Precedents Cited

The judgment extensively referenced several key Supreme Court rulings to underpin its reasoning:

• Council of Civil Service Unions v. Minister for the Civil Service, [1985] A.C. 374: Established grounds for challenging administrative decisions based on illegality, irrationality, procedural impropriety, and legitimate expectation.
• Star Enterprises v. CIDCO, (1990) 3 SCC 280: Emphasized the necessity of judicial review in state commercial transactions to ensure accountability and prevent abuse of power.
• Tata Cellular v. Union Of India, (1994) 6 SCC 651: Highlighted judicial restraint in administrative actions and the limited scope of judicial intervention.
• Moti Lal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh, (1979) 2 SCC 409: Discussed the applicability of promissory estoppel against the government and the conditions under which it can be enforced.
• Union of India v. Godfrey Philips India Ltd., (1985) 4 SCC 369: Reinforced that promissory estoppel applies to governmental bodies, barring exceptions where public interest genuinely necessitates.

Legal Reasoning

The Court meticulously dissected CIDCO's arguments against the High Court's judgment. Key points include:

• Eligibility of M/s. Metropolis Hotels: The Court found that CIDCO failed to establish significant grounds for claiming that M/s. Metropolis Hotels was ineligible, especially considering that the partnership was registered post bid submission and CIDCO's legal team had approved the technical qualifications.
• Change of Land Use: The Court interpreted the tender and allotment documents to allow CIDCO discretion in modifying land use, provided it was based on material considerations like economic downturns and infrastructural delays. The Court noted CIDCO had the authority to permit such changes.
• Sub-Division and Transfer of Plots: The Court held that CIDCO did not substantiate claims that the sub-division and transfer violated tender conditions, especially since the required permissions and payments were duly made.
• Doctrine of Promissory Estoppel: While acknowledging its applicability, the Court emphasized that it cannot override public interest unless CIDCO provided concrete evidence of losses or injustices arising from the continuation of the leases.
• Procedural Fairness: The Court criticized CIDCO for conducting a suo-motu enquiry without affording proper natural justice to the respondents, highlighting the lack of impartiality in the process.

Impact

This judgment reinforces the sanctity of contractual obligations entered into by governmental bodies, ensuring that public authorities cannot arbitrarily alter agreements without substantial justification. It underscores the necessity of administrative fairness and the limited scope of judicial intervention, fostering a more predictable and stable environment for public-private partnerships.

Doctrine of Promissory Estoppel

This legal principle prevents a party from reneging on a promise when the other party has relied on that promise to their detriment. In government contracts, however, its application is stringent and requires that the promise must have been clear, relied upon, and that enforcing it does not contravene public interest.

Natural Justice

A fundamental legal principle that mandates fair and unbiased procedures. It ensures that individuals are given a fair opportunity to present their case before any decision is made that could adversely affect them.

Promissory Estoppel Against the State

Traditionally, the state had a degree of immunity from being bound by promissory estoppel. However, modern jurisprudence, as upheld in this case, acknowledges that the state can be held to its promises unless doing so would severely prejudice public interest.