt.   Ltd.   had   fulfilled 9 such criteria, the transfer was held to be in violation of such terms and conditions. On   the   aspect   of   whether   the   change   of   user   and   sub­ 14. division   of   the   plot   adversely   affected   the   object   of development of a five­star hotel, the order noted that the change   of   user   and   sub­division   of   plots   were   in contravention of the terms and conditions initially offered. Due to such changes, the basic object of development of a five­star hotel in Navi Mumbai was frustrated. 15. On the aspect of whether allotment of the plot, change of land use, and sub­division of plots was arbitrary, illegal, and unjustified,   the   order   noted   that   the   deviations   could   be categorized   as   major   deviations   from   the   terms   and conditions   mentioned   in   both   the   tender   documents   and letter   of   allotment.   Such   deviation   frustrated   the   basic purpose of development of a five­star hotel. Therefore, it was concluded that the aspect of promissory estoppel against the CIDCO   would   not   be   applicable   as   specific   terms   of   the tender and letter of allotment were deviated. Further, such deviations were not in public interest. Accordingly, the two 10 lease   deeds   in   favour   of   the   respondents­lessees   were cancelled. Aggrieved   by   the   cancellation   of   the   lease   deeds,   M/s. 16. Metropolis Hotels and Shishir Realty Pvt. Ltd., challenged the aforesaid order of the Vice Chairman, CIDCO, through two writ petitions being Writ Petition No. 702 of 2011 and Writ Petition No. 5245 of 2011 before the High Court of Judicature   at   Bombay.   Separately,   a   PIL   was   also   filed challenging the allotment of the plot in question, change of land use, and sub­division of the said plot.  17. The   High   Court,   vide   impugned   order   dated   06.12.2013, while quashing the aforesaid cancellation order passed by CIDCO, held that the change of land use and sub­division of the   plot   had   taken   place   with   due   authorization   of   the CIDCO. Further, it held that the CIDCO was not able to show any concrete violations which go to the root of the matter. Finally, the High Court held that, without producing any pressing need on record, the CIDCO is precluded and estopped   on   the   doctrine   of   promissory   estoppel   from canceling the allotment. 11 18. Aggrieved by the impugned judgment, the CIDCO and PIL petitioner­ appellant in C.A. Nos. 3959­3961 of 2017 have filed separate appeals before this Court. Mr.   Rakesh   Dwivedi,   learned   Sr.   Counsel,   appearing   on 19. behalf of the CIDCO, has argued that: a) The High Court judgment cannot be sustained as the same   was   delivered   ignoring   blatant   violations   and illegalities committed during the tender process. b) Primarily, the bid by M/s. Metropolis Hotels itself was illegal   as   it   has   only   registered   subsequent   to   the allotment, which is a clear violation of clause 4(c) and 8(b) of the tender document.  c) Moreover, subsequent to the award of the contract, M/s. Metropolis   Hotels   went   beyond   the   tender   conditions and expanded the usage to residential­cum­commercial. Additionally consequent to change of usage, the M/s. Metropolis Hotels sub­divided the plot and executed a fresh   lease   in   favour   of   Shishir   Realty   Pvt.   Ltd.   The aforesaid acts were in breach of the original allotment letter. 12 d) This Court while concerned with distribution of State largesse,   should   ensure   that   no   arbitrariness, favouritism has taken place. e) The Respondents cannot claim any relief based on the doctrine of promissory estoppel as being a creature of equity,   it   must   yield   when   the   equity   so   requires. Considering  it   would   be   inequitable   to   hold   the Government to the promise made by it, the Court should not raise an equity in favour of the promisee and enforce the promise against the Government. f) It   is   well   settled   legal   proposition   that   the   private interest would always yield place to the public interest. Considering,   the   irregularities   committed   by   the respondents, it is expedient to revoke the allotment in favour   of   the   Respondents   especially   when   no   grave prejudice will be caused to the allottee. 20. Mr. Atmaram Nadkarni, learned Sr. Counsel, appearing on behalf   of   the   State   of   Maharashtra   while   supporting   the submissions made by CIDCO, has argued that: 13 a) This court, in a catena of judgments, has held that the representations   made  to  the   public  by   way  of   tender conditions  and   policies   cannot   be   changed   arbitrarily after the allotment. b) The rules of the game cannot be changed once the game is played. Mr Harinder Toor, learned Counsel, appearing on behalf of 21. the   PIL   petitioner­appellant   in   C.A.   No.   3959­3961,   has argued that: a) The PIL petitioner/appellant is a social activist and is involved in the business of construction services. b) The change of land use is in violation of clause 15 of the letter   of   allotment,   which   mandated   that   the   allotted land shall be used only for the construction of a five star hotel. c) The change of land use was illegal and arbitrary. d) The sub­division of plots was also invalid. 22.   Dr.   Abhishek   Manu   Singhvi,   learned   Senior   Counsel, appearing on behalf of Shishir Realty Pvt. Ltd., argues that: a) M/s.Metropolis Hotels was a partnership firm and had applied for registration. When bid was made, they had 14 declared the same to CIDCO. The enforcing committee received the bid being fully aware that the application for registration of partnership firm was pending before the registrar and decided to go with their bid as it was Rs.23 crore higher than the next bid. b) Additionally, the enquiry that was conducted against the said   allocation   was   in   complete   abrogation   of   natural justice. No notice was issued to the respondents during the pendency of the enquiry. Even while accepting the report of the Principal Secretary, no hearing was given to the respondents. c) Not only is CIDCO bound by the principles of estoppel, but they have also failed to prove any losses attributable to the respondent.  d) CIDCO has only raised bald allegations of collusion with management. Had there been any real apprehension of collusion   or   financial   losses   arising   out   of   this transaction,   the   State   would   have   taken   criminal action/disciplinary   actions   against   the   erring   officials. 15 However, CIDCO have failed to place anything on record to prove the same. Mr. Mukul Rohatgi, Learned Senior Counsel, appearing on 23. behalf of M/s. Metropolis Hotels argues that: a) The purpose of construction of a five­star hotel has been frustrated   considering   the   fact   that   the   same   was contingent on the coming up of Navi Mumbai Airport. b) Without there being an airport, it would be commercially absurd   to  construct  a  five­star   hotel  in  the  middle  of nowhere. c) The bidding process was conducted in 2008, when there was   a   huge   recession   both   globally   and   in   India.   The tender had attracted M/s. Metropolis Hotels because it was stated that the Navi Mumbai Airport would be built near the concerned plot, and the area would be declared a Special   Economic   Zone.   However,   the   promises   of   the tender   document   were   not   fulfilled   and   hence,   an application for change of user was made. The 1997 policy allows   for   a   change   of   user   and   hence,   there   is   no illegality. 16 d) There   is   no   violation   of   any   condition   of   the   tender document concerning sub­division of plots. e) Moreover,   even   after   the   allotment   was   made   the respondents have complied with the due procedure and have paid the requisite fees. After accepting the requisite charges to the tune of Rs. 321 crores, the cancellation of the allotment after 13 years is not only highly inequitable but will also cause grave prejudice to the respondents. f) He disputes the bona­fides of the PIL petitioner. Heard learned counsels from both sides.  24. 25. Before we delve into analysis of the case, it is pertinent to examine the role of Constitutional Courts in reviewing the tender   process.   The   Constitution   of   India   allows   the government   to   enter   into   contracts   and   perform   certain commercial   activities.   Due   to   increase   in   government business, there is a requirement of this Court to uphold certain discretion accruing to the government and disallow certain conduct in light of prevailing circumstances. Merely instilling an agency with discretion may not be prohibited by the   Constitution,   rather   it   is   unfettered   use   of   such 17 discretion, that is prohibited; the Constitution frowns upon those   decisions   which   are   taken   in   gross   abuse   of   law. English   Courts   have   developed   many   legal   standards   for evaluating   administrative   decisions,   one   of   them   being enumerated in the case of  Council of Civil Service Unions [1985] AC 374, wherein v. Minister for the Civil Service ,   Lord Diplock has summarized the grounds of challenging such   decisions   under   the   broad   heads   of   illegality, irrationality,   procedural   impropriety   and   legitimate expectation. Beyond these grounds, a recent development in the form of proportionality has further increased the scope of judicial review.  26. Being governed under “rule of law” every action of the State or its instrumentality while exercising its executive powers must met the aforesaid requirements. While recognising the existing principle of freedom to enter or not to enter into contracts by the state and its instrumentalities, the manner, method and motive behind the aforesaid decision can be subjected to judicial review on the touchstone of equality, fairness, proportionality and natural justice. The decision of 18 the   executive   must   strike   a   balance   with   the   alleged violation with that of the penalty imposed.  This   Court,   in   many   of   its   orders   reviewing   tender 27. conditions, has vouched for providing sufficient discretion and   independence   to   administrative   authorities   so   as   to enable them to perform their duties in the interest of the public. Further, the observation of judicial restraint while reviewing such contracts is a continuing trend which can be 1 seen   in  a   catena   of   cases.   The   power   of   judicial   review accorded to Constitutional Court of India and its jurisdiction is supervisory. This court in the case of    28. M/s Star Enterprises v. City and Industrial   Development   Corporation   of   Maharashtra

and stated the necessity of judicial review even with respect to  the   commercial  transactions  undertaken   by   the   State.

1    (2018) 5 SCC 462 Municipal Corporation, Ujjain v. BVG India Ltd., 19 vanishing   and   the   sphere   of   judicial scrutiny is being expanded. State activity too   is   becoming   fast   pervasive.   As   the State   has   descended   into   the commercial field and giant public sector undertakings have grown up, the stake of   the   public   exchequer   is   also   large justifying   larger   social   audit,   judicial control   and   review   by   opening   of   the public gaze; these necessitate recording of   reasons   for   executive   actions including cases of rejection of highest offers.   That   very   often   involves   large stakes   and   availability   of   reasons   for actions on the record assures credibility to the action; disciplines public conduct and   improves   the   culture   of accountability.  Looking   for   reasons   in support   of   such   action   provides   an opportunity for an objective review in appropriate   cases   both   by   the administrative   superior   and   by   the judicial process .” (emphasis supplied) In this context, this Court in   29. Tata Cellular v. Union of India ,   1994   (6)   SCC   651,   observed   certain   principles elucidated as under:  “ 94. The principles deducible from the above are: (1)   The   modern   trend   points   to   judicial restraint in administrative action. 20 (2) The court does not sit as a court of appeal but merely reviews the manner in which the decision was made. (3)  The court does not have the expertise to correct the administrative decision. If a review of the administrative decision is permitted it will be substituting its own decision, without the necessary expertise . which itself may be fallible (4) The terms of the invitation to tender cannot be   open   to   judicial   scrutiny   because   the invitation to tender is in the realm of contract. Normally speaking, the decision to accept the tender or award the contract is reached by process of negotiations through several tiers. More often than not, such decisions are made qualitatively by experts. (5)  The Government must have freedom of contract. In other words, a fair play in the joints is a necessary concomitant for an administrative body functioning in an administrative   sphere   or   quasi­ administrative   sphere.   However,   the decision must not only be tested by the application   of   Wednesbury   principle   of reasonableness (including its other facts pointed out above) but must be free from arbitrariness   not   affected   by   bias   or actuated by mala fides. (6) Quashing decisions may impose heavy administrative   burden   on   the administration   and   lead   to   increased .” and unbudgeted expenditure (emphasis supplied) 21 30. These   principles   acquire   importance   as   the   efficacy   of commercial activities in the public sector increases greatly. It appears that public interest litigation has opened a large window to entertain any tender, regardless of scale, which are now sought to be challenged as a matter of routine. Such   disruption   could   hardly   have   been   the   objective   of expanding the need of Constitutional Review. Close scrutiny of   minute   details,   contrary   to   the   view   of   the   tendering authority, makes execution of contracts in the public sector a cumbersome exercise.  Often, it is the case that parties entertain the idea of a long­drawn­out litigation at the very threshold   itself.   The   purpose   of   imbibing   the   spirit   of competition in a process such as that of the bidding process, is lost in this meandering exercise and delays suffered due to pending litigation. This causes great disadvantage to the government   and   public   sector   in   general.   This   Court,   in appropriate   cases   while   interpreting   the   contract,   can restrict   the   review   mechanism   by   not   inuring   to   the interpretation   so   provided   by   third   parties   or   parties competing   for   the   tender,   unless   the   impugned 22 2 interpretation is shown to be gross abuse of law.  The object of judicial review cannot be that in every contract where some parties lose out, a second opportunity is provided to such  parties   to  pick  holes  so  as  to  disqualify  successful parties, on grounds which even the party floating the tender find to be without merit. With this brief background on the standard   of   judicial   review,   we   may   analyze   the   case   at hand. At   the   outset,   the   respondents­lessees   have   argued   that 31. entire process of cancellation of the tender stood vitiated as it   was   based   on   the   enquiry   conducted   by   the   Principal Secretary,   Urban   Development   Department,   without affording a chance to be heard. It is borne from the records that, upon receiving the certain 32. complaints, the State Government initiated enquiry against the   alleged   irregularities   during   the   tender   process.   On 18.09.2010, the Shishir Realty Private Ltd. received an order from the Navi Mumbai Municipal Corporation directing them 2   , (2006) 11 SCC 548 B. S. N Joshi & sons Ltd. v. Nair Coal Services Ltd. 23 not   to   carry   any   further   construction   and   stay   the development. On 03.11.2010, the enquiry committee submitted its report 33. to the State Government recommending the cancellation of tender. On 19.11.2010, the State Government accepted the findings of the enquiry committee and directed CIDCO, to implement the findings of the enquiry committee. 34. Shishir Realty Private Ltd. has placed on record letter dated 23.12.2010   addressed   to   the   Urban   Development Department and CIDCO, stating that he was shocked to see a newspaper report stating that a committee appointed by the State Government has recommended the cancellation of the   allotment   done   in   their   favour.   The   aggrieved Respondent challenged the aforesaid recommendation as it was   passed   without   affording   an   opportunity   of   hearing them­the aggrieved party. 35. Subsequent   to   the   aforesaid   letter,   on   28.12.2010,   the Respondents­lessees   received   a   show­cause   notice   dated back   to   06.12.2010.   The   respondents­lessees   submitted their   responses   on   30.12.2010,   13.01.2011   and   on 24 19.02.2011. Finally hearing was given to the respondent on 03.03.2011. Thereafter, finally on 16.03.2011, the CIDCO cancelled/revoked   the   letter   of   allotment   and   the subsequent   permissions.   Vide   the   aforesaid   order,   the Manager   (Town   Services)   was   also   directed   to   take   over possession of the plots within 15 days. 36. The perusal of the materials produced on record shows that the   initiation   of   the   enquiry   by   the   Principal   Secretary, Urban Development Department was  suo­motu , without any natural justice being provided for the respondents­lessees. After   arriving   at   a   conclusion,   a   show­cause   notice   was issued by CIDCO to sanctify the enquiry. The afore­said fact of  post­decisional   hearing   just   to   sanctify   the   process   of cancellation   is   clearly   evidenced   in   the   order   dated 16.03.2011, passed by the Vice­ Chairman and Managing Director   CIDCO,   cancelling   the   tender   in   the   following terms: “1.  The   Government   of   Maharashtra through   the   Principal   Secretary,   Urban Development   Department   conducted enquiry   into   the   irregularities   in allotments of plots, change of user and deviation of the terms and conditions of 25 the   tender   made   by   the   then   Vice Chairman   and   Managing   Director, CIDCO,   during   the   period   from   Ist st October, 2009 to 31   March, 2010. The Principal   Secretary   Urban   Development Department   conducted   the   enquiry   and submitted   his   report   to   the   State Government on 03.11.2010.  The change of   user,   sub­division   and   transfer   of part of plot no. 5, Sector 46A, Nerul, to M/s   Metropolis   Hotels   was   also covered in the enquiry conducted by the   Principal   Secretary,   Urban Development   Department.   The   State Government accepted the findings and recommendations   of   the   enquiry committee and directed the Managing Director,   CIDCO,   vide   letter   dated 19.11.2010, to implement the findings and recommendations of the Principal Secretary,   Urban   Development Department .   The   Principal   Secretary has   recorded   his   findings   about   the irregularities  in acceptance of tender and   breach   of   tender   conditions, change of user, sub­division of plot and further transfer of part of the plot and further   recommended   cancellation   of the tender process.  2. Although the State Government issued directions   to   cancel   the   entire   tender process,   it   was   felt   necessary   to   re­ examine the entire issue for allotment of land   ….   by   conducting   an   enquiry   and giving   opportunity   of   hearing   to   the parties .” 26 37. Such   illegal   procedure   adopted,   clearly   vitiates   the subsequent   order   by   the   Vice­Chairman,   due   to   the irregularity,   which   goes   to   the   root   of   the   matter.   The conduct   of   the   appellant   authorities   indicate   that   the enquiry was not conducted with an open mind. The pre­ existing findings of the Principal Secretary recommending the cancellation of allocation has the potential to color the entire   proceedings   held   subsequently   just   to   meet   the procedural requirements. 38. Natural justice is an important aspect while reviewing the administrative orders. Providing effective natural justice to affected parties, before a decision is taken, it is necessary to maintain rule of law. Natural justice is the sworn enemy of intolerant authority. Any attempt by authority to circumvent the   requirement   of   providing   effective   hearing   before reaching a conclusion, cannot pass the muster. Coming to the  facts herein, the post­decisional hearing given to the respondent­lessee is reduced to a lip­service, which cannot be upheld in the eyes of law.  27 39. As a first step of judicial review, we need to note that when statutory   functionaries   such   as   CIDCO   render   an   order based on certain grounds, its validity must be judged by the reasons so mentioned and cannot be supplemented by fresh 3 reasons in the shape of an affidavit or otherwise.   To this extent, we agree with the submission of Dr. Abhishek Manu Singhvi, that the scope of this Court is limited. Hence, we will   only   consider   the   impugned   order   of   CIDCO   dated 16.03.2011 and the reasoning supplied therein.  40. At   this   juncture,   it   is   pertinent   to   consider   certain allegations of violation raised by the appellant authorities. The   first   aspect   for   the   consideration   of   this   Court   is whether M/s. Metropolis Hotels Ltd. was disqualified from participating in the bidding process. The impugned order dated 16.03.2011 of CIDCO provides two reasons: the first being   that   M/s.   Metropolis   Hotels   was   not   a   registered partnership firm while applying for the tender process, and the   second   that   one   of   the   partners   of   M/s.   Metropolis 3   Mohinder Singh Gill v. Chief Election Commissioner, New Delhi,   (1978) 1 SCC 405. 28 Hotels,   namely   M/s.   Sun­N­Sand   Hotels   Pvt.   Ltd,   had submitted a separate bid. 41. The perusal of the bid document clearly indicates that the respondent­ M/s. Metropolis Hotels at the time of applying for the bid had duly disclosed that the firm had already applied   for   registration   and   had   also   forwarded   the Registration   Form   and   Partnership   Deed   along   with   the tender   documents.   Subsequently,   on   16.01.2009   the Registrar of the firms issued the certificate of registration in favour of the respondent­ M/s. Metropolis Hotels.  Having   considered   the   communication   and   legal   opinion 42. tendered   before   accepting   the   highest   bid ,   CIDCO’s   law officers   did   their   due   diligence,   who   opined   that partnerships being creatures of contracts, the requirement of Board resolutions and other technical objections raised were not an essential condition.   Therefore, at this stage it may not be equitable to review such issues in detail.  43. Moreover,   after   accepting   the   lease   premium   of Rs.282,39,99,700/­ and a transfer fee of Rs. 1,38,56,000/­, the   appellant   authority   cannot   contend   that   the 29 respondents­lessees lacked the eligibility to contend in the tender. The respondents­lessees also pointed out that, being the highest bidder with a margin of Rs. 23 crores over the second highest bidder, the appellant authority did not go into the technicalities behind the matter. Even, the High Court   while   passing   the   impugned   judgment   has commented  that the appellant was aware about the pending registration, and even assented to the same as no objections were raised while assessing the technical bids. The second objection which the CIDCO in its order notes as 44. under: “Apart from this, M/s. Sun­N­Sand Hotels Pvt. Ltd., one of partners of M/s. Metropolis Hotels  also submitted separate offer in the bidding process. Such multiple offers were submitted by M/s. Sun­N­Sand Hotels Pvt. Ltd. with a view to get the land allotted. On this count also, the offer of M/s. Metropolis Hotels   stand   vitiated,   and   the   concluded agreement is liable to be terminated.” 45. In our considered opinion, the aforesaid paragraph does not indicate sufficient reasons. There is no reason provided as to what provision of law such bids violate. Further, there is no concrete   allegation   or   adjudication   on   the   suggested 30 cartelization.  There is no reasoning considered as to why such a practice was harmful to public interest. We may note that such considerations are important elements of party autonomy   and   commercial   freedoms   while   framing   the contract, which is not within the purview of judicial review. As there is no such law or contract provision which bars such conduct, the considerations undertaken by the order of CIDCO are extraneous and the same cannot be accepted. considered by the appellant (CIDCO) 46. The second aspect   was   the   change   of   land   use.   According   to   CIDCO,   such change of land use was not permitted under the contract. Therefore, it was argued to be not valid. On the contrary, the respondents   have   argued   that   not   only   CIDCO   was authorized to change the usage but also the Clause 19 of the allotment letter provided that development of the plot was governed   under   the   General   Development   Control Regulations   for   Navi   Mumbai   which   also   had   similar provisions.   Moreover,   the   respondents­lessees   contended that, this was not the first instance of change of usage. To support the said averment, the respondents­lessees placed 31 strong   reliance   upon   the   decision   of   this   Court   in   the identical   matter   of   CIDCO   Maharashtra   Ltd.     v.     M/s. Shree Ambica Developers ,  in C.A. No.7581 of 2012.  This Court held therein: “We have as a measure of abundant caution examined the relevant official record which was   produced   before   us   by   Mr.   Bhasme, counsel appearing for the appellant.    While the application for change may have been filed only a few days after the auction was conducted,   the   same   was   processed   at different levels giving an opportunity to officials dealing with specialised fields to record their opinion on the permissibility of the proposed change.   From a perusal of the notings recorded on the file, we are satisfied that the change was found to be permissible in – accordance with General .     We Development   Control   Regulations must   say   to   the   credit   of   M/s   Lalit   and Bhasme   that   they   did   not   question   the correctness   of   the   views   recorded   by   the officers, who examined the permissibility of a change as prayed for by the company.  It was not   their   contention   that   the   change   was against   the   development   plan   that   could have made the same untenable in law, nor was there any suggestion that any one of the functionaries   associated   with   the   decision making process had played a fraud on the statute   or   the   exercise   of   power   vested   in him .     It   is   true   that   the   official   record produced before us, does not reveal that the question of financial implications, if 32 any, involved in the change which could and perhaps ought to have been examined was examined  by any one at any stage. But so long as the appellant did not make absence of such a consideration a ground for   cancellation   of   change   in   use,   we cannot   help   leave   alone   permit   the Corporation to add the same as a ground for   supporting   the   order   recalling   –   the grant of the change .   The order passed by the   Corporation/its   Managing   Director cancelling   the   earlier   change   was   based entirely on the alleged absence of authority vested in it to direct such a change.”   (emphasis supplied) Upon the perusal of the above cited decision, we are of 47. the opinion that the aforesaid opinion is squarely applicable in the present case. Although the argument made by the CIDCO is attractive at the outset, a deeper analysis makes it clear that such argument is devoid of merit. In this context, it may be necessary to note certain clauses contained in the Tender Document and Allotment Letter: “ 4. Who is eligible to offer to acquire plot (a)A person competent to contract under the Indian Contract Act is eligible to make offer to acquire plot. (b)A   company   incorporated   under   the   Indian companies Act, 1956 is eligible to make offer to acquire plot. 33 (c) A   partnership   firm   registered   under   Indian Partnership   Act,   1932   is   eligible   to   offer   to acquire   plot.   Offer   shall   be   signed   by   all partners   and   enclosed   with   a   true   certified copies of Deed of Partnership and certificate of registration. (d)A public trust registered under Public Trust Act, 1950   and   also   registered   under   Society Registration   Act,   1860   is   eligible   to   offer   to acquire plot. (e) A   Co­operative   society   registered   under   the Maharashtra Co­operative Societies Act, 1960. The Offer form must be signed by the Chairman or   the   Hon.   Secretary   of   the   society   without which it will be held invalid. The authorization of general body must be enclosed with the offer. 18. General CIDCO reserves the rights to amend, revoke or   modify   the   above   conditions   at   its discretion as well as to reject any or all offers without assigning any reasons. … General Terms and Conditions prescribed for disposal of plots by open offer. …. …. 15.   Application   of   General   Development Control Regulation for Navi Mumbai The development of land will be governed by the   prevailing   provision   contained   in   the General Development Control Regulation of Navi Mumbai.   Any   modification   to   the   said Regulation and in particular to the Floor Space Index and  change of use of the land  shall not be made lessee (sic).   If he so desires, may 34 apply for the application of the modified regulation   of   the   General   Development   The Control   Regulation   to   CIDCO. Corporation may at its sole discretion, apply the modification of such regulation on payment of (1) Development charges (2) Additional premium and (3) other charges if any as may be decided by the Corporation from time to time. (…) 16. Transfer of assignment of rights The intending lease can transfer or assign his rights, interests of benefits which may accrue to him from the Agreement with the prior written permission of the Corporation and on payment of such transfer charges as may be prescribed by   the   Corporation   from   time   to   time.   Such permission can however be granted only after the   agreed   lease   premium   and   any   other amount required has been paid in full and after execution   of   Agreement   to   lease.   In   case   of transfer of plot, the Transferee should fulfill all eligibility conditions prescribed in condition 4 of the invitation of offer.” Conditions provided in the Allotment letter: 19.   Application   of   General   Development Control Regulation for Navi Mumbai The development of land will be governed by the   prevailing   provisions   contained   in   the General Development Control Regulation of Navi Mumbai. Any modification to the said regulation and in particular to the Floor Space index and charge of use of the land shall not be made automatically   applicable   but   the   intending lessee,   if   you   so   desire,   may   apply   for   the application   of   the   modified   regulation   of   the 35 General Development Control. (emphasis supplied) Clause 15 of the tender document and the corresponding Condition   19   of   the   allotment   letter,   allows   for   such modification. Although the language used in the aforesaid clause is contradictory, this Court needs to interpret the 4 same   to   harmonize   and   eliminate   any   absurdity.   If   the interpretation supplied by CIDCO, by reading Clause 15 (m) and   (n)   of   allotment   letter   with   Clause   15   of   the   tender document in isolation, is accepted, then the phrase  ‘If he so desires,   may   apply   for   the   application   of   the   modified regulation of the General Development Control Regulation to CIDCO’,   as   occurring   under   Clause   15   of   the   tender document, is   rendered   redundant.   In   this   context,   the   aforesaid   clause   needs   to   be   interpreted   to   mean   that, ‘lessee cannot apply for change of land use as a matter of right,   rather,   CIDCO,   on   its   discretion   could   grant   such ‘change   in   land   use’   on   satisfaction   based   on   material considerations’. 4  Ramana Dayaram Shetty v. International Airport Authority of India, AIR  1979 SC 1628. 36 48. The contradictory contractual clauses, seen within various documents   issued   by   CIDCO,   have   led   to  this   seemingly unending dispute, which required more than a decade to be settled.   This   only   emphasizes   the   importance   of   due diligence   and   careful   drafting,   which   could   have   avoided such type of litigation in the first place. 49. In the same breath, the CIDCO has fairly conceded that the power of change of land of use does exist with CIDCO and has, on multiple occasions, been used to change the land use  pattern.  Most importantly, in  the  present case,  after accepting   the   change   of   user   fee,   the   authorities   cannot post­facto  question the same.  In this case, the plots fell in the zone of commercial­cum­ 50. residential area, and through the contract, this condition was earmarked for construction of a five­star hotel. As seen from the records, the respondents­lessees sought dilution of this condition basing on the fact that the airport, which was supposed to come up near the area had not materialized; similarly situated hotels were loss­making endeavors; and a general economic slump. Further, the order of the CIDCO 37 dated  11.02.2010  clearly  indicates   the   reasons   as  to  the change in land use in view of prevailing circumstances in the following manner:  “The   plot   was   aid   (sic)   in   August   2008   for development of a Five Star Hotel along with the allied   activities   and   it   received   a   price   of Rs.60085.10 per sq. mtr. The plot was initially with 1.5 FSI which was increasable to FSI 2.0 as per Government Policy. For the period prior and after the date of sale instances of sale of plots by tender for various usages are keep as C/351 to C/377. It is well know fact that the real estate markets in the later part of the year 2008 literally crashed and the downward trend of 25% to 30% was noticed across various real estate markets and segments. As a result of this, the Board had also decided to bring down the prices of NRI Phase­II Pat­II by 10% as well as rescheduling the installments. Also the DPC rates   were   brought   down   to   10%.   The   sale instances on the file show that the prices of residential and commercial lands during that period were comparable or some cases lower than the plot in question. But nonetheless the fact of depressed market cannot be ignored. In cases of some of the plots which are sold at higher rates, the Bidders did not pay the first installment   and   therefore   their   EMD’s   were forfeited and in some cases  on their request references have been made to the government for extension of time for payment.” From the aforesaid reasoning, CIDCO has not been able to show as to how the its own order was illegal or arbitrary. 38 Moreover, they have not been able to identify whether the consideration taken by CIDCO at that time was deficient. The   prevailing   circumstances   and   changes   in   the   factual conditions   need   to   be   appropriately   considered.   In   our considered   opinion,   it   may   be   noted   that   delay   in construction of Navi­Mumbai airport, economic slump and loss­making   endeavors   by   similarly   situated   hotels   are ‘material   considerations’   and   the   order   has   appropriately taken the same into account.  The last submission on this aspect which the learned senior 51. counsel for the CIDCO, Shri Rakesh Dwivedi, takes is that the relaxation of land use was made under the policy of 1997 which has been substituted by a new policy in 2004. However, such submission is patently wrong, considering the fact that the letter dated 11.02.2010 specifically alludes to   the   expanded   policy   of   2004   whereby   additional categories of land use were added. It is mentioned in the letter that the policy of the CIDCO was not to impose any limit on the user of an area out of allotted area which can be converted. In light of the aforesaid discussion, the change of 39 land   use   from   five­star   hotel   to   partly   residential­cum­ commercial purpose cannot be said to be illegal or arbitrary.   which   needs   to   be   considered   is   the 52. The   third   aspect legality of sub­division of plots and subsequent transfer of rights. It has been contended that the terms of the tender and letter of allotment do not allow such transfer. However, on perusal of the aforementioned Clause 16 of the General Terms and Conditions and the corresponding Condition 21 of the allotment letter, it is clearly revealed that the allottee was permitted to transfer or assign his rights, interests or benefits   with  prior   written   permission  of   the   Corporation and   on   payment   of   such   transfer   charges   as   may   be prescribed   by   the   Corporation.   Both   the   clause   and   the condition   have   further   stipulated   that   such   permission could be granted only after the agreed lease premium has been paid in full and after execution of agreement to lease. In the present case, agreed lease premium was paid in full. However, agreement to lease was made on the very next day, i.e.   on   30.03.2010.   In   our   view,   merely   because   the agreement to lease was executed on the very next day, the 40 assignment   and   transfer   would   not   be   invalidated.   Such breach cannot in itself be termed as a fundamental to annul the   tender,   especially   after   receiving   the   lease   amount, CIDCO cannot question the subsequent transfer. We can only state that such clause can be construed as a warranty alone rather than a condition, in light of the circumstances. The CIDCO, being a public body, had a duty to act fairly. Having acquiescence of the facts and allowing such transfer, they ought not to have taken such a hyper­technical view on contractual   interpretation.   In   light   of   the   aforesaid reasoning, we do not find any substantial reason sought to be adduced by the CIDCO to differ from the High Court. 53. Ultimately,   we   need   to   consider   whether   there   was   any illegality or unfairness in the aforesaid transaction. Learned senior counsel representing the appellants have submitted that allowing subdivision of plots with change in land use, had caused substantive loss to the State largesse, as many people   would   have   shown   a   proclivity   to   buy   land   with different   land   use.   On   the   contrary,   the   learned   senior counsel representing the Respondents­lessees have stated 41 that the allotment, change in land use and transfer have taken place in accordance with law. There is no substantial deviation as sought to be projected by the appellants herein. The appellants herein have sought to invoke the doctrine of promissory estoppel to argue that the CIDCO could not have walked out of the bargain, merely because of the possibility of larger profits. It is pertinent to note that, the CIDCO has failed to prove any losses suffered. When a contract is being evaluated, the mere possibility of 54. more money in the public coffers, does not in itself serve public interest. A blanket claim by the State claiming loss of public   money   cannot   be   used   to   forgo   contractual obligations, especially when it is not based on any evidence or   examination.   The   larger   public   interest   of   upholding contracts and the fairness of public authorities is also in play. Courts need to have a broader understanding of public interest, while reviewing such contracts.  42 55. In  Jagdish Mandal v. State of Orissa , (2007) 14 SCC 517, it was held as under:    “22…   The tenderer or contractor with a grievance can always seek damages in a civil   court.   Attempts   by   unsuccessful tenderers   with   imaginary   grievances, wounded   pride   and   business   rivalry,   to make mountains out of molehills of some technical/procedural   violation   or   some prejudice to self, and persuade courts to interfere by exercising power of judicial review,   should   be   resisted .   Such interferences,   either   interim   or   final,   may hold up public works for years, or delay relief and succour to thousands and millions and . may increase the project cost manifold ( ) emphasis supplied 56. Similarly, this Court in the case of  Andhra Pradesh Dairy Development Corporation Federation v. B. Narasimha

“40.  In the matter of the Government of a State, the succeeding Government is duty­ bound   to   continue   and   carry   on   the unfinished job of the previous Government, for the reason that the action is that of the “State”, within the meaning of Article 12 of the Constitution, which continues to subsist and therefore, it is not required that the new Government can plead contrary to the State action taken by the previous Government in 43 respect of a particular subject.   The State, being a continuing body can be stopped from changing its stand in a given case, but where after holding enquiry it came to the   conclusion   that   action   was   not   in conformity   with   law,   the   doctrine   of estoppel   would   not   apply.  Thus,   unless the act done by the previous Government is found to be contrary to the statutory provisions,   unreasonable   or   against policy,   the   State   should   not   change   its stand merely because the other political   “Political party   has   come   into   power. agenda of an individual or a political party should not be subversive of rule of law.” The Government has to rise above the nexus of vested   interest   and   nepotism,   etc.   as   the principles of governance have to be tested on the   touchstone   of   justice,   equity   and   fair play.”  ( emphasis supplied ) 57. In the present case, it was argued by the respondents that with the change in the executive head in CIDCO, enquiry was initiated against the allotment made in favour of the respondent­ M/s. Metropolis Hotel during the tenure of the earlier executive head. Even the inquiry, that was conducted against the respondents­lessees stood vitiated as no proper notice   or   hearing   was   given   to   them   before   passing   the impugned   order.   Additionally,   from   the   above   analysis   it 44 clear that the change of usage and the subsequent division was   well­within   the   statutory   limitations.   Therefore,   the earlier   undertakings   taken   by   the   appellant­authorities cannot be set aside with the change of person in power, without any rhyme or reason. After all one cannot change the rules of the game once it has started. 58. From   the   contradictory   submissions   asserted   before   this Court   and   the   concessions   given   regarding   practice   of CIDCO to allow change in land use in other cases, clearly points to a ‘regime revenge’. Such conclusion reached herein is   further   buttressed   by   the   fact   that   no   inquiry   or disciplinary   proceedings   were   initiated   against   the   earlier Vice­Chairman,   whose   orders   have   been   annulled.   Such phenomenon   is   clearly   detrimental   to   the   constitutional values and rule of law.  As the last leg of the submission, the respondents­lessees 59. have   claimed   that   considering   they   have   acted   upon   the directions of the appellant authority and have duly paid the requisite amounts to the tune of Rs. 321.32 crores, CIDCO is bound by the doctrine of promissory estoppel. On the 45 contrary, principles of estoppel do not apply if enforcing the promise would lead to the prejudice of public interest. 60. Before   we   delve   into   the   aforesaid   arguments,   it   is imperative for us to go to have a look at certain decisions of this Court. This Court in the case of   Motilal Padampat

bound   by   the   principles   of   promissory   estoppel   in   the following words:  “ 24.   … The law may, therefore, now be taken   to   be   settled   as   a   result   of   this decision,   that   where   the   Government makes   a   promise   knowing   or   intending that it would be acted on by the promisee and,   in   fact,   the   promisee,   acting   in reliance   on   it,   alters   his   position,   the Government would be held bound by the promise   and   the   promise   would   be enforceable   against   the   Government   at the   instance   of   the   promisee, notwithstanding   that   there   is   no consideration   for   the   promise   and   the promise is not recorded in the form of a formal contract as required by Article 299 of the Constitution . … It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel…  It 46 was   laid   down   by   this   Court   that   the Government cannot claim to be immune from   the   applicability   of   the   rule   of promissory   estoppel   and   repudiate   a promise made by it on the ground that such   promise   may   fetter   its   future executive action. If the Government does not want its freedom of executive action to   be   hampered   or   restricted,   the Government   need   not   make   a   promise knowing   or   intending   that   it   would   be acted   on   by   the   promisee   and   the promisee would alter his position relying upon   it.   But   if   the   Government   makes such a promise and the promisee acts in reliance upon it and alters his position, there is no reason why the Government should   not   be   compelled   to   make   good such   promise   like   any   other   private individual.  The   law   cannot   acquire legitimacy and gain social acceptance unless it   accords   with   the   moral   values   of   the society and the constant endeavour of the Courts and the legislature, must, therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible. The doctrine of promissory estoppel is a significant judicial contribution   in   that   direction.   But   it   is necessary   to   point   out   that   since   the doctrine   of   promissory   estoppel   is   an equitable doctrine, it must yield when the equity so requires. If it can be shown by the Government that having regard to the facts as they have transpired, it would be inequitable   to   hold   the   Government   to the promise made by it, the Court would 47

48 exoneration from liability of enforcing contract, must satisfy the Court   as   to   how   public   interest   overrides   the   necessity   of enforcing the contract. The aforesaid opinion has been reiterated

4 SCC 369 : “ 12.  There can therefore be no doubt that the doctrine of promissory estoppel is applicable against the Government in the exercise of its governmental, public or executive functions and   the   doctrine   of   executive   necessity   or freedom of future executive action cannot be invoked   to   defeat   the   applicability   of   the doctrine of promissory estoppel. … Of course we must make it clear, and 13.   that is also laid down in  Motilal Sugar Mills case [(1979)   2   SCC   409   :   1979   SCC   (Tax) 144 : (1979) 2 SCR 641] that there can be no promissory estoppel against the Legislature in the exercise of its legislative functions nor can the Government or public authority be debarred   by   promissory   estoppel   from enforcing   a   statutory   prohibition.   It   is equally   true   that   promissory   estoppel cannot be used to compel the Government or   a   public   authority   to   carry   out   a representation   or   promise   which   is contrary to law or which was outside the authority or, power of the officer of the Government or of the public authority to make.   We   may   also   point   out   that   the doctrine of promissory estoppel being an equitable doctrine, it must yield when the 49

61. Therefore, although the appellants are right in claiming that Government   cannot   be   compelled   to   perform   its undertaking, but equity demands that the Government must place on record sufficient material on record to claim such exemption. The aforesaid opinion was affirmed by this Court

“20. When it seeks to relieve itself from its   application   the   government   or   the 50 public authority are bound to place before the court the material, the circumstances or   grounds   on   which   it   seeks   to   resile from   the   promise   made   or   obligation undertaken by insistence of enforcing the promise, how the public interest would be jeopardised   as   against   the   private interest . It is well settled legal proposition that the private interest would always yield place to the public interest.”   (emphasis supplied) 62. The learned senior counsel, Mr. Rakesh Dwivedi, has sought to argue that promises made to the respondents­lessees are contradicted   by   the   representation   given   to   the   general public, that the land was being allotted for construction of a 5­star Hotel. He has sought to create an exception of public interest as a limit to promissory estoppel.  63. As we have noted earlier, there is no substantial violation portrayed by the appellants herein with respect to allotment of the scheduled land. Further, the tender documents, as analyzed above, make it clear that the CIDCO had the power to change the land use, sub­divide and transfer the plots and accordingly, has been carried out in terms of the same. In   this   context,   we   may   only   observe   that   ‘good   faith 51 standards’   applicable   in   Government   contracts,   serve   an important purpose in reinforcing the  ‘reliance interest’ in contracts. 64. Even, the High Court while passing the impugned judgment has   correctly   held   that   respondents­lessees   have   acted pursuant to the permission granted by CIDCO. Moreover, after   getting   the   commencement   certificate   and   other necessary clearances, the respondents­lessees borrowed a substantial sum of money from other financial institutions for the development of the plot. However, due to the ongoing dispute,   no   development   could   take   place   for   the   past decade. 65. It   is   admitted   as   per   record   that   the   respondent­   M/s. Metropolis   Hotel   was   the   highest   bidder.   Moreover,   the appellants failed to bring anything on record to prove that the state exchequer has suffered losses pursuant to the said allotment. Nothing has been produced on record, the public interest that will be prejudiced if the respondents­lessees are allowed to go ahead with the said project. On the contrary, 52 the   respondents­lessees   acting   in   furtherance   of   the assurances given by the authorities, obtained huge financial assistance. Equity demands that when the State failed to produce an iota of evidence of either financial loss or any other public interest that has been affected, it should be compelled to fulfill its promises. In fact, it is respondents­ lessees   who   shall   be   gravely   prejudiced   if   the   order   of cancellation   is   upheld   by   this   Court   after   investing   a significant amount and facing prolonged litigation. Lastly, the PIL petitioner­Appellant in C.A Nos. 3959­3961 of 66. 2017 has tried to argue the case on the same lines as that of the CIDCO. The public interest as sought to be shown in his PIL, is doubtful, in light of his involvement in the business of construction service. Moreover, the tone and tenor of the notice dated 12.01.2009, issued by the PIL Petitioner to the CIDCO,   threatening   the   concerned   officers   with   criminal prosecution under Sections 405, 406, 420 read with Section 120(b)   of   IPC,   inter   alia ,   on   the   ground   of   allowing partnership firm, which was in the process of registration, to bid, needs to be viewed with some suspicion. In fact, the 53 non­prosecution   of   the   erring   officials   for   the   alleged mismanagement and irregularities is quite telling.  67. Before we state the conclusions, this Court would like to reiterate certain well­established tenets of law pertaining to Government   contracts.   When   we   speak   of   Government contracts,   constitutional   factors   are   also   in   play. Governmental bodies being public authorities are expected to   uphold   fairness,   equality   and   rule   of   law   even   while dealing with contractual matters. It is a settled principle that right to equality under Article 14 abhors arbitrariness. Public authorities have to ensure that no bias, favouritism or arbitrariness are shown during the bidding process. A transparent bidding process is much favoured by this Court to ensure that constitutional requirements are satisfied.  Fairness   and   the   good   faith   standard   ingrained   in   the 68. contracts entered into by public authorities mandates such public authorities to conduct themselves in a non­arbitrary manner   during   the   performance   of   their   contractual obligations.  54 69. The   constitutional   guarantee   against   arbitrariness   as provided under Article 14, demands the State to act in a fair and   reasonable   manner   unless   public   interest   demands otherwise. However, the degree of compromise of any private legitimate interest must correspond proportionately to the public interest, so claimed.  70. At this juncture, it is pertinent to remember that, by merely using grounds of public interest or loss to the treasury, the successor   public   authority   cannot   undo   the   work undertaken by the previous authority. Such a claim must be proven using material facts, evidence and figures. If it were otherwise, then there will remain no sanctity in the words and undertaking of the Government. Businessmen will be hesitant   to   enter   Government   contract   or   make   any investment in furtherance of the same. Such a practice is counter­productive   to   the   economy   and   the   business environment in general.   71. From   a   consideration   of   the   aforesaid   facts   and circumstances, it is clear that there is an element of abuse of   bureaucratic   power   behind   subsequent   change   in   the 55 tender   allotment.   After   conducting   a   tender   process   and receiving money, the Government backtracked which led to this   present   prolonged   litigation.   The   impugned   order   of CIDCO,   inter   alia ,   annulling   the   allotment   on   hyper­ technical grounds cannot be sustained for being contrary to the doctrine of fairness. The reasons stated in the aforesaid order   are   perverse   and   per­se   based   on   extraneous considerations.   As   analyzed   above,   we   are   not   able   to identify   any   substantive   violation   of   law   or   tender conditions,   which   mandate   annulling   the   allotment   and subsequent arrangements, thereby proving the conduct of the appellant authority to be disproportionate.  72. In light of the above discussion, we find no merit in the appeal   of   the   appellants   herein.   Accordingly,   these   civil appeals are dismissed with costs. 56 73. Pending applications, if any, stand disposed of.     ...........................................CJI.                     (N.V. RAMANA)  ..............................................J. (VINEET SARAN) ..............................................J. (SURYA KANT) NEW DELHI; NOVEMBER 29, 2021 57