Bonafide transaction

Written by Indu Bhan | Indu Bhan | Updated: May 16 2012, 06:16am hrs
Blacklisting delinquent bidders

Holding that the government is empowered to blacklist companies from bidding without any statutory law, the Supreme Court said such a commercial decision has to be exercised fairly and not arbitrarily. Upholding the authoritys decision, which was also endorsed by the Delhi High Court, to blacklist and debar Mumbai-based Patel Engineering from participating in its bid for one year, the apex court said that the failure to mention blacklisting in the bid document does not, by itself, disable NHAI from blacklisting a delinquent bidder, if it is otherwise justified. Such power is inherent in every person legally capable of entering into contracts. In this case, NHAI had invited bids for development and operation/maintenance of six laning of Dhankuni-Kharagpur in West Bengal and Orissa through public-private partnership. Patel Engineering was declared the highest bidder in January last year. The company had, however, expressed its inability to confirm its acceptance on the ground that its bid was found not commercially viable on a second look. After a show-cause notice, NHAI had debarred the firm for one year from participating or bidding for its future projects in May last year. Senior counsel Mukul Rohatgi, on behalf of the firm, argued that NHAI was entitled to appropriate the bid security as damages in various contingencies, but the power to blacklist was available only in those cases where the bidder is guilty of fraud and corrupt practices. NHAI had justified its action putting estimated loss at R3,077 crore over 25 years. It further said that the firm had no one else to blame, but itself.

Protecting real estate consumers

Terming a builder service provider and an applicant for a flat under construction consumer, the Supreme Court has held that the Consumer Protection Act 1986 shall be applicable to real estate developers as they provide services to consumers. If a builder uses substandard material or makes false or misleading comments about the condition of the flat, it would amount to denial of facility or benefit of which a consumer is entitled to claim compensation under the Consumer Protection Act, the apex court held in the case of Narne Construction P Ltd vs Union of India. In this case, Narne Constructions promoted ventures for development of lands into house-sites. Many individuals had become its members on payment of fees. When they complained of deficiency in service, the land development firm denied that it was providing a service as defined in the Act nor were the members consumers.

Paying top market value for land acquisition

In a ruling that could provide relief to farmers, the Supreme Court said that the government must pay owners the highest market price of the land under acquisition rather than the average market price. When a land is being compulsorily taken away from a person, he is entitled to the highest value which similar land in the locality is shown to have fetched in a bonafide transaction entered between a willing purchaser and a willing seller near about the time of the acquisition, the apex court said in the case Mehrawal Khewaji Trust (Regd), Faridkot Vs State of Punjab. According to it, It seems to be only fair that where sale deeds pertaining to different transactions are relied on behalf of the government, the transaction representing the highest value should be preferred to the rest unless there are strong circumstances justifying a different course. It is not desirable to take an average of various sale deeds before the authority/court for fixing fair compensation. In this case, the land of the erstwhile ruler of Faridkot state was acquired by the Punjab government for extension of the existing grain market at Faridkot by a 1979 notification under the Land Acquisition Act. While the Collector in 1982 had fixed the compensation at R4.85 lakh, the Additional District Judge had enhanced the compensation to R1 lakh per acre. But the Punjab and Haryana High Court in 2009 had declined any relief. The Supreme Court enhanced the compensation to R1,45,000 per acre.