Babu Ram vs State Of U.P. & Others.
2017 Latest Caselaw 6012 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH
 
 

A.F.R.
 
Court No. - 8
 

 
Case :- MISC. SINGLE No. - 1684 of 1994
 

 
Petitioner :- Babu Ram
 
Respondent :- State Of U.P. & Others.
 
Counsel for Petitioner :- Tarun Prakash,C.L.Yadav,Puneet Chandra
 
Counsel for Respondent :- N.K. Seth,Pankaj Awasthi,Rajeev Singh
 

 
Hon'ble Rajan Roy,J.

This is a writ petition under Article 226 of the Constitution of India challenging the auction proceedings and orders dated 26.3.1991 and 27.9.1999 passed by the Commissioner, Lucknow Division and the Board of Revenue and seeking certain other reliefs such as a direction to the respondents not to interfere in the peaceful possession of the petitioner over the land in question. This Court while entertaining the writ petition had passed an interim order on 11.8.1994 which reads as under:-

"Learned Standing Counsel accepted notice on behalf of opposite parties No.1 to 5. Sri N.K. Seth has accepted notice on behalf of opposite party no.6. They may file a counter affidavit within three weeks. Rejoinder affidavit, if any may be filed within one week thereafter.

List thereafter in October, 1994.

Issue notice to opposite party no.7.

Till the next date of listing, parties shall maintain status-quo regarding the possession of the property.

Learned counsel for the petitioner is permitted to file supplementary affidavit annexing therewith a copy of the order by which the auction sale has been confirmed within one week from today. He shall also serve a copy of the same through learned Standing Counsel."

The facts of the case in brief are that the predecessor in interest of the petitioner was the owner of the land in question bearing plot no.476-A measuring 6 Biswa, 6 Biswansi, plot no.476-B measuring 12 Biswa and plot no.738 measuring 3 Bigha, 17 Biswa and 15 Biswansi, total area being 4 Bigha, 16 Biswa and 1 Biswansi situated at village Lalpur, Pargana-Sadarpur, Tehsil- Mahmoodabad, District- Sitapur.

On account of certain sales-tax liabilities for the years 1980-81, 1981-82, 1982-83, 1983-84, a recovery certificate was issued against the original petitioner, Babu Ram in pursuance to which steps were taken for auctioning the aforesaid land in question. It is not out of place to mention that this very land appears to have been already mortgaged by Shri Babu Ram with the State Bank of India in respect of some tractor loan and as per the counter affidavit filed by the said bank, the mortgage had not been redeemed. Be that as it may, in pursuance to the aforesaid recovery certificate auction proceedings were initiated. Several times sale proclamation was issued but the auction could not take place. Ultimately the auction did take place on 15.7.1988. It is not out of place to mention that initially the estimated value of the land for the purposes of auction which is required to be mentioned in the sale proclamation and at the time of sale, was assessed as Rs. 20000/- which was reduced to about Rs. 13000/- in the last auction which actually took place and in respect of which the opposite party no.7 was the auction-purchaser, i.e. the predecessor in interest of the opposite party no. 7/1, 7/2 and 7/3. Within thirty days of the auction-sale objections were filed by the petitioner under Section 285-I of the U.P Zamindari Abolition & Land Reforms Rules, 1952 i.e. on 12.08.1988. A copy of the said objections are on record as Annexure No.10 thereof.

On a perusal of the said objections, the Court finds that specific objections had been raised with regard to the bid price being much less than the estimated value. In fact the bid price, which was accepted, was Rs. 5500/- for land measuring 4 Bighas, 16 Biswa and 1 Biswansi whereas the estimated value in the said auction was Rs. 13000/-, thus, the land was sold for a value less than half of what was estimated. The other grounds taken in the objections were that proper publicity was not made, on account of which sufficient number of bidders did not take part in the auction and in fact the same was manipulated on account of the auction purchaser being the mother of then Cabinet Minister, therefore, the authorities, according to the petitioner, fraudulently sold off the land of the petitioner in an illegal manner contrary to the Rules by setting up proxy bidders. It was also one of the grounds in the objections that the auction proceeding were held by an incompetent authority that is the Naib Tehsildar whereas under the Rules the auction had to be held by the Collector or the Assistant Collector of the First Class. Various other grounds were also taken.

Be that as it may, the objections were rejected by the Commissioner on 26.3.1991, stating that the auction notice was served personally upon Babu Ram and four persons had participated in the auction and also that the auction purchaser had deposited the bid amount as per Rules, however, on a bare perusal of the said order the Court does not find any discussion much less a finding on the grounds taken by the petitioner as referred herein above. The interim protection granted earlier was also vacated. A review application was filed before the Commissioner which was rejected as not maintainable.

Being aggrieved the petitioner filed a revision before the Board of Revenue. The Board of Revenue rejected the revision on 22.02.1994 again by another cryptic order, copy of which is annexed as Annexure No.14 to the writ petition stating that the Commissioner had taken care of all the issues raised and that there was no such substantial ground for interference with the Commissioner's order. Here again the Court finds that the Board of Revenue adopted a rather superficial approach while deciding the revision, whereas the memo of the revision, which is annexed as Annexure No.13, shows that various grounds were taken similar to the grounds raised before the Commissioner specially with regard to the auction bid being much less than the estimated value and the land having been sold off to the auction purchaser for pittance, but, without considering any of these grounds the revision was rejected in a cursory manner. It is against the aforesaid background that this writ petition was filed wherein an interim protection was granted on 11.8.1994.

The contention of Sri Puneet Chandra, learned counsel for the petitioner was two fold, firstly, that the auction proceedings had been held by the Tehsildar who was not competent to do so as under the Rules same should have been held by the Collector or the Assistant Collector of the First Class. Secondly, he contended that the estimated cost which the property was expected to fetch in the auction was initially fixed as about Rs. 20000/- thereafter, it was fixed as Rs. 13000/- but surprisingly enough the property measuring more than 4 Bighas of land was auctioned for a meager amount of Rs. 5500/-. He also contended that the auction purchaser was the mother of the then Cabinet Minister in the Government of Uttar Pradesh and, therefore, all the officials manipulated and conducted a farcical auction to facilitate the sale of the petitioner's land to her. He also contended that in fact the said land was already mortgaged with the State Bank of India and, therefore, could not have been put to auction. It was also his contention that Babu Ram was in fact illegally foisted with sales tax liability and ultimately in appeal / revision it was found that he was exempted from such liability for the relevant assessment years, therefore, the entire proceedings against the petitioner, which in any case were de hors the Rules without appropriate publicity, were a nullity. He also contented that though on paper the possession was handed over to the auction purchaser, actual possession continues with the petitioner. It was also his contention that before the Commissioner two out of four bidders had given an affidavit that they in fact had not participated in the same which also goes to show that the entire exercise was a farce. He invited the attention of the Court to various provisions i.e. Rule 279, 225, 285-L of the Rules, 1952 to contend that auction proceedings were not held in accordance with the Rules.

The learned counsel for the opposite party no.7, her legal heirs contended that the sale had already been confirmed, therefore, the remedy, if any, was before the Civil Court in view of the provisions of Rule 285-K of the Rules, 1952. He also asserted that possession was with his client.

Sri Dileep Pandey, learned Standing Counsel submits that though the property was sold off at a lesser price than the estimated value, the dues recoverable by the State from the petitioner who is defaulter are to be protected, as, in view of the order proposed to be passed by the Court if the amount deposited by the auction purchaser is to be refunded, then the interest of the State is liable to be protected. However, on being asked if the petitioner has been exempted for tax liability of the relevant years in respect of which the recovery certificate had been issued then what liability should be fastened on the petitioner as being recoverable by the State, no satisfactory reply could be given except that it would have to be varified.

After hearing the learned counsel for the parties and perusing the original records, the Court finds that the Sub-divisional Magistrate concerned delegated the power to hold the auction to the Naib Tehsildar vide his order dated 14.06.1988 who, in fact, held the auction. In this regard reference may be made to Rule 285-A which provides that every sale under Section 284 and 286 shall be made either by the collector in person or by an Assistant Collector specially appointed by him in this behalf. Reference may also be made in this regard to certain Notifications including Notifications dated 17.01.1976 and also the Notification dated 28.11.1974 empowering all the Assistant Collector of First Class on whom powers as such have been conferred under Notification dated 25.07.1960 to discharge the functions of Collector under Section 282 of the Act, 1950, which have been referred by a Single Judge Bench of this court in the judgment reported in 2014 (32) LCD 1559, Ramesh Chandra Gupta v/s State of U.P and others, wherein, the Assistant, Collectors of First Class in charge of the Sub-Division have been empowered to discharge the functions of a Collector under Section 286 of the U.P Z. A & L.R. Act, 1950.

In view of the above provisions, the holding of auction by the Naib Tehsildar or Tehsildar in the present matter can not be sustained as the same was clearly de hors the mandatory Rules and without jurisdiction.

Furthermore, the Court finds that though there is no reserve price mentioned in the Rules but there is a provision contained in Rule 281 (2-A) and 283 which provide that in a proclamation for sale under Section 286, the Collector shall state the amount of the annual demand and the estimated value of the property calculated in accordance with the Rules in Chapter-15 of the Revenue Manual. It has been provided that in the case of sale of a holding the Collector shall auction the holding in lots of 1.26 hectares to 5.04 hectares after working out and announcing the land revenue and the estimated value of each lot.

The question of valuation is of utmost importance as it is designed to ensure the best price for the property and it is essential in this circumstance that vide publication of notice of the proposed sale should be given as per Rule 285-A, as has been observed by the Supreme Court in the case of State of Uttar Pradesh and others Vs. Swadeshi Polytex Limited and others (2008) 12 SCC 596 wherein it has also been said that it can hardly be over emphasized that the proper valuation of the property and vide publicity of the proposed auction is intimately linked with the price that the auction fetches. In the said judgment reference has been made to another judgment of the Supreme Court rendered in the case of Gajraj Jain v. State of Bihar, reported in (2004) 7 SCC 151, wherein, the reasonableness of the valuation done for the purposes of auction has been considered and it has been held that it is to be tested against the dominant consideration to secure the best price. If adequate steps are not taken to secure the best price then prejudice to the creditor as also the defaulter is self evident as in the event of a better price being fetched, the residuary amount after sale would have to be returned to the owner of the property. Moreover, if there is any other creditor, as in this case the State Bank of India, then its right would also be adversely affected if the property is sold at a lesser price. In the present case undeniably, the estimated value of the property which comprised of more than 4 Bighas of land was initially Rs. 20000/- which was reduced to Rs. 13000/-. The auction was held on 15.7.1988 but the property was auctioned in favour of the opposite party no.7 merely for Rs. 5500/- i.e. less than half of the estimated value of the property. It is not denied that the auction purchaser was the mother of the then Cabinet Minister. There is no direct evidence to show that the Cabinet Minister had himself played any role in this regard but if the Rules have been violated as appears to the case then it is anybody's guess as to why it happened. It is quite possible that the authorities were at fault. Reference may also be made in this regard to a decision of this Court in the case of Bhau Pratap Singh and Ors v. Board of Revenue and Ors; 2013 (10) AdJ, P-10 wherein similar issues regarding non-compliance of the provisions of the Rules came up for consideration. In the said case reference was made to the decision of the Supreme Court in the case of Divya Mfg Co. (P) Ltd v. Union of India, AIR 2000 SC 2346, wherein, it had been held that in appropriate cases, even a confirmed sale can be set aside. Reference was also made to the case of Union Bank of India Vs. Official Liquidator, 2000 (5) SCC 274, wherein it had been held that the Court should exercise judicial discretion to ensure that sale of property should fetch adequate price. For deciding what would be reasonable price valuation report of an expert is essential. Reference was also made therein to the judgments of the Supreme Court in the case of Swadeshi Politics on the question of valuation of property in the context of auction sale. This Court observed that though there is no provisions in the act or Rules for fixation of reserves price before property is put up for auction sale but referring to Rule 283 it was observed that it provides the manner for determining the estimated value. This exercise had to be undertaken by the Collector or the S.D.O before issuance of sale proclamation. The prejudice caused to the parties on account of incorrect valuation or sale of the property on lesser valuation was considered in the said case. It was also considered that vide publicity of the proposed auction is interlinked with the fetching of an adequate price in the auction alongwith its proper valuation.

As regards the contention of Sri Rajeev Singh, learned counsel for contesting opposite party based on Section 285-K, this Court finds that once an objection had been filed under Rule 285-I of the Rules 1952 within thirty days, as it borne out from the original records which have been perused by the Court then, it was incumbent upon the Commissioner to take into consideration all the grounds raised, consider and decide the same, which was not done. Not only this, on a revision being filed before the Board of Revenue, the same was also decided in a very superficial manner without considering any of the grounds. In view of this, the bar of Rule 285-K can not be pressed into service in the facts and circumstances of this case. The same would come into play only if no application under Rule 285-I is made within the time allowed, and in such an eventuality all claims on the grounds of irregularity or mistake in publishing or conducting the sale would be barred, which of course would not bar a suit before the Civil Court, but, in the present case, an objection was filed within time and from the facts and documents on record it is evident that the auction was conducted de hors the Rules. In this regard reference may be made to a judgment of this Court reported in M/S Swadeshi Polytex Limited Vs. Board of Revenue U.P. and others 2006 (24) L.C.D. 1, wherein reference has been made to a Division Bench Judgment of this Court reported in 2000 (2) AWC 1505 (Harmindar Singh v/s Chandra Cold Storage and others), wherein, it has been held that the deposition of the entire amount by the auction purchasers will not create any right unless the auction is held in accordance with statutory provisions. This judgment of this Court has been upheld by the Supreme Court as already referred hereinabove. Furthermore, in the same judgment it has also been held with reference to another Division Bench judgment reported in 1996 RD 161, Cawnpur Rolling Mills Private Limited Vs. Sub Divisional Officer, Kanpur to hold that if objection is filed the competent authority is legally obliged to decide the objections before proceedings with auction and sale of the property.

In view of the errors pointed out hereinabove, mere lapse of time does not persuade the Court to take any other view, especially as the petitioners are not at fault in this regard. Had the Commissioner and the Board of Revenue considered his objections at the appropriate time, this situation would not have arisen, therefore, the petitioners cannot be made to suffer for their lapses and those of the authorities who undertook the auction-sale ignoring the legal provisions and the law on the subject.

In view of the above, the impugned auction proceedings and the orders passed by the Commissioner, Lucknow Division and the Board of Revenue can not be sustained, the same are accordingly quashed. As regards the amount deposited by the auction purchaser is concerned, there is a provision contained in Rule 285-L which provides that whenever the sale of any holding or other immovable property is set aside under the Rule 285-H or Rule 285-I, the purchaser shall be entitled to receive back his purchase money plus an amount not exceeding five per cent of the purchase money, as the Collector or the Commissioner as the case may be may determine. On the analogy of the principle contained in the said provision, the auction purchaser shall be entitled to similar amount for which, if any amount is required to be paid, the same shall be paid by the petitioner as per Rules. As regards the dues of the State are concerned, if there are any dues against the petitioner then, it shall be open for the State to recover the same as per Rules.

Accordingly, the writ petition is allowed.

The original records which had been retained shall be returned to Sri Dileep Pandey, learned Standing Counsel for being handed over to the concerned authorities.

Order Date :- 30.10.2017

Haseen U./ A.Nigam