Case Note & Summary
The Supreme Court allowed the appeals filed by the Municipal Council, Neemuch, against the judgment of the Madhya Pradesh High Court which had quashed the order of the Divisional Commissioner rejecting the tender proposal for allotment of municipal land on lease. The factual background involves the Municipal Council inviting tenders for a 30-year lease of land admeasuring 163176 sq. ft. in Scheme No.1A, Neemuch. Respondent No.1, Mahadeo Real Estate, submitted the highest bid of Rs.5,81,00,106/- and deposited 25% of the bid amount after acceptance. However, objections were raised by two council members under Section 323 of the Madhya Pradesh Municipality Act, 1961, leading to a stay by the Collector. The Collector eventually directed that the proposal be sent for approval of the State Government under Section 109 of the Act. The Divisional Commissioner, by order dated 03.07.2010, rejected the proposal on the ground that the tender process was not competitive as the NIT was published only in Indore editions of two Hindi newspapers, lacking wide circulation. He directed fresh tenders with wider publicity. Respondent No.1 challenged this order before the High Court, which quashed it and directed the Commissioner to grant approval. The Municipal Council appealed to the Supreme Court. The legal issues centered on the interpretation of Section 109 of the Act, which mandates previous sanction of the State Government for sale or conveyance of land exceeding Rs. 50,000 in value, and Rule 3 of the Municipal Corporation (Transfer of Immovable Property) Rules, 1994, requiring transfer to the highest bidder unless State Government sanctions otherwise. The Supreme Court held that the High Court exceeded its limited scope of judicial review by substituting its own view for that of the administrative authority. The Court emphasized that the Commissioner's decision was based on a valid finding of lack of wide publicity, which was neither illegal, irrational, nor procedurally improper. The Court also noted that the High Court's finding that previous sanction was granted was factually incorrect, as no such sanction existed. Consequently, the Supreme Court set aside the High Court's orders and restored the Commissioner's order dated 03.07.2010, directing the Municipal Council to invite fresh tenders with wider publicity.
Headnote
A) Municipal Law - Disposal of Municipal Property - Section 109, Madhya Pradesh Municipality Act, 1961 - Previous Sanction of State Government - No land exceeding fifty thousand rupees in value shall be sold or otherwise conveyed without the previous sanction of the State Government - The provision is mandatory and must be complied with before any transfer of such land (Paras 8-13). B) Administrative Law - Judicial Review - Scope - Tata Cellular v. Union of India - Court's duty confined to legality, irrationality, procedural impropriety - High Court cannot substitute its own view over administrative decision unless it is illegal, irrational, or procedurally improper - The High Court exceeded its jurisdiction by quashing the Commissioner's order without finding any such infirmity (Paras 14-15). C) Tender Law - Public Auction - Rule 3, Municipal Corporation (Transfer of Immovable Property) Rules, 1994 - Transfer to highest bidder - Exception with State Government sanction - The Commissioner's finding that the tender process lacked wide publicity was a valid administrative decision - High Court erred in interfering with it (Paras 10-12, 15).
Issue of Consideration
Whether the High Court was justified in quashing the order of the Divisional Commissioner rejecting the tender proposal for lack of wide publicity and lack of previous sanction of the State Government under Section 109 of the Madhya Pradesh Municipality Act, 1961.
Final Decision
Appeals allowed. Impugned judgment and order of the High Court dated 31.08.2017 and order dated 05.07.2018 rejecting review petition are set aside. Order of the Divisional Commissioner dated 03.07.2010 is restored. The Municipal Council is directed to invite fresh tenders with wider publicity in accordance with law.
Law Points
- Previous sanction of State Government mandatory for sale/lease of municipal land exceeding Rs. 50
- 000 in value
- Scope of judicial review limited to legality
- rationality
- procedural propriety
- High Court cannot substitute its own view over administrative decision unless irrational or illegal
