Omprakash Jivanlal Sawal vs Ram Omprakash Patil And 5 Ors
2023 Latest Caselaw 2484 Bom

                                                                 910.31918.22-wpl.docx


BASAVRAJ                    10IN THE HIGH COURT OF JUDICATURE AT BOMBAY
GURAPPA                         ORDINARY ORIGINAL CIVIL JURISDICTION
PATIL
Digitally signed by
BASAVRAJ GURAPPA                   WRIT PETITION (L) NO. 31918 OF 2022
PATIL
Date: 2023.03.16
11:35:42 +0530
                          Ram Omprakash Patil
                          C-402, La Gloriosa, S/No.9/3, 10/4,
                          Kalyani Nagar Annexe, Wadgaon Sheri,
                          Pune - 411014
                          201, Athena Society, Opp Kumar
                          Primavera, Wadgaon Sheri,
                          Pune - 411014                        ..... Petitioner

                                           VERSUS

                      1   The Secretary
                          Govt of India, Ministry of Finance
                          Department of Revenue Delhi
                          Represented through Union of India

                      2   Office of the Competent Authority and
                          Administrator, Smugglers and Foreign
                          Exchange Manipulators (Forfeiture of
                          Property) Act, 1976

                          Narcotic     Drugs   and      Psychotropic
                          Substances Act 1985, Adjudicating
                          Authority,
                          Off at : Room No.134-A, 1st Floor, Aayakar
                          Bhawan, M.K. Road, Churchgate,
                          Mumbai - 20

                      3   Joint Commissioner,
                          SAFEMA/NDPSA/PBPTA
                          Mumbai
                          Off at : Room No.134-A, 1st Floor,
                          Aayakar Bhawan, M.K. Road,
                          Churchgate, Mumbai - 20

                      4   Superintendent Administration
                          SAFEMA/NDPSA, Mumbai

                      5   Inspecting Officer
                          Office of SAFEMA/NDPSA, Mumbai               ..... Respondents


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                            WITH
           INTERIM APPLICATION (L) NO.35930 OF 2022
                              IN
              WRIT PETITION (L) NO. 31918 OF 2022

    Omprakash Jivanlal Sawal
    Occ : Social Worker
    R/o. Gorakshan Road,
    Near Nikate Hospital, Akola              .....Applicant /
    Tal. & Dist. Akola - 44400               Intervenor

    Ram Omprakash Patil
    C-402, La Gloriosa, S/No.9/3, 10/4,
    Kalyani Nagar Annexe,
    Wadgaon Sheri, Pune - 411014
    201, Athena Society,
    Opp Kumar Primavera, Wadgaon Sheri,
    Pune - 411014                            ..... Petitioner

                     VERSUS

1   The Secretary
    Govt of India, Ministry of Finance
    Department of Revenue Delhi
    Represented through Union of India

2   Competent Authority and Administrator,
    Smugglers   and    Foreign  Exchange
    Manipulators (Forfeiture of Property)
    Act, 1976

    Narcotic Drugs and Psychotropic
    Substances Act 1985,
    Adjudicating Authority,
    Off at : Room No.134-A, 1st Floor,
    Aayakar Bhawan, M.K. Road,
    Churchgate, Mumbai - 20

3   Joint Commissioner,
    SAFEMA/NDPSA/PBPTA
    'C' Wing, 3rd Floor, Mittal Court,
    Nariman Point, Mumbai,
    Maharashtra - 400021


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4    Superintendent Administration
     SAFEMA/NDPSA, Mumbai

5    Inspecting Officer
     Office of SAFEMA/NDPSA, Mumbai          ..... Respondents


Mr. Venkatesh Dhond, Senior Advocate with Ms. Rashi Raghavan,
Ms. Janhavi Kamik, Mr. S. A. Khan I/b. Himanshu Kode for the
Petitioner

Mr. Vivek Arote for the Applicant in Interim Application (L)
No.35930 of 2022

Mr. Advait M. Sethna with Mr. D. P. Singh a/w. Mr. Poushali
Roychoudhary a/w. Mr. Rangan Majumdar, Mr. Sandeep Raman for
the Respondents.


                      CORAM:     S.V.GANGAPURWALA, ACJ &
                                 SANDEEP V. MARNE, J.

      RESERVED ON            : MARCH 10, 2023
      PRONOUNCED ON          : MARCH 15, 2023


JUDGMENT (PER : ACTING CHIEF JUSTICE)

1. The Petitioner participated in the tender process initiated by

the Respondents for auction of agricultural land and was declared as

a highest bidder at Rs.66,00,000/- (Rupees Sixty Six Lacs Only).

The Petitioner deposited the earnest money of Rs.6,63,000/-

(Rupees Six Lacs Sixty Three Thousand Only). The Petitioner

thereafter deposited 25% of the amount i.e. Rs.9,75,000/- (Rupees

Nine Lacs Seventy Five Thousand Only). The Petitioner, in all, had

deposited Rs.16,53,000/- (Rupees Sixteen Lacs Fifty Three

Thousand Only). Subsequently, Respondent No.3, under the order

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dated 18th August 2022 cancelled the auction conducted by

Respondent No.2 due to technical reasons. Under the said order

dated 18th August 2022 cancelling the auction, Respondent No.2 also

returned the amount of Rs.16,53,000/- (Rupees Sixteen Lacs Fifty

Three Thousand Only) deposited by the Petitioner under cheque

No.277513 dated 18th August 2022. The Petitioner assails the order

dated 18th August 2022 cancelling the auction.

2. Mr.Dhond, the learned Senior Advocate for the Petitioner in his

usual lucid manner canvassed his submissions and put-forth

following propositions.

a) The concluded contract had come into an existence

between the parties. Respondent No.2, 3 and 4 had accepted

the offer of the Petitioner without any qualification and

reservation. 25% amount deposited by the Petitioner was also

accepted. Respondent No.2, 3 and 4 have signed the Bid

Acceptance Form thereby resulting in concluded contract. It

was not open for the Respondents to resile from the same.

Resiling from the said contract would amount to breach of

contract and the same is not permissible.

b) The action of the Respondents in cancelling the auction is

arbitrary and perverse. The reserve price under the

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advertisement was fixed at Rs.26,51,000/- (Rupees Twenty Six

Lacs Fifty One Thousand Only). The same was fixed after

considering the valuation by the Valuation Officer of the

Income Tax Department. The property offered was on "as is

where is" and "as is what is" basis. The sale of the property

was advertised in two local newspapers viz; (i) Voice of

Vidharbha; and (ii) Times of India, Nagpur Edition, both of

which have wide circulation in Akola District. Tender notice

was also put up on website of Respondent No.2. The Petitioner

was the highest bidder in the auction and offered sum of

Rs.66,00,000/- (Rupees Sixty Six Lacs Only) which is

significantly higher than the reserve price of Rs.26,51,000/-

(Rupees Twenty Six Lacs Fifty One Thousand Only). The said

bid was accepted and the Bid Acceptance Form dated 3 rd June

2022 was issued to the Petitioner.

c) In terms of the auction, the Petitioner had already paid

earnest amount of Rs.6,63,000/- (Rupees Six Lacs Sixty Three

Thousand Only). The Petitioner thereafter tendered the first

installment of Rs.9,75,000/- (Rupees Nine Lacs Seventy Five

Thousand Only) by his letter dated 1st July 2022 for 25% of

total bid price. The notice of cancellation dated 18 th August

2022 is served upon the Petitioner. The said decision was

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taken relying upon Clause 19 of the Standard Terms and

Conditions. The said clause 19 does not permit cancelling of an

auction after a bid has been accepted and a contract has come

into existence. The Petitioner objected to the said cancellation

by his letter dated 23rd August 2022 and sought

reconsideration of the decision. The Petitioner in the said

letter emphasized that the Petitioner was ready and willing to

pay the entire amount which is well within the deadline to pay.

The Petitioner's request was turned down by Respondent No.2

under communication dated 26th August 2022 without

ascribing any reason. The Petitioner thereafter served

Advocate's notice dated 12th September 2022 calling upon

Respondent No.2 to withdraw the cancellation. The said notice

was responded by Respondent No.2 through letter dated 19 th

September 2022. In the said letter, Respondent No.2 sought to

justify the decision to cancel on a completely new ground i.e.

"while conducting the auction it was felt that wide publicity

could not be given to the auction". The said explanation is

contrary to the explanation offered earlier viz. "technical

reasons". The explanation offered is self-defeating since while

conducting the auction, if the authorities had felt that wide

publicity had not been given, the authorities ought not to have

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proceeded ahead with the auction. The excuse of wide

publicity not being given was without merit since the auction

had been advertised in two newspapers having wide

circulation. The learned Senior Advocate submits that the

auction had fetched a price which was far in excess of the

reserve price mentioned in the ready reckoner of the said plot.

d) In the affidavit in reply filed by the Respondents yet

another reason has been offered that the auction has been

cancelled because a complaint had been filed by one

Omprakash Jeevanlal Sawal. The said complainant claimed

that (i) the property had been sold at a low price; and (ii) wide

publicity had not been given. The same was erroneous, as wide

publicity was given and the price offered was much higher

than the reserve price. Moreover, the stand of the

Respondents is contrary to the communication they made to

the complainant Omprakash Sawal. The Respondents

communicated to the complainant Omprakash Sawal stating

that adequate publicity had been given and the offer obtained

was fair price. The auction of 3rd June 2022 had complied with

all the requisite formalities under the Smugglers and Foreign

Exchange Manipulators (Receipt, Management and Disposal of

Forfeited Property) Rules, 2006 and the Illegally Acquired

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Property (Receipt, Management and Disposal) Rules 1989.

e) Once the auction was conducted and the Petitioner's bid

was found to be in accordance with the terms of the auction

and accepted, a contract came into existence which could not

be unilaterally terminated. Not only did the Respondents

accept that the contract had come into existence, the

Respondents acted on the basis of this contract by receiving

further amounts.

f) In a fresh auction advertisement the reserve price is

fixed at Rs.29,19,000/- (Rs. Twenty Nine Lacs Nineteen

Thousand Only) which is less than the price offered by the

Petitioner. The learned Senior Advocate relied upon the

judgment of the Apex Court in the case of K. Kumara Gupta

Vs. Sri Markendaya and Sri Omkareshwara Swamy

Temple and Ors. 1 to submit that unless and until it is found

that there was any material irregularity and/or illegality in

holding the public auction and/or the auction sale was vitiated

by any fraud or collusion, it is not open to set aside the said

auction in favour of the highest bidder on the basis of some

representations made by third party who did not even

participate in the auction on the ground that the value of the

1 (2022) 5 SCC 710

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property might have been much more.

g) Only because now in a fresh auction, more amount is

received, is not a ground for setting aside the validly

conducted auction. Once it is concluded that the price offered

is adequate, no subsequent higher offer can constitute a valid

ground for refusing confirmation of sale or offer already

received. Reliance is placed by the learned Senior Advocate on

the judgment of the Apex Court in the case of Vedica Procon

Pvt. Ltd. Vs. Balleshwar Greens Pvt. ltd. & Ors. 2

h) Only because the Respondents issued a cheque of the

amount deposited by the Petitioner and the Petitioner

encashed the said cheque, cannot be a ground to negate the

relief to the Petitioner. The Petitioner, on 23 rd August 2022

had clearly written to the Respondents not to proceed ahead

with the cancellation and that the Petitioner is ready and

willing to perform his part of the promise. This shows that the

Petitioner encashed the cheque of the amount under-protest.

Reliance is placed by the learned Senior Advocate on the

judgment of the Apex Court in the case of State of U.P. and

Anr. Vs. Uptron Employees' Union, CMD and Ors. 3

2 (2015) 10 SCC 94 3 2006 5 SCC 311

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3. Mr. Sethna, the learned advocate for the Respondents

succinctly countered the arguments of the learned Senior Advocate

for the Petitioner and canvassed following submissions:

(i) According to the learned advocate, clause 19 of the Rules

empowers the Respondents to cancel the auction at any point

of time without assigning any reason. The bid of the Petitioner

was never accepted by the Respondents. No concluded

contract came into existence. The document viz. Bid

Acceptance Form relied on by the Petitioner cannot give rise to

the concluded right. The same is only confirmation by the

Petitioner that he has purchased the immovable property

detailed in the said form.

(ii) The Respondents had returned the entire amount to the

Petitioner that was deposited by cheque. The Petitioner has

encashed the said cheque without any protest, as such, now

the Petitioner cannot claim performance of the same.

(iii) The complaint was received about the sale of the

property being done at a lower price and that the market value

of the property is more than Rs. 2 crores. The same stands

proved in the fresh auction conducted, wherein the highest bid

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received is Rs.2.25 crores and second highest bid is of Rs.2.07

crores.

(iv) It is for the Respondents to decide whether to accept the

bid of the tenderer or not and the courts may not interfere in

such matter. Reliance is placed on the judgment of the Apex

Court in the case of M/s. N. G. Projects Ltd. Vs. M/s. Vinod

Kumar Jain & Ors. 4 Relying upon the judgment of the Apex

Court in the case of State of Punjab & Ors. Vs. Mehar Din .5

It is submitted that a plausible decisions arrived at need not

be overturned and at the same time, latitude ought to be

granted to the State in exercise of its executive power.

v) Relying upon the judgment of the Apex Court in the case

of the Haryana State Agricultural Marketing Board and

Ors. Vs. Sadhu Ram 6 it is submitted that the final authority

to approve the auction bids was the Competent Authority and

unless the same is done, the bids cannot be said to have been

confirmed.

vi) The Competent Authority had not passed an order

accepting the bid. Reliance is also placed on the judgment of

4 Decided on 21 st March 2022 5 Civil Appeal No.5861 of 2009 dated 2 nd March 2022 6 MANU/SC/7475/2008

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the Apex Court in the case of Indian Overseas Bank Vs. RCM

Infrastructure Ltd. 7 to submit that the sale would be

complete only when the auction purchaser makes the entire

payment and the Authorised Officer, exercising the powers of

sale issues a certificate of sale of the property. In the present

case, no such certificate of sale has been issued nor any

agreement has been executed between the parties. The learned

advocate further submits that the High Court may not exercise

its power under judicial review.

vii) The Petitioner having accepted the refund of the amount

without any protest is now precluded from challenging the

auction nor any right subsists with him.

4. We have considered the submissions canvassed by the learned

Senior Advocate for the Petitioner and the learned advocate for the

Respondents.

5. The Central Government, under the provisions of Section 68-I

of the Narcotic Drugs and Psychotropic Substances Act, 1985

(hereinafter referred to as the NDPS Act) forfeited the property viz.

agricultural land bearing Sy.No.98/1, Gut No.203, Mauja Kumbhari,

Dist. Akola admeasuring 2.02 H. The Competent Authority and the

7 MANU/SC/0661/2022

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Administrator, SAFEMA/NDPSA/PBPTA Mumbai issued notice for

sale of forfeited property through simultaneous tender, public

auction and e-auction on or about 18th May 2022. The reserve price

was fixed at Rs.26,51,000/-.

6. It is trite that in matters of tender the Courts would be loath in

interfering with the decision of the employer unless the decision

exhibits manifest, arbitrariness, perversity and/or illegality. The

Courts would step-in if the decision is arbitrary or if actuated by

mala fides and bias, so also if the decision making process is actuated

with malice or is illegal.

7. It is not disputed that the reserve price for the property under

auction was Rs.26,51,000/- (Rupees Twenty Six Lacs Fifty One

Thousand Only). The Petitioner had quoted Rs.66,00,000/- (Rupees

Sixty Six Lacs Only). The Petitioner had deposited earnest money

and also 25% of the amount. The Bid Acceptance Form was issued to

the Petitioner by Respondent Nos.2, 3 and 4. The question would be

whether the concluded contract came into existence.

8. Tender is an invitation to offer. Pursuant to the tender the

Petitioner had given his officer. The acceptance of the offer has to be

by the Respondents. The acceptance should be unqualified and

without reservation and absolute. The Respondents had accepted

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the offer of the Petitioner. Bid Acceptance Form was also signed by

the Respondent Nos.2 to 4. Once offer of the Petitioner is accepted

by the Respondents, a promise comes into existence. In the present

case, offer of the Petitioner was accepted without any qualification.

Promise between the parties came into existence. Both the parties

thereafter are bound by the promise and are expected to perform

their part of the promise. The Petitioner was required to deposit

remaining 75% amount by 2nd September 2022. Prior to that on 18 th

August 2022 the Respondent cancelled the tender / auction and also

forwarded the cheque of the entire amount deposited by the

Petitioner to the Petitioner. Though the Petitioner on 23 rd August

2022 gave a written communication that he has not committed any

wrong and is ready and willing to go ahead with the transaction and

requested the Respondents to reconsider the decision of cancelling

the auction, the Petitioner on the same day encashed the cheque. He

did not suggest that he is encashing the same under-protest. The

Petitioner accepted the said amount without demur.

9. Once having accepted the refund of the amount deposited by

him pursuant to the auction, it will not be open for the Petitioner to

turn around and say that the contract of sale subsists between the

parties. The fact that a part consideration amount paid by the

Petitioner towards purchase of the property under auction is

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refunded by the Respondents and the Petitioner accepted it without

demur is sufficient to negate the relief to the Petitioner. The

Petitioner wants to contend that the Petitioner was and is ready and

willing to perform his part of contract. Encashing the cheque of the

amount refunded by the Respondents is not compatible with the plea

of the Petitioner to proceed ahead with the alleged contract.

Accepting the amount of earnest money of 25% deposited by the

Petitioner from the Respondents would be a death knell for the

Petitioner. Accepting the refund of the amount from the

Respondents would demonstrate that if at all there is a contract, the

parties have rescinded the same.

10. In the case of K.Kumara Gupta (Supra), the auction sale was

not below the reserve price. The Apex Court came to the conclusion

that unless and until it is found that there was material irregularity

and/or illegality in holding the public auction and/or the auction sale

was vitiated by fraud or collusion, it is not open to set aside the said

auction in favour of the highest bidder on the basis of some

representations made by third party on the ground that the value of

the property might have been much more. In the present case, the

parties have rescinded the contract, if any, existed between the

parties and it has come on record that the market value of the

property was three times more. Even if we consider that the reserve

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price of the property was low and the Petitioner had quoted more,

still the auction process itself came to an end when the Petitioner

encashed the amount of the cheque refunded by the Respondents to

the Petitioner. In the case of State of Uptron Employee's Union,

CMD (supra) the Petitioner therein encashed the cheque of the

amount under-protest. In the present case, the Petitioner nowhere

suggested that he is accepting the amount, under-protest.

11. Rule 19 of the Smugglers and Foreign Exchange Manipulators

(Receipt, Management and Disposal of Forfeited Property) Rules,

2006 reads thus:

19. Disposal of land or building.--Subject to the relevant provisions of any law relating to the acquisition or disposal of immovable property and also subject to the sale proceeds being credited into the account of the Central Government, land or building shall be disposed of in the following manner, namely:--

(1) The disposal of land or building shall be done simultaneously through open tender, public auction and e- auction. Bids shall be invited through advertisements in local newspapers and through the website of the department. After the sealed tenders are received, the property shall be put to public auction. Simultaneously, the department shall advertise through internet inviting bids through e-auction. The property shall be sold to the highest bidder in all the three methods namely, sealed tender, public auction and e-auction, provided the price obtained is not less than the reserve price fixed at by the department.

(2) In case the property is not disposed of in the manner prescribed under sub-rule (1) of rule 19 in two attempts, the same shall be disposed of by inviting sealed tenders:

(a) the property shall be advertised in the local newspapers

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indicating the reserve price and inviting tenders. The highest bidder (subject to the reserve price) shall be entitled to buy the property.

(b) if the property cannot be sold in the first attempt as provided in clause (a), the sale of the property through sealed tender shall be advertised again with a proviso that the competent authority reserves the right to sell the property to the highest bidder who offers to buy the property for a price which is up to fifteen per cent less than the reserve price.

(c) if the property remains unsold even after the attempts as provided in clause (a) and clause (b), the sale of the property shall be advertised again with a proviso that the competent authority reserves the right to sell the property to the highest bidder who offers to buy the property for a price which is up to thirty per cent less than the reserve price.

(3) If the property remains unsold even after attempts as provided in sub-rule (1) and sub-rule (2), it shall be disposed of through a negotiated sale upto fifty per cent below the reserve price to any of the following entities, namely:--

(a) Central and State Government Departments.

(b) Public Sector Undertakings.

(c) Local bodies.

(4) If the property is not sold by any of the above methods, it may be disposed of by the Central Government in the manner as deemed fit.

12. Rule 19 dealing with disposal of land or building would be

relevant to be considered. The disposal of the immovable property is

subject to the sale proceeds being credited into the account of the

Central Government. In the present case, the stage for depositing

the complete sale proceeds had not yet arrived and prior to that

auction sale was cancelled.

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13. The Apex Court in the case of Indian Overseas Bank (supra)

while considering the auction under the provisions of the

Securitisation And Reconstruction Of Financial Assets And

Enforcement Of Security Interest Act, 2002, held that the statutory

sale as per Rule 8 & 9 of the Security Interest (Enforcement) Rules

2002 would be complete when the auction purchaser makes the

entire payment and the authorised officer exercising the power of

sale issues a certificate of sale. In the present case sale would

complete only after deposit of entire sale proceeds with the Central

Government as contemplated under Rule 19 of the Rules 2006.

14. The title of the property never passed to the Petitioner. The

Petitioner only got right to purchase the property. As observed

above, the Petitioner accepted the cheque of the amount refunded by

the Respondent towards the earnest amount and 25% of the amount

i.e. total Rs.16,53,000/- (Rupees Sixteen Lacs Fifty Three Thousand

Only and encashed the cheque without demur, would be sufficient to

suggest that the Petitioner forfeited his right to purchase the

property inasmuch as any transaction between the Petitioner and

the Respondents would be rescinded. Section 62 of the Indian

Contract, 1872 deals with 'contracts which need not be performed'.

If the parties to contract agree to rescind it, the original contract

need not be performed. The rescission can be express or implied.

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The Respondents, under communication dated 18 th August 2022

cancelled the contract. The Petitioner accepted the refund of the

amount deposited by it thereby acceding to the rescission of the

contract. It will be too late in the day now for the Petitioner to

contend performance of the contract that has been rescinded by the

act of the parties. On this count also, the Petitioner would not be

entitled for any relief from this Court.

15. Once the contract is rescinded, no rights and liabilities would

flow from the same. Rescission can be by accepting the refund of the

consideration amount. Rescission may be express or implied.

16. Moreover, the Respondents had resorted to fresh auction. By

way of interim order, this Court had directed not to finalize the

tender, however, allowed the Respondents to proceed with the

auction and open the tender. The amount tendered by the fresh

auction purchaser is three times more than the amount offered by

the Petitioner. The highest bid is of Rs.2.25 crores and the second

highest bid is of Rs.2.07 crores. The same is more than 3 times the

amount offered by the Petitioner i.e. Rs.66,00,000/- (Rupees Sixty

Six Lacs Only). The same would substantiate the contention of the

Respondents and of the Complainant that the market value of the

property is much more than for which it was being sold. The public

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exchequer would be a casualty if the auction is allowed to be

confirmed at Rs.66,00,000/- (Rupees Sixty Six Lacs Only).

17. The aforesaid facts and circumstances taken into

consideration in entirety, would dis-entitle the Petitioner to any

relief. The Writ Petition, as such, is dismissed. No costs.

      (SANDEEP V. MARNE, J)                     (ACTING                 CHIEF

      JUSTICE)

18. At this stage, the learned Senior Advocate for the Petitioner

submits that the interim order was operating since long and the

same be continued for a period of 10 days.

19. The learned Counsel for the Respondents opposes the said

request.

20. Considering the fact that the interim order was in operation,

the Respondents shall not finalize the auction / tender till 25 th March

2023. Needless to state that after 25th March 2023, the present

protection shall come to an end.

(SANDEEP V. MARNE, J)                    (ACTING CHIEF JUSTICE)




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