Public auction - Highest bidder does not acquire a vested right for acceptance of the bid - Commercial considerations paramount in public contract decisions.
Delhi High Court Upholds DDA's Decision to Reject Highest Bid in Public Auction. High Court Affirms DDA's Right to Prioritize Commercial Considerations Over Highest Bidders
In a significant judgment delivered on September 23, 2025, the Division Bench of the Delhi High Court, comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela, has upheld the decision of the Delhi Development Authority (DDA) to reject the highest bid submitted by Ozar Homes LLP in a public auction. The court's ruling emphasized the precedence of commercial considerations in public contracts, asserting that the highest bid does not automatically entitle a bidder to bid acceptance.
The case, titled "Ozar Homes LLP v. Delhi Development Authority," revolved around a tender issued by the DDA on October 9, 2022, for the e-auction of several group housing plots in Rohini, Delhi. Ozar Homes LLP, the appellant, submitted the highest bid for one of the plots, known as Pocket-2(c), Block-B, Sector-32. Despite being the highest bidder, Ozar Homes LLP's bid was rejected by the DDA, which reasoned that the plot had the potential to fetch a higher price in a subsequent auction.
The appellant approached the court, arguing that the rejection of its 40% above reserve price bid was arbitrary and inconsistent with the DDA's own circular dated June 28, 2019, which outlined procedures for bid acceptance. The appellant contended that the DDA's decision contravened the circular's stipulations, particularly since the bid was above the threshold price.
The court, however, upheld the DDA's decision, emphasizing that merely being the highest bidder does not confer a vested right for bid acceptance. Citing precedents such as "Jaipur Vidyut Vitran Nigam Ltd. v. MB Power (M.P.) Ltd." and "Air India Ltd. v. Cochin International Airport Ltd.," the bench reiterated that commercial considerations are paramount in public contract decisions, and judicial intervention is warranted only in cases of arbitrariness, malafides, or irrationality.
The court noted that the DDA's decision was based on valid commercial considerations, as the adjoining plot had fetched a higher price, indicating the potential for a better return on the subject plot. The judgment also dismissed concerns about deviations from the circular, emphasizing that minor deviations do not constitute grounds for challenging the decision if it is based on relevant considerations and free from malafide intent.
Ultimately, the Delhi High Court found no merit in Ozar Homes LLP's appeal against the single judge's dismissal of their writ petition and upheld the DDA's decision to reject the highest bid. This ruling underscores the judicial principle that public authorities, like private parties, must prioritize commercial considerations in public contracts, and highest bids do not guarantee bid acceptance.
Bottom Line:
Highest bidder does not acquire a vested right for acceptance of the bid - Commercial considerations paramount in public contract decisions.
Statutory provision(s): Article 226 of the Constitution of India
Ozar Homes LLP v. Delhi Development Authority, (Delhi)(DB) : Law Finder Doc Id # 2782729
