Sidakat Ullah Khan vs State Of U.P. And Others
2019 Latest Caselaw 4400 ALL

HIGH COURT OF JUDICATURE AT ALLAHABAD
 
 

AFR
 
Reserved on 24.04.2019
 
Delivered on 13.05.2019
 
Court No. - 32
 

 
Case :- WRIT - C No. - 12617 of 2008
 
Petitioner :- Sidakat Ullah Khan
 
Respondent :- State Of U.P. And Others
 
Counsel for Petitioner :- Pradeep Kumar Pandey
 
Counsel for Respondent :- C.S.C.
 

 
Hon'ble Shashi Kant Gupta,J.

Hon'ble Pankaj Bhatia,J.

(Delivered by Hon'ble Pankaj Bhatia, J.)

1. The present petition has been filed by the petitioner challenging the Demand Notice dated 27.08.2007 issued by the respondent no. 2 and the consequent recovery certificate, in pursuance thereof, dated 27.08.2007.

2. The facts leading to the filing of the present petition are that the Assistant Engineer, Uttar Pradesh Avas Vikas Parishad decided to auction the unusable buildings and the contents therein and in pursuance thereof an auction was held on 25.01.1991, wherein the petitioner also participated in the auction and was the highest bidder at Rs. 3 Lacs. The auction goods were the rubble of the buildings at Sadar Tehsil, Shahjahanpur.

3. The petitioner claims that subsequent to the auction, the goods to be sold were altered and as such the petitioner did not deposit the 1/4th of the auction which was to be deposited within a period of three days from the date of the auction. However, the petitioner did deposit the earnest money of Rs. 3,000/-, consequent thereupon he participated in the bid. The petitioner claims that he was never informed about the approval of his highest bid and no information stating that his bid has been accepted was ever communicated to the petitioner. It is stated that on 04.02.1991, the respondent no. 2, the Collector, Shahjahanpur, cancelled the auction dated 25.01.1991 and on the same date passed an order for re-auction. It is stated that on 05.02.1991, the respondent no. 2 issued a notice to the petitioner (served on the petitioner on 15.02.1991) informing that the auction dated 25.01.1991 has been cancelled and the earnest money of Rs. 3,000/- has been forfeited. It is stated that the petitioner gave a reply to the said notice on 19.02.1991 and thereafter no action was taken and the petitioner thought that the matter stands closed.

4. It is stated that for the same things, which were put to auction on 15.02.1991 a second auction was done on 25.01.1991 and the highest bid received was Rs. 1,30,000/-. It is stated that a third auction was held on 07.03.1991 for the same goods and this time the highest bid of Rs. 1,41,000/- was received, which was accepted by the respondent authorities. It is stated that on 12.09.2005 i.e. after about 14 years, the respondent no. 3 issued a notice to the petitioner calling upon to deposit a sum of Rs. 1,59,000/-, the same being the amount of difference of the bid in the first auction and the third auction, it was also stated in the communication dated 12.09.2005 that an order in that respect had already been passed on 04.02.2991. The petitioner claims that he sent his reply to the notice dated 12.09.2005 on 26.09.2005 before the respondent no. 3 denying his liability to pay any amount as claimed and also stating that there was no such terms and conditions in the auction dated 25.01.1991. It was also agitated that the claim made against the petitioner is a time barred claim. It is stated that the said reply dated 26.09.2005 has never been decided, however on 27.08.2007, a demand notice was issued by the Prabhari Adhikari, Nazarat on behalf of respondent no. 2 calling upon the petitioner to deposit a sum of Rs. 1,59,000/-. It was also stated that if the said amount is not deposited, the same would be recovered as arrears of land revenue.

5. The petitioner states that he made an application for grant of all the documents relating to the auction proceedings from the first auction to the last auction, however the said documents have never been provided to the petitioner. The petitioner further states that in fact on 24.10.2007, the respondents responded by stating that none of the documents pertaining to the earlier auction were available and as such could not be supplied.

6. The learned counsel for the petitioner has made three fold submissions; one that the auction dated 25.01.1991 was not honoured by the petitioner as the goods to be sold through the said auction were changed after the auction was over. Secondly it is argued that even otherwise no recovery can be made after a period of 15 years and the third submission of the petitioner is that there is no liability to pay by the petitioner in the absence of any stipulation in the contract and no recourse could be taken by the respondent authorities to the provisions of U.P. Zamindari Abolition and Land Reforms Act, 1950 (hereinafter referred to the 'Act, 1950') read with U.P. Zamindari Abolition and Land Reforms Rules, 1952 (hereinafter referred to the 'Rules, 1952').

7. Learned counsel for the respondents have filed a counter affidavit denying the averments made in the writ petition and have placed before this Court an order dated 25.01.1991, whereby the petitioner was found to be the highest bidder and he was called upon to deposit the 1/4th amount within a period of three days and the balance 3/4th amount within a period of 15 days. The respondents have also relied upon the provisions of Rule 285-F of the 'Rules, 1952' to justify the recovery and the difference amount in between the first auction and the third auction. In view of those submissions, the respondents claim that the writ petition is liable to be dismissed.

8. The learned Standing Counsel was specifically confronted with the question as to how the provisions of the 'Act, 1950' and 'Rules, 1952' could be invoked in a normal contract, however the learned Standing Counsel has relied upon Rule 285-F to justify the levy and recovery of the difference between the price faced at the third auction and the price offered by the petitioner in the first auction. There is no denial/objection to the averment that the recovery, as initiated against the petitioner, was hopelessly time barred, however the learned counsel for the respondents has argued that an order in that regard had already been passed and there is no limitation prescribed for recovering the amount under the 'Act, 1950' and the 'Rules, 1952' and as such recoveries could be made by the respondents for the loss suffered on account of the petitioner withdrawing from the first auction after bidding.

9. Based upon the averments made at the bar and the provisions of the law relied upon, the first question to be considered by this Court is whether in a normal contractual relationship in between the State and the private person recourse can be taken by the State to the provisions of 'Act, 1950' and the 'Rules, 1952' applicable thereto.

10. The Uttar Pradesh Zamindari Abolition and Land Reforms Act was promulgated in the year 1950 and was aimed at abolition of the Zamindari system and for crystallizing the tillers rights, title and interest and also providing for revenue on the lands owned by the tillers of the soil. The word 'Revenue' has not been defined under the 'Act, 1950'. However, Section 245 of the 'Act, 1950' provides for payment of land revenue by a Bhumidhar. The Section 279 of the Act 1950 provides for the procedure for recovery of an arrear of land revenue. Sections 275 and 279 of the Act 1950 are quoted hereinbelow:-

"275. Arrangements for collection of land revenue.-The State Government may make such arrangement and employ such agency for the collection of land revenue as it may deem fit.

279. Procedure for recovery of an arrear of land revenue.-[1] An arrear of land revenue may be recovered by anyone or more of the following processes:

(a) by serving a writ of demand or a citation to appear on any defaulter;

(b) by arrest and detention of his person;

(c) by attachment and sale of his moveable property including produce;

(d) by attachment of the holding in respect of which the arrear is due;

(e) [by lease or sale] of the holding in respect of which the arrear is due;

(f) by attachment and sale of other immovable property of the defaulter, [and]

[(g) by appointing a receiver of any property, moveable or immovable of the defaulter.]

[(2) The costs of any of the processes mentioned in sub-section (1) shall be added to and be recoverable in the same manner as the arrear of land revenue.]"

11. In exercise of powers conferred, the State Government has framed the Rules known as Uttar Pradesh Zamindari Abolition and Land Reforms Rules, 1952. Rule 285-E provides for coercive processes for recovery of the land revenue. Rule 241 corresponding to Section 280 provides for issuance of a writ of demand or citation to appear before taking recourse to recovery of land revenue. Rule 254 to Rule 260 provide for the manner of attachment and sale of movable property which has to be resorted as a coercive measure for recovery of land revenue and Rule 281 to Rule 286 provide for procedure to be followed in the case of sale of immovable property for recovery of the land revenue.

12. In the present case, we are concerned only with the provisions of Rule 285-F of the Rules 1952, which is quoted hereinbelow:-

"[285-F. If the proceeds of the sale which is eventually made are less than the price bid by such defaulting purchaser, the difference shall be recoverable from him as if it were an arrear of the revenue]"

13. A bare perusal of of the provisions of the 'Act, 1950' and the 'Rules, 1952' applicable thereto make it clear that resort to the provisions of the Act and the Rules can only be made when steps are being taken for recovery of land revenue or any amounts which can be recovered as arrears of land revenue by any statutory provisions and the Rules pertaining to the sale of moveable and immovable property can be resorted to only when coercive steps are taken for recovery of land revenue. The State has power to enter into the contracts, which it does and in those cases, the contracts are not governed by any statute and are governed by the common law statute i.e. the Contract Act and any damages can only be claimed by filing a suit and in given cases, where clause containing arbitration exists, under the Arbitration Act. The State in exercise of its contractual powers cannot take recourse to the special statute which empowers the State Government to exercise their statutory powers as in the case of recovery of land revenue, which is governed under the provisions of the 'Act, 1950' and the 'Rules, 1952' applicable thereto.

14. The auction proceedings in the present case were for sale of the unused building and the goods lying therein and cannot by an stretch of imagination be termed as the steps for recovery of land revenue, as such no recourse was available to the State under the provision of the 'Act, 1950' and 'Rules, 1952' applicable thereto. The State, if it felt, was entitled to any damages on account of any acts of the petitioner which led to monetary loss to the State, the State was free to take recourse under the common law rights by filing a suit and by relying upon the provisions of the Indian Contract Act, as there was no arbitration clause in the auction in question. The State instead of resorting to the common law, rights and remedies, took recourse to the statutory powers conferred upon the State only for recovery of land revenue. We are afraid to hold that the State could not have taken recourse to provisions of the 'Act, 1950' and the 'Rules, 1952' applicable thereto to recover any damages that the State may have suffered on account of cancellation of the first auction. In terms of the provisions of the auction, the State Government had forfeited the security deposit of Rs. 3,000/-, the said forfeiture was under the contractual powers which the State exercised. Thus, we hold that the resort to the provisions of Rule 285-F of the Rules 1952 to claim contractual damages is wholly misconceived.

15. Now, coming to the second question with regard to the limitation. The State authorities after the year 1991 sent a demand notice to the petitioner in the year 2005 i.e. after about 14 years and despite a demand, the documents were not supplied to the petitioner on the ground that they were not available with the State authorities. In fact, the recovery notice was issued in the year 2007 i.e. after about 16 years of the auction. The recovery of damages (even assuming that the State Government was entitled to) could only be done by resorting to filing of a suit within the limitation prescribed under the Limitation Act, the State having failed to file a suit within the limitation prescribed could not resort to recovery of the said damages taking recourse to the provisions of 'Act, 1950' and 'Rules, 1952'. Although, no limitation is prescribed under the 'Act, 1950' and the 'Rules, 1952' and even if it is presumed that the State could have taken recourse to the said Act and the Rules, it is well settled law that where no limitation is prescribed, the same could be done within a reasonable time. A period of 16 years can by no stretch of imagination be termed as a reasonable time. The Supreme Court in Joint Collector Raga Reddy District and another v. D. Narsing Rao and others, (2015) 3 SCC 695, has summarized the legal position as under:-

" The legal position is fairly well settled by a long line of decisions of this Court which have laid down that even when there is no period of limitation prescribed for the exercise of any power, revisional or otherwise, such power must be exercised within a reasonable period. This is so even in cases where allegations of fraud have necessitated the exercise of any corrective power. We may briefly refer to some of the decisions only to bring home the point that the absence of a stipulated period of limitation makes little or no difference insofar as the exercise of the power is concerned which ought to be permissible only when the power is invoked within a reasonable period."

16. The statute of limitation as prescribed in the Indian Courts is based upon certain principles, they being, that after a particular time, the documents are not available, and the memory fails which makes it impossible to defend any action.

17. In the present case, if the State Government did not have any documents available with them and as such it was not even possible for the petitioner to have effectively defended himself in the proceedings initiated against him. Thus, on the reasoning as given above, it is held that the demand notice issued by the State Government was hopelessly barred by limitation.

18. As regards the submission of the petitioner that the petitioner did not deposit the amount for which he gave his bid because there were interpolations in the goods to be auctioned, the counter filed by the learned Standing Counsel, on the perusal by naked eyes, does contain a overwriting, however the said question need not be gone into in view of our holding that the petitioner is liable to succeed on the two questions decided above.

19. Thus we hold as under:

a) In normal contracts the State is governed by common law statutes and cannot take recourse to the Provisions of U.P. Z.A. & L.R. Act and Rules framed thereunder.

b) Law of limitation is applicable in cases where the State enters into contracts to enforce its contractual rights.

20. In view of the reasoning given in the foregoing paras, we quash the demand notice dated 27.08.2007 and allow the writ petition.

21. No order as to costs.

Order Date :-13.5.2019

SR