Karnataka High Court
State Of Karnataka vs Ramaiah Reddy on 28 May, 2024
Author: Krishna S Dixit
Bench: Krishna S Dixit
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WA No. 1640 of 2016
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 28TH DAY OF MAY, 2024 R
PRESENT
THE HON'BLE MR JUSTICE KRISHNA S DIXIT
AND
THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR
WRIT APPEAL NO. 1640 OF 2016 (KLR-RES)
BETWEEN:
1. THE STATE OF KARNATAKA
DEPARTMENT OF REVENUE
M.S.BUILDING, BANGALORE-01
BY ITS SECRETARY
2. THE DEPUTY COMMISSIONER
BANGALORE URBAN DISTRICT
K.G.ROAD, BANGALORE-09.
...APPELLANTS
(BY SRI. G.S. ARUNA, (HCGP))
Digitally signed AND:
by SHARADA
VANI B RAMAIAH REDDY
Location: HIGH S/O LATE CHINPPA REDDY
COURT OF AGED ABOUT 59 YEARS
KARNATAKA
R/AT RAMAIH REDDY COLOANY
SECTOR-C, BASAVANANAGARA
MARATHAHALLI POST
BANGALORE-560 037
REPRESENTED BY HIS GPA HOLDER
D.BABU @ YUSUF SHARIFF
S/O SHRI DASTAGIR SHARIFF
AGED ABOUT 50 YEARS
R/AT NO.22/1, KAVERAPPA LAYOUT
MILLERS TANK BUND ROAD
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WA No. 1640 of 2016
VASANTHANAGAR,
BENGALORE-560 052.
...RESPONDENT
(BY SRI.K.N.PHANEENDRA, SR. COUNSEL
SRI. YADUPATHI G., ADVOCATE)
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 2061/2016 DATED 17/02/2016 CF
SUFFICIENT APPEAL OUT OF TIME.
THIS APPEAL COMING ON FOR ORDERS, THIS DAY,
KRISHNA S DIXIT J., DELIVERED THE FOLLOWING:
JUDGMENT
This intra-court appeal filed under Section 4 of the
Karnataka High Court Act, 1961, seeks to call in question a
learned Single Judge's order dated 17.02.2016, whereby
Respondent's W.P.No.2061/2016 (KLR-RES) having been
favoured, relief has been granted to him. The operative
portion of the order reads as under:
"It is pointed out by the learned Counsel
for the petitioner that this is not the only
instance and there have been other instances
where such bidders have been denied the
benefit of the land and further, even without the
said bidders having taken recourse to
proceedings before this court, the State
Government has thought it fit to convey
alternative land and therefore, this is one other
instance, which would indicate that the State
Government is acting arbitrarily insofar as the
sale transactions are concerned. Hence, the
petitioner would have to be given his due.
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Therefore, the stand of the learned Government
Advocate that the State is not bound to pay
interest or not bound to consider grant of
alternative land cannot be accepted."
2. After service of notice, the respondent - bidder
having entered appearance through his counsel
vehemently opposes the appeal making submission in
justification of the impugned order and the reasons on
which it has been structured. Learned Sr. Advocate Mr.
Phanindra contends that the scope for interference in an
intra court appeal of the kind is restrictive; his client
having suffered legal injury because of the culpable
conduct of the appellant, relief needs to be granted to him,
by moulding the prayer if need be. Alternatively, he
seeks refund of the entire amount with interest at the
commercial rates, as obtaining in the realm of banking.
3. BRIEF FACTS:
(i) The subject land was notified for public auction
vide Notification dated 16.05.2005. This land accrued to
the State by way of forfeiture vide orders dated
22.09.2004 and 16.05.2005 since its owner had bought
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the same in violation of prohibitory sections 79A & 79B of
the Karnataka Land Reforms Act, 1961. These orders
were put in challenge by the land owner in Appeal Nos.
633/2005 & 647/2005 before the Karnataka Appellate
Tribunal, Bengaluru.
(ii) The public auction was held on 27.05.2005 and the
Writ Petitioner who happens to be the Respondent herein
being the highest bidder remitted 25% of the bid amount
on 28.05.2005, undertaking to pay the remainder in the
specified timeline. Nothing was done in the matter
presumably because land owner's appeals were pending.
The said appeals came to be allowed on 11.06.2013 and
the Appellate Tribunal set at naught the forfeiture orders.
As a result, the land was restored to its original owner.
(iii) In view of Tribunal's order whereby the forfeiture
of land was set at naught, the appellants herein had
issued an endorsement dated 01.01.2016 telling that the
25% amount in deposit would be refunded to the writ
petitioner that too without interest, thereby rejecting his
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claim for the grant of alternate land. Therefore, the
subject writ petition was moved by him. The same
having been favoured, a direction for grant of alternate
land came to be issued. That is how this appeal against
the same is at our hands.
4. Having heard the learned counsel for the parties and
having perused the appeal papers, we are inclined to grant
indulgence in the matter as under and for the following
reasons:
(a) Indisputably the contract brought about by the
public auction has been frustrated because of
unavailability of the subject land on account of its
forfeiture being voided by the Karnataka Appellate
Tribunal and the land being restored to its owner. The
doctrine of frustration of contract is enacted inter alia in
Sec.56 of the Indian Contract Act, 1872, which employs
the word 'impossible'. The super meaning 'impossibility' in
the performance of contract has to be construed in its
practical and not literal sense vide HIRJI MULJI vs.
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CHEONG UYUE SS CO. LTD., 1926 All England
Reports 51. Cheshire, Fifoot & Furmston's Law of
Contract, Sixteenth Edition-Oxford at page 714 reads as
under:
"After the parties have made their
agreement, unforeseen contingencies may occur
which prevent the attainment of the purpose that
they had in mind. The question is whether this
discharges them from further liability".
If the land sought to be auctioned by the State as its
owner, ceased to avail because of Tribunal's order that
has voided its forfeiture. Thus it is a case in which this
doctrine become invocable, subject to certain conditions.
That being the position, it remains ununderstandable as to
how the learned Single Judge could grant relief in question
to the respondent, in the absence of right to allotment of
alternate land was demonstrated in law such as the
Government Grants Act, 1895 or the like.
(b) Mr. Phaneendra appearing for the respondent drew
our attention to a Co-ordinate Bench decision of this court
in W.P.No.11246/2010 (KLR) between R.ASWATHAPPA
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vs. STATE OF KARNATAKA & OTHERS, disposed off on
14.09.2010. There is no much dispute that any question
of law debated before us was raised in the said case and
decided. We are afraid that this decision does not have
any precedential value and therefore it cannot be cited as
a binding rule of authority in support of the case of
respondent. We are not inclined to grant rescue to the
respondent only because in more or less a similar fact
matrix, some alternate land was granted to some others.
In a case like this, parity in treatment cannot be sought
for as a matter of right. A host of factors enter the fray
whilst granting land as an alternative to the one sought to
be auctioned. Therefore, a Writ Court cannot readily
grant relief of the kind.
(c) The above being said, we cannot ignore that the
appellants happen to be State entities under Article 12 of
the Constitution of India and therefore they have to
conduct tall & scrupulous whilst dealing with the citizens
like the respondent. They could not have hastily notified
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the land for public auction when challenge to forfeiture
was undertaken by the land owner in the appeals
mentioned above, which later eventually came to be
allowed by the Tribunal. At least, the factum of challenge
ought to have been mentioned in the Auction Notification
itself so that the intending participants therein would have
made a rational decision to bid or not. The respondent
was made to participate in the auction, being kept in
darkness. His highest bid of Rs.3,05,00,000/- was
accepted and in furtherance he deposited 25% of the
same i.e., Rs.76,25,000/- way back on 28.05.2005 ie.,
exactly 19 years ago. Added, why despite endorsement
dated 01.01.2016 this amount was not refunded to him,
remains as a mystery wrapped in enigma. This culpable
act of the appellants, whether one calls it a 'tort' or any
other 'actionable wrong', cannot go with impugnity.
(d) Respondent had filed W.P.No.2061/2016 inter alia
challenging the subject endorsement issued by the 2nd
appellant. The learned Single Judge vide ad interim order
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dated 22.01.2016 directed him to deposit in the Registry
the remainder of the bid amount i.e., 75%. Accordingly,
he deposited a sum of Rs.2,78,75,000/-. This money was
lying in the Registry without accrual of interest till
24.11.2019. However, the Registry in terms of Registrar
(Judicial) Circular No.43/2019 dated 07.11.2019 parked
this amount in a Fixed Deposit on 25.11.2019 in a
Nationalized Bank. Thus undeniably, the said amount was
not earning any interest till such investment was made.
For this blame cannot be laid at the threshold of the
respondent.
(e) Money belonging to a citizen is his property. If
that is retained by the State entities falling under Article
12, that amounts to temporary acquisition of property for
which as a matter of rule compensation has to be paid
going by Article 300A jurisprudence as developed by the
Apex Court, precedent by precedent. Such a view gains
broad support from the Constitution Bench decision in
MAFATLAL INDUSTRIES LTD., AHMEDABAD VS.
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UNION OF INDIA, AIR ONLINE 1996 SC 1268. It
needs no research to know that the property prices have
been sky-rocketing and at the same time the value of
money is depleting. What the amount in deposit made
way back in 2006 or later in 2019 could have bought,
cannot buy it now, hardly needs to be stated. Further,
retention of respondent's amount even otherwise is
unjustifiable. Accepting a contra argument virtually
amounts to placing premium on unconscionability. We
make it clear that all this discussion is relevant to decide
the claim for payment of interest and the rate at which it
should be remitted. We hasten to add that we are not
awarding any damages for the tort of the appellants.
However, we have kept in view the provisions of the
Interest Act, 1978, as interpreted by the Apex Court in
STATE OF RAJASTHAN v. FERO CONCRETE
CONSTRUCTION (P) LTD., (2009) 12 SCC 1.
(f) The last submission of learned HCGP that the
respondent's writ petition be dismissed and he be
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relegated to civil court for working out his remedies in the
realm of contract law, does not much impress us: firstly,
we are not adjudging the tortuous liability of the State;
what we are inclined to do is to award interest on the
amount to be refunded. Secondly, the auction was held
way back in the year 2005 and since then years have
rolled. The limited liability on account of demonstrable
culpability of the appellants, entitles the respondent - writ
petitioner to an equitable relief. Denying the same would
shake the conscience of the Court. It was Justice Oliver
Wendell Holmes who said "Constitutions are intended to
preserve practical and substantial rights, not to maintain
theories..." DAVIS v. MILLS, 194 U.S.451.
In the above circumstances, this appeal succeeds in
part and the impugned order of the learned Single Judge is
set aside with the following directions:
(i) The appellants are directed to refund to the
respondent 25% of the bid amount i.e., Rs. 76,25,000/-
(Rupees Seventy Six Lakh & Twenty Five Thousand) only
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with interest at the rate of 10% per annum reckoned from
28.05.2005.
(ii) The appellants are further directed to pay to the
respondent interest at rate of 10% per annum on the
amount of Rs.2,28,75,000/- (Rupees Two Crore Twenty
Eight Lakh & Seventy Five Thousand) only for the period
between 25.11.2019 and till 10.06.2024.
(iii) The directions at (i) & (ii) above shall be
complied with within a period of six weeks from this day,
failing which, additional interest at the rate of 4% on what
is prescribed above, shall be payable and that amount
after payment to the respondent be recovered from the
erring officials of the Department.
(iv) The Registry is directed to liquidate the Fixed
Deposit dated 25.11.2019, made in a sum of
Rs.2,28,75,000/- vide Circular 43/2019 dated 07.11.2019
and hand the same to the respondent herein forthwith.
However, it is open to the respondent to continue the said
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Fixed Deposit in his name on the basis of this judgement,
till the expiry of the maturity period or to continue the
same by way of refixing or the like.
(v) The appellants are liable to pay jointly a cost of
Rs.1,00,000/- (Rupees One Lakh) only to the respondent
within six weeks, failing which, an additional sum of
Rs.500/- becomes payable per day.
Sd/-
JUDGE
Sd/-
JUDGE
PSJ/SNB/Bsv
