Kanwarpal Singh vs State Of U.P. And Others
2011 Latest Caselaw 6354 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

                                                                                                            A.F.R.
 
Court No. - 21
 
Case :- WRIT - C No. - 65357 of 2011
 

 
Petitioner :- Kanwarpal Singh
 
Respondent :- State Of U.P. And Others
 
Petitioner Counsel :- Udayan Nandan,Shashi Nandan
 
Respondent Counsel :- C.S.C.,Illegible,Namit Srivastava,Naveen Srivatava,V.K.Dixit,Vikash Srivastava
 

 
Hon'ble Ashok Bhushan,J.

Hon'ble Mrs. Sunita Agarwal,J.

Short counter affidavit filed by respondent no.5 is taken on record.

Heard Shri Shashi Nandan, learned Senior Advocate assisted by Shri Udayan Nandan, learned counsel for the petitioner, Shri V.K. Dixit, learned counsel for the respondent no.3, Shri Namit Srivastava, learned counsel for the respondent no. 5 and learned Standing Counsel. By the consent of learned counsel for the parties, the writ petition is being finally disposed of.

By means of this petition, petitioner has prayed for quashing the order dated 31.10.2011 passed by the Commissioner, Saharanpur Division Saharanpur by which auction dated 23.7.2011 has been cancelled and directions have been issued to hold fresh auction.

The petitioner in whose favour auction was held has challenged the impugned order by means of this petition.

Brief facts of the writ petition are as under: -

The Zila Panchayat, Saharanpur issued public notices in the newspaper Rashtriya Sahara and Mano Jagat Dainik for holding a public auction on 23.6.2011 for grant of contract for realisation of fees from ferries. In pursuance of the aforesaid notices, a public auction was held on 23.7.2011in which four persons including the petitioner participated and submitted their respective bids. The bid submitted by the petitioner of Rs. 1,56,000/- was the highest and the same was duly accepted by the competent authority and subsequently an agreement was executed in his favour on 4.8.2011 by the Upper Mukhya Adhikari, Zila Panchayat Saharanpur. Thereafter, respondent no.5, Azdar Hussain submitted an application dated 9.9.2011 before the Commissioner, Saharanpur Division, Saharanpur claiming that no notice for auction was published and bid has been awarded on an amount of Rs. 1,56,000/- whereas respondent no.5 is ready to take contract for an amount of Rs. 3,00,000/- and made prayer that aforesaid contract be set aside and fresh auction be held. Writ Petition No.56819 of 2011 was filed by respondent no.5 in this court, which was disposed on 28.9.2011 directing the Commissioner, Saharanpur Division, Saharanpur to consider and decide the representation of the petitioner. In pursuance of the order of this court dated 28.9.2011 the representation was submitted by the respondent no.5 before the Commissioner, Saharanpur Division, Saharanpur on 7.10.2011, who has decided the representation of respondent no.5 by means of the impugned order dated 31.10.2011. In the impugned order although he accepted that notice was published in the Rashtriya Sahara, but has set aside the auction taking view that it would be appropriate that fresh auction be held. The Commissioner has referred clause 17 of the terms and conditions of the auction while passing the impugned order.

Learned counsel for the petitioner submitted that petitioner was the highest bidder. He further submitted that bid submitted by the petitioner of Rs. 1,56,000/- was the higher than the other three bidders. It is further submitted that bid was accepted on 23.7.2011 and agreement was executed in favour of the petitioner on 4.8.2011. The application submitted by the respondent no.5 was not required to be considered since it was not in accordance with Clause 17 of the terms and condition of the auction. He further submitted that as per Clause 17 of the terms and condition, before the bid is accepted, any person could submit 25% more amount of the highest bid. Under clause 17 of the terms and conditions only course open for re-auction is to deposit 25% more amount of the highest bid and only then his application will be accepted. It is submitted that a person who has not participated in the auction inspite of due public notice is not entitled under law to submit any application or offer subsequently thereby disturbing the entire auction proceedings. He further submits that auction was held after due publication of notice in the newspaper in which four persons including the applicant participated and submitted their respective bids. The commissioner has wrongly set aside the auction dated 23.7.2011 in view of the fact that the said auction proceedings were already completed and no person had a right to submit a subsequent bid after the completion of the auction proceedings. In support of his contention he has placed reliance of the judgement reported in (2008) 9 S.C. 299, Valji Khimji and Company Vs. Official Liquidator of Hindustan Nitro Product ( Gujarat) Limited and others.

Learned counsel for the Zila Panchyat submitted that auction was held after due publication of notice in the newspaper in which four persons including the petitioner participated and submitted their respective bid and he has placed the copy of the auction proceedings held on 23.7.2011 which indicate that comparative bid took place and persons who participated had given their bid.

Learned counsel for the respondent.5 submitted that notice published in the Rashtriya Sahara newspaper, which is not widely circulated newspaper in district Saharanpur, as well as the second newspaper named as MauavaJagat Dainik is a bogus newspaper and that is why respondent no.5 could not get information of the tender. He further submits that respondent no.5 is ready and willing to pay Rs.3,00,000/- for the same contract, which is almost double to the amount quoted by the petitioner. Therefore, if the petitioner is permitted to go ahead with the contract, it will not only be violation of Article 14 of the constitution of India but it would be loss for the public exchequer. In support of his contention he has relied upon the decision reported in AIR 1970,S.C. 2037 Navalkha and sons Vs. Ramanuja Das and Ors., 2005 (1) AWC 372, Ashok Kumar Vs. Zila Panchayat/Parishad and Ors. and 1996 VII AD (SC) 527 State of Punjab Vs. Yoginder Sharma Onkar Rai & Co. and Ors.

Learned counsel for the petitioner has placed reliance of the decision given by Division Bench of this Court in Civil Misc. Writ Petition No. 11650 of 2010, Nazir Hassan Vs. State of U.P. and others decided on 3.5.2010.

We considered the terms and condition of the auction. The terms and condition of the auction has been brought on record as Annexure-8 to the writ petition. The clause 17 of the terms and condition of auction is as follows:

"Ukhyke dh Lohd`fr ls iwoZ cksyh ds i'pkr ;fn dksbZ O;fDr mPpre cksyhnkrk ls vf/kd /kujkf'k dk izkFkZuki= izLrqr djrk gS rks og izkFkZuki= izkIr mPpre cksyh esa 25 izfr'kr o`f} ds i'pkr dqy /kujkf'k tek djus ij iqu% uhyke gsrq Lohdk;Z gksxkA"

In the present case, auction was held on 23.7.2011, which was confirmed on 23.7.2011, and agreement was executed in favour of the petitioner on 4.8.2011. Application for the first time was filed by respondent no.5 on 9.9.2011 addressed to the Commissioner. Application submitted by respondent no.5 cannot be said to be in accordance with clause 17 of the terms and conditions of the auction. The judgement given by the Division Bench in Nazir Hassan Vs. State of U.P. and others relied by the petitioner fully supports his case. Counsel for the petitioner submitted that in the said case also similar condition was considered. Against the judgement given by Division Bench in Nazir Hassan case the Special Leave to Appeal no. 8740 of 2011 was filed, which has been dismissed by the Apex Court vide order dated 29.7.2011

The Commissioner has categorically stated that there was due publication of auction, thus present case is not a case where auction notice was not duly published. Moreover, four bidders had participated. In the application submitted by the respondent no.5 the allegation was made that without publishing the notice the auction has been settled on 23.7.2011. The said allegation was also considered in Vijay Khimji & Co. (supra). Relevant paragraphs 11 and 26 are as under:

"11. It may be noted that the auction sale was done after adequate publicity in well-known newspapers. Hence, if any one wanted to make a bid in the auction he should have participated in the said auction and made his bid. Moreover even after the auction the sale was confirmed by the High Court only on 30.7.2003, and any objection to the sale could have been filed prior to that date. However, in our opinion, entertaining objections after the sale is confirmed should not ordinarily be allowed, except on very ."

"26 .On the other hand, learned counsel for the respondents relied upon a decision of this Court in Divya Manufacturing Company (P) Ltd. etc. vs. Union Bank of India & Ors. etc. (2000) 6 SCC 69. We have carefully perused the above decision and we find that it is clearly distinguishable. The facts of the case were that at the initial stage the appellant offered 37 lakhs for purchasing the property in question. At the intervention of the court the price was raised to 1.3 crores, and ultimately it was found that the property could be sold for Rs.2 crores. It was on these facts that this Court held that even after confirmation of the sale the same could be set aside. Thus, the ratio in Divya Mfg. Co. (p) Ltd. Was that if there is fraud then even after the confirmation the sale can be set aside because it is well settled that fraud vitiates everything. On the facts of that case, the court was of the view that confirmed sale deserved to be set aside."

The Judgement relied by the learned counsel for the respondent no. 5 reported in AIR 1970,S.C. 2037 Navalkha and sons Vs. Ramanuja Das and Ors., 2005 Pertaining to winding of the proceeding of company in which official liquidator sought permission of the court for sale of immovable and movable properties and actionable claims of the company. Upon the order passed by Company Judge, for the purpose of selling, sale proclamation was drawn inviting offer for the purchase. One of the conditions was that the proclamation of sale was to be advertised twice in each of the five leading daily newspapers so as to ensure wide publicity. The Company Judge while considering the question of conformation of sale directed to have an open bid in the court itself on that very day. It was observed that learned Company Judge having decided to put the property to auction went wrong in not holding the auction as a public auction after due publicity. This has resulted in prejudice to the company and the creditors in that the auction did not fetch adequate price. The Hon'ble Supreme Court held that "the prejudice was inherent in the method adopted."

However, the present case is that where there is no dispute with regard to the auction held at a public place and, therefore, is clearly distinguishable.

Learned counsel for respondent no.5 has also placed reliance on the judgment in 1996 VII AD (SC) 527 State of Punjab Vs. Yoginder Sharma Onkar Rai & Co. and Ors.

The first respondent filed writ petition challenging the auction on the allegation that his presence was not taken note of. The auction was not fairly and properly held and resulted to loss of State Exchequer. The Hon'ble Supreme Court held that the question of participation of first respondent in the auction being of fact, the order passed by the Financial Commissioner could be interfered under Article 226 only if it found to be perverse. The appeals filed by the successful bidders in the auction held were allowed, accordingly and the Writ petition filed by first respondent was dismissed. Relevant paragraphs 15 and 18 are as under:

"15-We are constrained to observe that the judgement of the Division Bench is based upon conjectures and inferences more tenuous than those it found the Financial Commission guilty of. Such conjectures and inferences are impermissible in a judgement upon a writ petition under Article 226 where the fact-finding authority has arrived at a conclusion which is not perverse or so unreasonable that, upon the record, it could not have been reached."

"18- The Division Bench was, in the circumstances, in error in reaching the conclusion that the auction was not fairly and properly held with the result that the State exchequer had been subjected to a huge loss. In any event, loss to the exchequer is a factor which may be taken into account in genuine cases, as it was in the case of M/s Rajshila cited by learned counsel for the first respondent. At the same time, the finality of auctions must also be recognised to be in the interests of the exchequer. If auctions are set aside and re-auctions ordered on less than satisfactory material, the loss of the exchequer would be far greater."

The case does not help the petitioner.

In Ashok Kumar Vs. Zila Panchayat/Parishad and Ors. and 1996 VII AD (SC) 527, the court held that the petitioner also represents a Society registered with Khadi Gramdyog Board, there is no explanation given as to why the case of his society was not considered.

The aforesaid case also clearly distinguishable and court held that if in a particular area more than one society exist, they can be the rival bidders but in case there is only one society in the area licence is to be granted in respect of the same without holding auction.

Relevant Paragraph-20 of the Ashok Kumar (supra) reads as under: -

"20- Be that as it may, there is no dispute to the fact that if there are more than one registered Society in the area concerned, the rights have to be settled by auction between them. In the instant case, petitioner as well as respondent nos. 4 to 6 had been the interested Society for the contract for same area. Thus, submission on behalf of the respondents, that petitioner could not participate or there could be no auction at all, is not wroth acceptance. If petitioner has been willing to pay Rs. 6 lakhs for the said ariea, how the contract could be awarded for a petty sum of Rs. 1,60,000 only. No explanation could be furnished why there should be financial loss to the public exchequer."

In the result, the writ petition is allowed. We are of the view that the Commissioner committed error in setting aside the auction. The order dated 31.10.2011 passed by the Commissioner is set aside.

Order Date :- 7.12.2011

Atul kr. sri.