Karnataka High Court
C Rajamallaiah S/O. Late Venkaiah vs The State Of Karnataka on 13 January, 2023
Bench: Alok Aradhe, S Vishwajith Shetty
1
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 13TH DAY OF JANUARY 2023
PRESENT
THE HON'BLE MR. JUSTICE ALOK ARADHE
AND
THE HON'BLE MR.JUSTICE S. VISHWAJITH SHETTY
W.A. No.639 OF 2009 (KLR-RES)
BETWEEN:
C. RAJAMALLAIAH
S/O LATE VENKAIAH
SINCE DECEASED BY HIS LR'S.
1. C. RAJA VENKATESHWARALU
AGED ABOUT 47 YEARS.
2. C. RAJA KRISHNA PRASAD
AGED ABOUT 45 YEARS.
3. C.S. RAJA RAMESH
AGED ABOUT 41 YEARS.
4. SMT. J. SHOBHA RANI
AGED ABOUT 50 YEARS.
APPELLANT NOS.1 TO 3 ARE THE SONS
AND APPELLANT NO.4 IS THE D/O
LATE C. RAJAMALLAIAH
ALL ARE R/AT NO 1638/11
B BLOCK, SAHAKARA NAGAR
BANGALORE-92.
... APPELLANTS
2
(BY MR. K.L. SHREENIVASA, ADV., A/W
MR. B.K. MANJUNATH, ADV., FOR
MR. J. SUDHAKAR, ADV.,)
AND:
1 . THE STATE OF KARNATAKA
BY THE SECRETARY FOR FINANCE
VIDHANA SOUDHA
BANGALORE-01.
2 . THE DEPUTY COMMISSIONER
MANDYA DISTRICT
MANDYA.
3 . THE TAHSILDAR
MANDYA DISTRICT
MANDYA.
4 . K. ATMANANDA
S/O LATE KALE GOWDA
R/AT KALLAHALLI
MANDYA CITY, MANDYA.
... RESPONDENTS
(BY MRS. NAMITHA MAHESH B.G. AGA FOR R1-R3
MR. M.R. RAJAGOPAL, SR. COUNSEL FOR
MR. S. RAJU, ADV., FOR R4)
---
THIS WRIT APPEAL IS FILED U/S 4 OF THE
KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE
ORDER PASSED IN THE WRIT PETITION NO.12669/06
DATED 13/2/09.
THIS WRIT APPEAL HAVING BEEN HEARD AND
RESERVED FOR JUDGMENT ON 10.01.2023, COMING ON
FOR PRONOUNCEMENT OF JUDGMENT THIS DAY,
ALOK ARADHE J., DELIVERED THE FOLLOWING:
3
JUDGMENT
This intra court appeal arises out of judgment dated
13.02.2009 passed by learned Single Judge by which the
writ petition preferred by the appellants has been
dismissed and order dated 31.08.2006 passed by the
Karnataka Appellate Tribunal (hereinafter referred to as
'the Tribunal' for short), upholding the sale proclamation
dated 22.03.2006 issued by Tahsildar, Mandya, has been
upheld.
FACTS:
2. In order to appreciate the grievance of the
appellants, relevant facts need mention. Late
C.Rajamallaiah (hereinafter referred to as 'the Contractor'
for short) was father of the appellant and was an excise
contractor who had purchased rights to sell toddy in retail
in Mandya District. The Contractor was in arrears on
account of monthly rentals amounting to Rs.57,06,350/-
with interest during the year 1982-83 and 83-84. The
Deputy Commissioner passed an order on 22.11.1984
directing recovery of the aforesaid amount along with
interest. The Contractor challenged the order passed by
the Deputy Commissioner in a writ petition viz.,
W.P.No.17754/1983 in which an interim order of stay was
granted. The said writ petition was dismissed by an order
dated 31.05.1985 and the order passed by the learned
Single Judge was upheld by a division bench of this court
in a writ appeal.
3. The Tahsildar, Mandya issued a notice on
15.03.1988 for recovery of arrears of rentals as arrears of
land revenue. Thereupon the son of the Contractor filed a
suit viz., O.S.No.149/1988 seeking the relief of permanent
injunction. In the said civil suit, an interim order of
injunction was passed on 19.04.1988. The said civil suit
was dismissed on 07.02.1994 and the judgment and
decree passed by the trial court was upheld in an appeal
vide judgment and decree dated 19.09.1998 passed in
R.A.No.94/1994. The aforesaid judgment and decree was
upheld by learned Single Judge of this court in RSA
No.30/1999 vide judgment and decree dated 01.03.1999.
4. Thereafter, notices dated 20.11.1998 and
10.11.2000 were issued to the Contractor under Rule 113
and 124 of Karnataka Land Revenue Rules, 1966
(hereinafter referred to as 'the Rules' for short) demanding
a sum of Rs.2,33,23,343/-. The State Government by an
order dated 02.09.2002 introduced Karsamadhan Scheme
(hereinafter referred to as 'the scheme' for short) which
was in vogue for a period from 01.10.2002 till
29.12.2002.Thereafter, another notice dated 22.03.2006
was issued under Rule 113 and Rule 124 of the Rules for
recovery of an amount of Rs.2,86,59,234/- by auction of
the property of the contractor. The land in question,
which was put for auction was described as land
measuring 100x60 ft surrounded by the boundaries
mentioned in the notice. The auction was scheduled to be
held on 03.04.2006.
5. In pursuance of the aforesaid auction notice,
an auction was held on 03.04.2006, in which the bid of
respondent No.4 (hereinafter referred to as 'the auction
purchaser' for short) for an amount of Rs.65,50,000/- was
found to be highest.
6. The Contractor submitted a representation on
05.04.2006 to the Deputy Commissioner, Mandya not to
confirm the auction held on 03.04.2006. The auction
purchaser deposited an amount of Rs.10 Lakhs by cheque
and deposited the amount of Rs.6,37,500/- by way of cash
being 25% of the amount. The auction purchaser was
required to deposit the balance 75% of the bid amount
within a period of 15 days. The auction purchaser
tendered the balance amount of Rs.49,12,500/- by way of
cheque on 21.04.2006. The Contractor thereafter
submitted representations dated 02.05.2006 and
21.06.2006
7. On the basis of the representations issued by
the contractor, a notice was issued to the contractor. The
contractor appeared in the proceeding before the Deputy
Commissioner through a power of attorney and submitted
written submissions on 27.06.2006. The deputy
Commissioner by an order dated 10.07.2006 decided the
representations submitted by the contractor and upheld
the auction held on 03.04.2006. The Deputy Commissiner
further held that the contractor cannot be extended the
benefit of the scheme as the same was not in force as on
10.07.2006.
8. Thereafter, the Deputy Commissioner issued a
corrigendum dated 15.07.2006 in which it was provided
the dimensions of the property auctioned on 03.04.2006
are 24.60 x 30.05 meters instead of 100 x 60 feet and
khata number of the land mentioned as
No.1094/1090/2A.
9. The contractor being aggrieved by the order
dated 10.07.2006 passed by the Deputy Commissioner, by
which he had confirmed the sale, filed an appeal before
the Tribunal. The tribunal by an order dated 31.08.2006
inter alia held that failure to serve the notice of
proclamation does not constitute a legal infirmity. It was
further held that sale notice was affixed at various places
as required under Rule 124 of the Rules. It was also held
that subsequent revision in dimension of the land would
have no legal impact on the auction. Consequently, the
appeal preferred by the contractor was dismissed.
10. The contractor thereupon filed a writ petition,
in which a prayer was made to quash the order dated
31.08.2006 passed by the tribunal. The contractor also
sought the relief of quashment of sale proclamation dated
22.03.2006 as well as a direction to consider his
application under the scheme dated 17.08.2006. The
learned Single Judge by an interim order dated
12.09.2006 stayed the dispossession of the contractor
from the property in question. Thereafter, by an order
dated 26.10.2006 liberty was granted to the appellant to
deposit the amount under the scheme upto 31.10.2006. In
compliance of the aforesaid interim order, the contractor
deposited an amount of Rs.59,98,175/- towards principal
amount on 30.10.2006. The contractor made an
application under the scheme, seeking to waive interest of
Rs.3,12,23,180/- under the scheme. Thereafter, the
contractor deposited a further sum of Rs.40,00,000/- on
04.12.2006 and a further sum of Rs.2,54,158/- on
06.01.2007.
11. During the pendency of the writ petition, the
contractor expired. Thereupon his legal representatives
viz., his sons and daughters were brought on record. The
learned Single Judge by an order dated 13.02.2009 inter
alia held that (i) The contractor initiated several rounds of
litigation to stall the recovery of the amount due from him.
(ii) The instant case was a case of mis-description of the
property and wide publicity was given for sale of property
and therefore, the auction on the ground of mis-
description of the property cannot be set aside. (iii) There
is no material irregularity either in publishing or
conducting the sale. (iv) The sale cannot be set aside on
the ground of violation of either Section 168 or Section
176 of the Karnataka Land Revenue Act, 1964 (hereinafter
referred to as 'the Act' for short). (v) The auction purchaser
had deposited the bid amount within time lines prescribed
under Section 164 of the Act. Therefore, there is no
violation of Section 164 of the Act. (vi) No attempt was
made by the Contractor to settle the dues. (vii) When the
sale took place, the scheme was not in existence,
therefore, the contention that auction should be
suspended till the contractor avails of the remedy under
the scheme does not deserve acceptance. Accordingly, the
writ petition was dismissed.
12. Against the aforesaid order, the contractor
preferred an appeal, which was dismissed by a division
bench of this court vide judgment dated 22.06.2011
passed in W.A.No.639-640/2009. Against the order
passed by division bench of this court, SLP (C) CC
Nos.21555-21666/2012, which was dismissed by Hon'ble
Supreme Court by order dated 30.04.2012. The relevant
extract of the order reads as under:
Delay condoned, Liberty is granted to the
petitioners to file review petition before the
High Court since many of the grounds raised
before us were not seen considered by the High
Court. Learned counsel placed reliance on the
Deputy Commissioner's report dated
16.04.2007 and let it be brought to the notice of
the High Court. Counsel appearing for the
petitioners also submitted that he has also
deposited approximately rupees one Crore
before the authorities concerned. Let this fact
also be examined by the High Court. The
special leave petitions are disposed of.
13. Thereafter, this court by an order dated
31.10.2022 passed in R.P.No.402/2012, allowed the
review petition and restored W.A.No.639-640/2009 to file.
The aforesaid order dated 31.10.2022 was upheld by
Hon'ble Supreme Court by an order dated 02.12.2022
passed in SLP (C) No.21442/2022. In the aforesaid factual
background, this appeal arises for our consideration.
SUBMISSIONS:
14. Learned counsel for the appellant submitted
that in the proclamation of sale issued on 22.03.2006, the
property was described as site measuring 6,000 square
feet (100 x 60) whereas, boundaries were given in respect
of property measuring 14,250 square feet. It is further
submitted that the reserve price of the property was
Rs.75,00,000/-, whereas, the same was sold for an
amount of Rs.65,50,000/-. It is pointed out that after
confirmation of the sale, a corrigendum was issued on
15.07.2006. It is further pointed out that the Deputy
Commissioner has submitted a report, in which it is
stated that the property has been sold below market
value.
15. It is contended that copy of the sale
proclamation was not served on the contractor and
therefore, Section 168(2) of the Act has been violated. It is
also urged that the auction purchaser did not comply with
Section 174 of the Act inasmuch as he did not deposit
25% of the bid amount immediately and remaining 75% of
the amount within 15 days. It is further contended that on
the date of issuance of cheques, the auction purchaser did
not have credit balance in his account. It is argued that
Deputy Commissioner did not decide the objection
preferred by the contractor for setting aside the sale and
the auction sale suffers from violation of Section 176 of
the Act.
16. Learned Additional Government Advocate while
supporting the order passed by the learned Single Judge
submitted that the property has been auctioned in
accordance with the provisions of the Act and the Rules. It
is further submitted that appellant has deposited a sum of
Rs.1,05,50,000/- and the application submitted by the
appellant dated 31.10.2006 seeking waiver under the
second scheme framed by the State Government for waiver
of the amount of interest is pending, which shall be
decided after decision of this appeal.
17. Learned Senior counsel for auction purchaser
has taken us through the orders passed by the tribunal as
well as the learned Single Judge. It is submitted that
provisions of Section 168(2) of the Act have been
substantially complied with as notice has been published
in the manner prescribed under Rule 124 of the Rules. It
is further submitted that in Form 38 prescribed under the
Rules 113 and 124 of the Rules, the reserve price is not
required to be mentioned in proclamation of sale. It is also
submitted that instant case is a case of mis-description of
a property and not a case of dispute pertaining to identity
of the property. It is pointed out that 25% of the bid
amount was deposited on the date of auction and balance
75% of the bid amount was deposited within a period of
15 days. It is also urged that from perusal of the grounds
mentioned in the representation submitted on behalf of
the contractor, it is evident that no material irregularity,
mistake or fraud resulting in loss or injury to him has
been made out. Therefore, it was not necessary to hold an
enquiry as required under Section 34 of the Act.
18. It is also urged that the contractor was not
entitled to the benefit of the scheme. It is contended that
learned Single Judge on the basis of meticulous
appreciation of material available on record has recorded a
finding that the sale does not suffer from any infirmity,
which does not warrant any interference in this intra
court appeal. In support of aforesaid submissions, reliance
has been placed on decisions of Hon'ble Supreme Court in
M/s KAYJAY INDUSTRIES (P) LTD VS. M/S ASNEW
DRUMS (P) LTD AND OTHERS', (1974) 2 SCC 213, 'RAO
MAHMOOD AHMAD KHAN THROUGH HIS LRs VS.
RANBIR SINGH AND OTHERS', 1995 SUPP (4) SCC 275,
SAHEB KHAN VS. MOHD. YOUSUFUDDIN AND OTHERS',
(2006) 4 SCC 476 and SHEODHYAN SINGH AND
OTHERS VS. MST. SANICHARA KUER AND OTHERS',
AIR 1963 SC 1879.
19. We have considered the submissions made on
both sides and have perused the record. The solitary issue
involved in this appeal pertains to the validity of the
auction held on 03.04.2006. In 'N.PADMAMMA VS.
S.RAMAKRISHNA REDDY', (2008) 15 SCC 517, it was
held that right to hold the property is a human right as
also a constitutional right and the same cannot be taken
away except in accordance with law. Article 300-A of the
Constitution of India protects the right to hold the
property. Similar view was taken in 'DELHI AIR TECH
SERVICES (P.) LTD. VS. STATE OF U.P.', (2011) 9 SCC
354. The aforesaid principles were reiterated with
approval in 'VIDYA DEVI VS. STATE OF HIMACHAL
PRADESH AND OTHERS', (2020) 2 SCC 569. Therefore,
the procedure laid down under the Act and the Rules has
to be adhered to while conducting the auction of a
property.
STATUTORY PROVISIONS:
20. Before proceeding further, it is apposite to take
note of relevant provisions of the Act and the Rules viz.,
Sections 168, 169, 174, 175, 176, 177 of the Act and
Rule 124 of the Rules, which are extracted below for the
facility of reference:
168. Procedure in effecting sale of
immoveable property.--(1) Before effecting
the sale of any land or other immoveable
property under the provisions of this Chapter,
the Deputy Commissioner or other officer
empowered in this behalf, shall issue such
notices and proclamations, in such form and in
such manner and containing such particulars
as may be prescribed, and cause such notices
and proclamations to be published in such
manner as may be prescribed.
169. The sale to be by auction.--All
sales of property, moveable or immoveable,
under this Chapter shall be by public auction
held in accordance with such rules as may
prescribed.
174. Deposit by purchaser of
immoveable property.--In all cases of sale of
immoveable property, the party declared to be
the purchaser shall be required to deposit
immediately twenty-five per cent of the amount
of his bid, and the balance within fifteen days
from the date of the sale. 1964: KAR. ACT 12]
Land Revenue 523.
175. Failure to make deposit.--(1) In
default of the payment of the deposit referred
to in section 174, the property shall be put up
for re-sale forthwith and the expenses incurred
in connection with the first sale shall be borne
by the defaulting bidder. (2) In default of
payment of the balance of the bid amount
within the period prescribed in section 174, the
deposit, after defraying therefrom expenses of
the sale, shall be forfeited to the State
Government and the property shall be re-sold;
such resale shall be made after issue of a fresh
notice in the manner prescribed under this
Chapter for the original sale. (3) Any deficiency
of price which may happen on a resale by
reason of the purchaser's default and all
expenses attending such resale shall be
recoverable from the defaulting purchaser in
the same manner as an arrear of land revenue.
176. Setting aside sale.--(1) Where
immovable property has been sold under this
Chapter, the defaulter, or any person owning
such property or holding an interest therein,
may at any time within ninety days of the date
of sale apply in the prescribed manner to the
Deputy Commissioner to have the sale set
aside,-- (a) on the ground of some material
irregularity or mistake or fraud resulting in loss
or injury to him, or (b) on his depositing in the
Deputy Commissioner's office the amount of the
arrear specified in the proclamation of sale, the
cost of the sale and for payment to the
purchaser, a sum equal to five per centum of
the purchase money. (2) On an application
made under clause (a) of sub-section (1), the
Deputy Commissioner shall, if he is satisfied
after a summary enquiry that there has been
some material irregularity, mistake or fraud in
publishing or conducting the sale, set aside the
sale and direct a fresh sale: Provided that no
sale shall be set aside on the ground of any
irregularity or mistake, unless it is proved that
the applicant has sustained loss or injury as a
result of such irregularity or mistake. (3) On an
application with the required deposit being
made under clause (b) of subsection (1) within
the period specified therein, the Deputy
Commissioner shall make an order setting
aside the sale: Provided that if more persons
than one have made deposits and applied
under this section, the application of the first
depositor or in case all the depositors agree to
the application of any other depositor being
accepted, the application of such depositor,
shall be accepted.
177. Confirmation of sale.--If, on the
expiration of ninety days from the date of sale
of any immoveable property, no application has
been made for setting aside the sale or if any
such application has been made and rejected,
the Deputy Commissioner shall make an order
confirming the sale: Provided that for reasons
to be recorded, the Deputy Commissioner may
set aside the sale subject to such conditions as
he may deem proper, notwithstanding that no
application therefor has been made, or on
grounds other than those alleged in any
application which has been made and rejected
R.124. Sales how conducted: (1)(a) The
notice of sale under Section 168 shall be in
Forms 38 and 39 with such modifications as
are found necessary.
(b) The notice of sale shall be
affixed on the following place, namely:-
(i) property to be sold;
(ii) the notice board of the Office of
the Deputy Commissioner of
the District.
(iii) the notice board of the office of
the Assistant Commissioner
in-charge of the Revenue Sub-
Division.
(iv) the notice board of the office of
the Tahsildar of the Taluk in
which the immovable property
is situate.
(v) the notice board of the Village
Panchayat concerned, and
(vi) the chavadi in the village in
which the immovable property
is situate.
(c) In cases, where the arrears to be
recovered exceeds rupees five thousand,
the notice of sale shall also be published
n a vernacular newspaper having wide
circulation in the locality.
(2) Every sale held under Section 169
shall be held on the day named in the
proclamation, and, if necessary, continued from
day to day (public or general holidays
excepted), until all the properties specified in
the sale proclamation shall have been sold. The
Deputy Commissioner may adjourn any sale
for a period not exceeding three days recording
his reasons for such adjournment.
(3) Where owing to combination or other
causes there are either no bidders or the bids
offered are not adequate, the Deputy
Commissioner shall postpone the sale, and in
the case of land forfeited under Section 164 he
may direct that the land be either purchased on
behalf of Government and dealt with as an
unoccupied land or disposed of in such other
manner as he may deem proper, and in the
case of other property, make such orders
regarding the purchase of the property on
behalf of Government or its disposal by a
resale or otherwise, as may seem to him to be
suitable.
(4) The certificate of purchase of
immovable property to be granted under
Section 179 shall be in Form 41, and shall be
engrossed or impressed stamp paper to be
produced by the purchaser.
REASONS:
21. From perusal of relevant statutory provisions,
it is evident that Section 168 of the Act provides for
procedure in effecting the sale of immovable property.
Section 168(1) provides that Deputy Commissioner or
other officer empowered to conduct the sale shall issue
such notices and proclamations in such form and in such
manner as may be prescribed and shall cause such
notices and proclamation to be published in such manner
as may be prescribed. Section 168(2) of the Act provides
that copy of every notice of proclamation issued under
Sub-Section (1) shall be served on the defaulter.
22. Rule 124 of the Rules provides the forms of
notice of sale to be issued under Section 168 of the Act
and provides that it shall be affixed at the places
mentioned therein.
23. Section 174 of the Act mandates the auction
purchaser to deposit immediately 25% of the amount of
the bid and balance within 15 days from the date of sale.
Section 175(1) of the Act provides for consequences in
default of payment of the bid amount in the manner
indicated under Section 174 of the Act and provides that
in case of such a default, the property shall be put up for
re-sale forthwith. Section 176 of the Act provides that the
defaulter may apply to the Deputy Commissioner to have
the sale set aside on the ground of some material
irregularity, mistake or fraud resulting in loss or injury to
him. The defaulter is also required to deposit the arrears
specified in the proclamation of sale, the cost of sale and
for payment to the purchaser a sum equal to 5% of the
purchase money. On receipt of such an application, the
Deputy Commissioner, if satisfied, may conduct a
summary enquiry. Section 177 of the Act provides for
confirmation of sale after expiry of 90 days from the date
of sale, in case, no application has been made for setting
aside the sale or if such an application has been rejected.
24. The court while dealing with the issue relating
to validity of an auction sale has to satisfy itself that the
property has been sold in the manner prescribed under
the law having regard to market value of the property. In
the instant case, the contractor had purchased the
following properties vide registered sale deed dated
03.12.1979 and 11.11.1981.
(i) Site bearing Khata No.871/1090/2 measuring
50+75x100 Feet with following boundary:
North: Vacant place belonging to Municipality.
South: Bangalore - Mysore Road.
East: Private site belonging to Sri.Balakrishna.
West: Property No.1090/2A belonging to
K.S.Sachidananda.
(ii) Site bearing Khata No.854/1090/2A measuring
80x100 Feet with the following boundary:
North: Vacant place belonging to Municipality.
South: Bangalore - Mysore Road
East: site belonging to the petitioner.
West: Road in which buses ply.
The aforesaid two sites are situated adjacent to each
other and have a common boundary, which is extracted
below for facility of reference.
North: Vacant place belonging to Municipality (now
bus stand).
South: Bangalore - Mysore Road.
East: site belonging to Balakrishna.
West: Road in which buses ply.
25. In the proclamation of sale, the property was
described as follows:
Site bearing No.Municipal Khata No.81/914/1090, 2A
measuring 100x60 Feet with the following boundary:
North: New Bus stand.
South: Mysore - Bangalore Road.
East: shop of M.C.Balakrishna, Mandya.
West: Bus stand road.
The Mangalore Roofed house with compound situated
within the aforesaid boundaries.
26. Thus, even though the area of the site was
mentioned to be 6,000 square feet, the common boundary
was mentioned which includes site bearing khata
No.871/1090/2 as well as site bearing khata
No.854/1090/2A. Thus, the dimensions of the property
as well as the khata number were incorrectly mentioned.
The aforesaid mistake was realized by the Deputy
Commissioner after confirmation of the sale and a
corrigendum was issued on 15.07.2006 by which the
description of the property was rectified as land beraing
Khata No.1094/1090/2A and the area of the land was
also corrected as measuring 24.60x 30.05 meters.
27. From perusal of the report of the Deputy
Commissioner submitted pursuant to an order passed by
learned Single Judge, it is evident that in fact, the
boundaries were shown in respect of land measuring
14,250 square feet, whereas, the dimension of the land
was mentioned as 6,000 square feet. The market value of
the property on the date of auction was Rs.85,60,000/-,
whereas, the same was sold for an amount of
Rs.65,50,000/- i.e., below the market price.
28. The auction was held on 03.04.2006. The
auction purchaser deposited a sum of Rs.10,00,000/- by
way of cheque on 03.04.2006 and a sum of Rs.6,37,500/-
by way of cash. The aforesaid cheque was encashed on
12.04.2006. Thereafter, the remaining bid amount of
75% was deposited by cheque on 17.04.2006, which was
encashed on 25.04.2006. Section 174 of the Act requires
the auction purchaser to deposit 25% of the bid amount
immediately and balance amount within 15 days. The
expression 'immediately' used in Rule 285D of the U.P.
Zamindari Abolition and Land Reforms Rule, 1952
(hereinafter referred to as 'the U.P. Rules' for short) which
requires the purchaser to deposit 25% of the amount of
his bid immediately was considered by Hon'ble Supreme
Court in RAO MAHMOOD AHMAD KHAN supra. Rule
285D is quoted below for facility of reference:
6. Rule 285-D. The person declared to
be the purchaser shall be required to deposit
immediately twenty five per cent of the amount
of his bid, and in default of such deposit the
land shall forthwith be again put up and sold
and such person shall be liable for the
expenses attending the first sale and any
deficiency of price which may occur on the re-
sale which may be recovered from him by the
Collector as if same were an arrear of land
revenue.
29. The Hon'ble Supreme Court while interpreting
the expression 'immediately' in Rule 285D in para 12 held
as under:
12. The question now remains to be
considered is whether the deposit of 25 per
cent of the bid amount by the purchaser
respondent No. 1 herein by cheque instead of
cash would be a valid deposit within the
meaning of Rule 285-D of the Rules. Admittedly
the respondent No. 1 was declared purchaser
of the property in question on 18.10.1973.
According to the learned counsel for the
appellants neither the deposit of 25 per cent of
the bid amount was made in cash nor by
cheque on 18.10.1973 as the cheque was
encashed on 22.10.1973. While according to
the learned counsel appearing for the auction
purchaser respondent No. 1 the cheque was
tendered on 18.10.1973 itself which was
encashed on 22.10.1973 and the amount was
deposited in the Government treasury on
22.10.1973. The question is whether such a
payment by cheque could be regarded as a
valid deposit within the, meaning of Rule 285-
D. As discussed above Rule 285-D is a
mandatory rule according to which if 25 per
cent of the bid amount is not deposited
immediately the land shall forthwith be again
put up and sold. In other words on the failure
of the purchaser to deposit 25 per cent of the
bid amount immediately the land shall be re-
sold immediately the land shall be re- sold
immediatety after such failure the very same
day. If for instance the 25 per cent of the bid
amount is accepted by cheque and
subsequently the purchaser changes his mind
and advises his banker not to encash the
cheque or there is no amount in the account of
the purchaser in the bank and the cheque is
bounced, the purpose of Rule285-D would be
frustrated and thus the mandatory provision
would be rendered nugatory. The result would
be that neither the authorities would be in a
position to forfeit any amount of the purchaser
nor the authority would be in a position to
defray the expenses of the sale as
contemplated by Rule 285- E. The other
consequence that will follow is that the re- sale
of land will have to be delayed and a fresh
proclamation for sale has to be issued as
provided by Rule 285-G. It, therefore, appears
to us that Rule 285-D does not contemplate any
payment by cheque but a cash deposit of 25
per cent of the bid amount has to be made in
accordance with the requirement of the rule,
otherwise the very purpose of the mandatory
rule 285-D would be frustrated and rendered
nugatory. In these facts and circumstances we
are of the view that deposit of 25 per cent of
the bid amount by cheque will not be a valid
tender within the meaning of the rule. This was
also the view taken by a Division Bench of the
Allahabad High Court in the case of Hira Lal
(supra) and the Learned Single Judge was not
right in ignoring the said view by observing
that it was obiter. The High Court of Madhya
Pradesh in MI s. Progressive Industrial
Enterprises v. Bank of Baroda - A.I.R. 1989
M.P. 177 also expressed the view that deposit
of 25 per cent of the bid amount by cheque
which was not encashed on the date on which
the person was declared purchaser but on a
later date, there was no compliance of Order 21
Rule 84 (C) C.P.C.
30. In view of aforesaid enunciation of law, it is
evident that deposit of the amount by cheque was not held
to be a valid tender within the meaning of Rule 285D of
the U.P.Rules. The language employed in Rule 185D of
U.P.Rules as well as Section 174 of the Act insofar as it
pertains to requirement of deposit of 25% of the amount of
bid is similar as in both the provisions, the expression
'immediately' has been used, which has been interpreted
by Hon'ble Supreme Court in RAO MAHMOOD AHMAD
KHAN supra. In view of aforesaid enunction of law by
Hon'ble Supreme court, we hold that the auction
purchaser did not deposit the amount as required under
Section 174 of the Act and therefore, by virtue of Section
175(1) of the Act, the property ought to have been put up
for re-sale.
31. It is also pertinent to note that copy of
proclamation of sale was not served on the contractor.
Thus, the sale was held in infraction of Section 168(2) of
the Act.
32. For the aforementioned reasons, it is axiomatic
that the auction of the land in question has been held in
violation of the provisions of the Act and the Rules and the
Deputy Commissioner and the tribunal as well as the
learned Single Judge grossly erred in confirming the sale.
33. The finding recorded by the learned Single
Judge that since, wide publicity was given for the sale of
property, the auction on account of mis-description of the
property cannot be sustained as in the instant case, khata
number of the property as well as the dimension was
incorrectly mentioned. The learned Single Judge ought to
have appreciated that the sale suffered from infirmities
inasmuch the property was sold below the market value,
the auction purchaser did not deposit the bid amount
within the time limit prescribed under Section 174 of the
Act and the auction notice was not served on the
contractor.
34. So far as submission made on behalf of
auction purchaser that under the Rules, the reserve price
is not required to be mentioned in the proclamation of sale
is concerned, suffice it to say that even though there is no
such requirement under the Rules, the same does not
mean that a property can be sold below the reserve price.
In the instant case, in the auction notice not only the
khata number of the property but its boundaries also were
incorrectly mentioned. Therefore, it cannot be contended
that the same does not result in any prejudice to the
appellants inasmuch as even though an area of 6,000
square feet was mentioned, but in fact, the property
sought to be sold was 14,250 square feet. Similarly, in
view of law laid down in RAO MAHMOOD AHMAD KHAN
supra held that the auction purchaser has complied with
the mandate of Section 174 of the Act.
35. Admittedly, the application filed by the
contractor under the scheme for grant of benefit of waiver
of interest is pending consideration before the State
Government. A statement has been made on behalf of the
Government that suitable orders on the aforesaid
application shall be passed subject to outcome of this
appeal.
For the aforementioned reasons, the orders dated
10.07.2006 and 31.08.2005 passed by the Deputy
Commissioner as well as the tribunal are hereby quashed
and set aside. The order passed by learned Single Judge
dated 13.02.2009 is also set aside. The State Government
is permitted to withdraw the amount deposited by the
contractor. The State Government shall decide the
application submitted by the contractor under the scheme
within a period of four weeks and thereafter shall be at
liberty to recover the balance amount due, if any.
In the result, appeal is disposed of.
Sd/-
JUDGE
Sd/-
JUDGE
SS
