Mere Participation in an Auction does not create a Vested Right unless the bid is formally accepted by the Competent Authority --- Islamabad High Court, Islamabad
Islamabad 18-02-2025: The Islamabad High Court (IHC) has dismissed a Regular First Appeal [RFA No. 181-2015] against the Capital Development Authority (CDA), ruling that mere participation in an auction does not create a vested right unless the bid is formally accepted by the competent authority. The decision, delivered by Mr. Justice Inaam Ameen Minhas, reaffirms the discretionary power of government bodies in auction matters and underscores the legal prerequisites for seeking declaratory relief under Pakistani law.
The appellant participated in an open auction conducted by CDA for the sale of commercial plots No. 23 & 24 in F-11 Markaz, Islamabad. She was declared the highest bidder but failed to deposit 25% of the total bid amount within 24 hours, as required under the auction terms. Despite multiple extensions, she did not comply with the payment schedule, leading CDA to cancel her bid and forfeit Rs. 4 million in token money through a letter dated 05.08.2004.
While CDA later restored plot No. 23, her request for the restoration of plot No. 24 was denied by the CDA Board in meetings held on 15.10.2005 and 20/21.04.2006. Feeling aggrieved, the appellant filed a suit for declaration, permanent injunction, and mandatory injunction, which was dismissed by the Single Judge in Chambers on 26.12.2014. She subsequently filed the present appeal before the Islamabad High Court (IHC).
The Court emphasized that successful bidders must comply with the payment terms. Clause V of the Auction Brochure required that the 25% bid amount be paid within 24 hours, failing which the bid would be automatically canceled, and the token money forfeited. Since the appellant failed to meet this requirement, the CDA’s decision to cancel the bid was legally justified.
The Court ruled that being the highest bidder does not create an enforceable right unless the competent authority formally accepts the bid. This principle was reaffirmed by Supreme Court precedents:
- Munshi Muhammad Vs. Faizanul Haq (1971 SCMR 533)
- Babu Pervaiz Qureshi Vs. Settlement Commissioner Multan (1974 SCMR 337)
- Meraj Din Vs. Noor Muhammad (1970 SCMR 542)
These rulings established that a mere auction bid does not grant ownership rights unless confirmed by the relevant authority.
The CDA Board had the authority to decide on auction matters. The Court found that the Board lawfully exercised its discretion by:
- Restoring plot No. 23.
- Denying the request for plot No. 24, as the appellant had defaulted on payment obligations.
The Court held that CDA was not obligated to accept the Appellant’s proposal for an extension.
The Court ruled that a declaration under Section 42 of the Specific Relief Act, 1877 is only available for pre-existing legal rights. Since the Appellant had no vested right over plot No. 24, her suit was not maintainable. The Court relied on:
- Director Military Lands Vs. Aziz Ahmed (2023 SCMR 860)
- Muhammad Jameel Vs. Abdul Ghafoor (2022 SCMR 348)
These cases reaffirm that a declaratory suit cannot be filed to create a new right but only to protect an existing one.
The Respondents (CDA) argued that the suit was barred under Section 49-E of the CDA Ordinance, 1960, which restricts Court intervention in CDA’s auction decisions. The Court upheld this argument and found that the Appellant’s suit was legally untenable.
The Islamabad High Court dismissed the appeal, holding that the appellant failed to comply with the auction’s payment requirements. The CDA Board had the discretion to accept or reject the bid, and its decision was lawful. The Appellant had no pre-existing legal right over plot No. 24, making her declaratory suit inadmissible.
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