Auctions, particularly those held by government authorities, are often manipulated to suit vested interests. When the highest bidder is not declared successful due to extraneous considerations, can he approach the consumer forum for redressal? This issue was decided in a judgment of the National Commission delivered last August by member Anupam Dasgupta.
Shiv Shankar Lal Shukla was the highest bidder for a plot auctioned by UP Avas Evam Vikas Parishad. Yet, he was not allotted the plot.
Shukla filed a consumer complaint before the Kanpur district forum, alleging negligence and deficiency in service. The forum upheld it. The Parishad challenged this order before the UP state commission, which upheld the forum's order and dismissed the appeal. The Parishad then filed a revision petition before the national commission.
The contention of the Parishad was that the housing commissioner had been vested with the discretionary power to accept or reject any bid, a fact that had not been considered by the district forum or the state commission.
The national commission considered this in the light of a government notification issued in February 1997, in view of the repeated cancellations of auction sales. The notification observed that several complaints had been received by the government. These stated that despite receiving bids/tenders higher than the reserve price, some officers delay giving approval to auction proceedings on some pretext or include the property in the next auction due to personal reasons. Sometimes, they justify their action by claiming the bid received in the subsequent auction was higher; hence, their action was in the interest of the organisation. On analysis, the government found these arguments incorrect and against the principles of natural justice. It was observed that a fair competition in a public auction could be seen only if the highest bidder got the property. Also, it would be unfair to promote a culture where the highest bidder (meeting the reserve price requirement) is left to the mercy of the discretionary powers of an authority. Hence, it was necessary to crack down on the corruption. An authority would have power to interfere in the auction proceedings only in exceptional circumstances, where it is suspected the bidders are working in connivance or dummy bidders are participating. In such cases, the decision should be taken within a day after the auction. Also, reasons for interference should be cited.
The Parishad attempted to justify non-allotment on the ground that only two persons had participated in the auction, including Shukla. This contention was proved false, as in an earlier correspondence the Parishad had listed the names of four participating persons. More, the decision had not been taken within a day, as prescribed by the notification, but had been kept in abeyance for more than two months, without citing any reason.
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The Parishad argued Shukla could not be termed a "consumer" and the dispute was not a ‘consumer dispute’. Overruling this, the Commission held when a development authority invites applications for allotment of plots but fails or delays the handing over of possession, it would amount to a deficiency in service.
Accordingly, the Commission held the non-acceptance of the highest bid for extraneous reasons would constitute deficiency in service and unfair trade practice. Also, non-observance of the statutory directions issued by the government of UP to the Parishad would amount to "negligence per se". The Parishad's revision petition was thus dismissed. The order was upheld in favour of the consumer.
A consumer who faces arbitrary action and high-handedness of a government official can now invoke the Consumer Protection Act to fight for his rights.
The author is a consumer activist. Views expressed are his own.