TMI Blog2004 (8) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... rbitrary and violative of Article 14 of the Constitution. In the writ petition, the petitioner prayed for setting aside the Scheme. Pending hearing and final disposal, the petitioner sought interim reliefs restraining NOIDA, respondent no.2 herein, from giving effect to the said Scheme. By impugned order dated 12.3.2004, the High Court refused the interim relief as prayed for. Aggrieved, the original petitioner came to this Court by special leave. Vide order dated 28.4.2004, this Court stayed the operation of the impugned Scheme. By order dated 9.7.2004, the Court presided by Hon'ble the Chief Justice, at the request of respondent nos.2 and 3 herein, directed Writ Petition no.10137 of 2004 pending in the Allahabad High Court to be transferred to this Court under Article 139A of the Constitution.. By order dated 23.7.2004, the Court presided by Hon'ble the Chief Justice, on the joint prayer made by all the counsel, directed the matter to be listed for final hearing and accordingly this matter has come for hearing. As stated, the impugned Scheme is for development of plot no.M-3 admeasuring 54,320.18 sq. mtrs. in sector 18 by constructing thereon a commercial hub consis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date, respondent no.3 has deposited the earnest money of ₹ 3 crores and ₹ 40,25,24,433.25 on 23.4.2004. However, respondent no.3 has not deposited the balance premium payable on 10.7.2004 as the Scheme was stayed by this Court vide order dated 28.4.2004. It is the case of the petitioner that respondent no.2 is the statutory authority under U.P. Industrial Area Development Act, 1976; that it is responsible for the development of the area in terms of the Master Plan for Noida; that it has framed Building Regulations w.e.f. 1.2.1986 containing guidelines of occupancy, building permits and floor area ratio. According to the petitioner, the reserve price of ₹ 27,500/- per sq. mtr. in the present case for a plot admeasuring 54,320.18 sq. mtrs. was abysmally low, particularly in view of the fact that under the Board Resolution dated 10.7.2003, the reserve price of plots measuring 5001 or more square metres had to be fixed at 1= times the sector price which according to the petitioner was ₹ 90,000/- per sq. mtr. In this connection, the petitioner has relied upon earlier Schemes of NOIDA for the year 2002 under which reserve price of plots admeasuring 6000 to 700 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. It is fixed by the Government for the guidance of the Sub-Registrar. The circle rates are not fixed by respondent no.2. That under the Board Resolution dated 10.7.2003, the reserve price of commercial plots measuring 5001 sq. mtrs. and above is to be fixed at one and half times the sector rates. That under the resolution, the reserve price for commercial plot measuring 5001 sq. mtrs. and above should be fixed on the basis of average rate of adjoining sectors. In this connection, it is pointed out that sector 18 abuts sectors 17 and 27 (residential) and sector 16A (institutional); that average rate in these sectors is ₹ 12000/- per sq. mtr. and on the basis of 1= times the average rate of these sectors, the reserve price came to ₹ 18000/-. That even on the basis of the Highest Rate in sector-17, being ₹ 15,700/- per sq. mtr., the reserve price comes to ₹ 23,050/- per sq. mtr. In the circumstances, respondent no.2 has submitted that while fixing the reserve price in the present case at ₹ 27,500/- per sq. mtr., it has complied with the principles embodied in the Board Resolution dated 10.7.2003. It is further pointed out that relatively smaller commerc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich applies to the plot measuring 54,320.18 sq. mtrs. with 30% ground cover and FAR of 150. That in the earlier instances of sales of plots bearing nos.M-30, M-13, K-1A and K-1B, auctions had failed in the past. That on the contrary, in case of auction of two plots, L1 and L2 in sector-18, the reserve price was ₹ 22,500/- per sq. mtr. based on actual sales of adjoining plots in last six years. That such reserve price of ₹ 22,500/- per sq. mtr. was lower than the impugned reserve price of ₹ 27,500/- per sq. mtr. in the present Scheme. In the circumstances, it has been urged in the counter filed on behalf of respondent no.3 that the reserve price of ₹ 27,500/- per sq. mtr. has been fixed taking into account the previous experiences and the prices prevailing in the adjoining sectors. Mr. L. Nageshwar Rao, learned senior counsel appearing on behalf of the petitioner submitted that the reserve price fixed by respondent no.2 at the rate of ₹ 27,500/- per sq. mtr. is contrary to clause 2 (e) of the Board Resolution dated 10.7.2003; that under the said clause, the reserve rate of commercial plots admeasuring 5001 sq. mtrs. or more was one and half times the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution dated 10.7.2003. Before coming to the above challenge, we would like to examine the concepts of 'valuation' and 'upset/reserve price'. In the case of McManus v. Fortescue another reported in [1907 Vol.II K.B. page 1] it has been held by Court of Appeal that in a sale by auction, subject to reserve, every offer/bid and its acceptance is conditional. That the public is informed by the fact, that the sale is subject to a reserve, that the auctioneer has agreed to sell for the amount which the bidder is prepared to give only in case that amount is equal to or higher than the reserve. That the reserve puts a limit on the authority of the auctioneer. He cannot accept a price below the upset/reserve price. That he could refuse the bid which is below the upset price. The aforestated ruling explains the meaning of the term 'reserve price'. It indicates the object behind fixing the reserve price viz. to limit the authority of the auctioneer. In the present case, the board resolution is meant to guide the officers of the second respondent. The resolution prescribes the guidelines for fixing the reserve price. The concept of reserve price is not syno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenge the tender price of ₹ 31,850/- per sq. mtr. as understated, notwithstanding the fixation of the reserve price. No comparative sales instances, with similar parameters of ground cover of 30% and 150 FAR, have been placed before us. No figures of cost of 2800 ECS have been placed before us as such costs would increase the reserve price. On the other hand, we find that the reserve price has been fixed by taking into several factors. Firstly, in the past tenders invited for relatively smaller plots with higher reserve price had failed. It is important to bear in mind that tender process is an expensive exercise. To resort repeatedly to this exercise is a costly affair. Secondly, in the present case, the reserve price is fixed by taking into account the comparative offers/sales in the adjoining sectors. That the average of such sales has been taken into account while fixing the reserve price in terms of clause 4(c) of the Resolution dated 10.7.2003, which reads as under: 4(C) In developed sectors where tenders have been received earlier, fixation of rates is proposed to be on the basis of average price arrived at prior to the scheme of fixation of reserve price, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y; that although nine bidders bought the tender documents, only respondent no.3 offered its bid; that the financial committee has recommended its acceptance keeping in mind the prior experience and the terms and conditions of the Resolution dated 10.7.2003 in the matter of fixation of sector price and reserve price. Hence, there is no merit in the above contentions. Mr. L. Nageshwar Rao, learned senior counsel for the petitioner submitted that under the impugned Scheme, two concessions have been given arbitrarily to benefit the developer at the cost of the State exchequer. In this connection, reliance is placed on clause 10(A) (B) and clause 15 of the terms and conditions of the Scheme. For the sake of convenience, we quote herein below the aforestated clauses: 10. GROUND RENT/LEASE RENT: In addition to tendered amount, the allottee/lessee shall have to pay yearly ground rent/lease rent in the manner indicated below: (A) The ground rent/lease rent shall be charged @ 2.5% p.a. of the total premium of the plot for the first 10 years from the stipulated date of execution of lease deed. However, the ground rent/lease rent shall be charged @ ₹ 1/- per sq. mtr. per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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