Karnataka High Court
Shri Manjunath Guttedar And Partner vs State Of Karntaka And Anr on 18 November, 2016
Author: B.S.Patil
Bench: B.S.Patil
WP No.204591/2016
C/W
WP No.204592/2016
1
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 18TH DAY OF NOVEMBER, 2016
BEFORE
THE HON'BLE MR.JUSTICE B.S.PATIL
WRIT PETITION No.204591/2016 (GM-RES)
C/W
WRIT PETITION No.204592/2016 (GM-RES)
WRIT PETITION No.204591/2016:
BETWEEN:
Shri Manjunath Guttedar and Partner
Office at Plot No.100,
Bapugouda Darshanapur Layout,
Opp. G T and T C College,
M.G. Road, Kalaburagi - 585 105.
Rep by its Managing Partner
Shri Manjunath Guttedar.
... PETITIONER
(By Shri Diwakara & S. Nagendra Dikshit, Advocates)
AND:
1. State of Karnataka
By its Secretary,
Urban Development Department,
Vidhan Soudha,
Bengaluru - 560 001.
2. The Commissioner
WP No.204591/2016
C/W
WP No.204592/2016
2
Urban Development Authority,
Kalaburagi - 585 102.
... RESPONDENTS
(By Shri Syed Habeeb, AGA for R-1;
Shri Shivakumar Tengli, Advocate for R-2)
This Writ Petition is filed under Articles 226 and 227
of the Constitution of India, praying to direct the respondent
No.2 to confirm the public auction sale dated 21.09.2015
Annexure-B. No: £À¥ÁæP/À JA.J¸ï.PÉ.«Ä¯ï/ºÀgÁdÄ/2015-16 with
respect to site No.4 measuring 10071 sq fit for
Rs.2,61,00,000/-. To quash the letter dated 25.02.2016
issued by the respondent No.2 found at Annexure-A bearing
No: £À¥ÁæP/À JªÀiï.J¸ïÀ.PÉ.«Ä¯ï/ªÁtÉdå/ºÀgÁdÄ /2015-16/2438.
WRIT PETITION No.204592/2016:
BETWEEN:
Dr. Sanjeev Patil
S/o Shri Malkajappa Patil,
Aged about 41 years,
R/o House No.84, Shanti Nagar,
M.S.K. Mill Road,
Kalaburagi - 585 103.
... PETITIONER
(By Shri Diwakara & S. Nagendra Dikshit, Advocates)
AND:
1. State of Karnataka
By its Secretary,
Urban Development Department,
Vidhan Soudha,
WP No.204591/2016
C/W
WP No.204592/2016
3
Bengaluru - 560 001.
2. The Commissioner
Urban Development Authority,
Kalaburagi - 585 102.
... RESPONDENTS
(By Shri Syed Habeeb, AGA for R-1;
Shri Shivakumar Tengli, Advocate for R-2)
This Writ Petition is filed under Articles 226 and 227
of the Constitution of India, praying to direct the respondent
No.2 to confirm the public auction sale dated 21.09.2015
Annexure-B, No: £À¥ÁæP/À JA.J¸ï.PÉ.«Ä¯ï/ºÀgÁdÄ/2015-16 with
respect to site No.4 measuring 10071 sq fit for
Rs.2,63,00,000/-. To quash the letter dated 25.02.2016
issued by the respondent No.2 found at Annexure-A bearing
No: £À¥ÁæP/À JªÀiï.J¸ïÀ.PÉ.«Ä¯ï/ªÁtÉdå/ºÀgÁdÄ/2015-16/2447.
These petitions coming on for preliminary hearing this
day, the Court made the following:
ORDER
1. In both these writ petitions common question arise for consideration and facts involved are similar, hence they are clubbed together and heard and disposed of by this common order.
2. Petitioner in both the petitions have filed these petitions seeking a direction against 2nd respondent WP No.204591/2016 C/W WP No.204592/2016 4 Commissioner, Urban Development Authority, Kalaburagi refusing to confirm the public auction dated 21st September 2015 as regards site No.4 measuring 10071 Sq.ft. for the bid amount of Rs.2,63,00,000/- and site No.5 measuring 10071 Sq.ft. for the bid amount of Rs.2,61,00,000/- They have also challenge the letter dated 25th February 2016 produced at Annexure-A in both the petitions.
3. The 2nd respondent Urban Development Authority issued a notification regarding public auction of the sites owned by it. The said auction notification was issued on 21.09.2015. Two of the sites proposed for auction were site Nos. 4 and 5. The auction for proposed sites was to be conducted in accordance with Karnataka urban Development Authority (Disposal of Corner sites and Commercial sites), Rules 1991. The auction was held on 19.10.2015. Petitioner who participated in the bid was the highest bidder. As pr the auction notification minimum price fixed was Rs.2,300/- per Sq.ft for both the sites. Petitioner in both the petitions being the highest bidder in a sum of WP No.204591/2016 C/W WP No.204592/2016 5 Rs.2,63,00,000/- for site No.4 and Rs.2,61,00,000/- for site No.5 emerged successful.
4. As per the terms and conditions 25% of the bid amount, in a sum of Rs.63,25,000/- through demand draft dated 21.08.2015 drawn in favour of 2nd respondent Urban Development Authority, Kalaburagi was paid. However without assigning any reasons vide letter dated 25th February 2016, 2nd respondent intimated the petitioner that the Urban Development Authority in its meeting dated 06.01.2016 had refused to confirm the auction sale and therefore, petitioner had to take back the amount deposited by him. In this background petitioner has approached this Court challenging the communication Annexure-A in both the petitions seeking direction to the respondent No.2 Urban Development Authority to execute the sale deed pursuant to the auction conducted.
WP No.204591/2016
C/W WP No.204592/2016 6
5. On 08.09.2016 when this matter came up before this Court, this Court has passed an interim order in the following terms: (in W.P.No.204591/2016) "Learned counsel for the petitioner submits that the auction of the Site No.5 measuring 10071 Square meter in favour of petitioner on 19.10.2015 for Rs.2,61,00,000/- in MSK Mill Commercial Layout of Urban Development Authority, Kalaburagi has been cancelled without assigning any reason and the deposit of Rs.63,25,000/- has been directed to be refunded to him vide impugned order Annexure-A dated 25.02.2016 which has been passed without giving any prior opportunity of hearing to him and without assigning any proper reason for the same.
The petitioner's counsel further submitted that the petitioner is ready and willing to deposit the entire balance price also and get the sale deed executed at bid price of Rs.2.61 crores within a week.
Hence this writ petition has been filed. The matter requires consideration.
Issue notice to the respondents.
WP No.204591/2016
C/W WP No.204592/2016 7 Heard for interim relief also.
If the petitioner deposits the entire remaining amount of Rs.2.61 crores minus 63,25,000/- (Rs.1,97,75,000/-) within a period of one week from today, the operation of the impugned order Annexure-A dated 25.02.2016 shall remain stayed. The respondent UDA, Kalaburagi will not allot the site No.5 in question in favour of any third party without leave of this Court.
Put up on 20.09.2016, as prayed."
Sd/-
Dr. Vineet Kothari, Judge.
Similar order was passed in W.P.No.204592/2016 which reads as under:
"Learned counsel for the petitioner submits that the auction of the Site No.5 measuring 10071 Square meter in favour of petitioner on 19.10.2015 for Rs.2,6300,000/- in MSK Mill Commercial Layout of Urban Development Authority, Kalaburagi has been cancelled without assigning any reason and the deposit of WP No.204591/2016 C/W WP No.204592/2016 8 Rs.63,25,000/- has been directed to be refunded to him vide impugned order Annexure-A dated 25.02.2016 which has been passed without giving any prior opportunity of hearing to him and without assigning any proper reason for the same.
The petitioner's counsel further submitted that the petitioner is ready and willing to deposit the entire balance price also and get the sale deed executed at bid price of Rs.2.63 crores within a week.
Hence this writ petition has been filed. The matter requires consideration. Issue notice to the respondents. Heard for interim relief also.
If the petitioner deposits the entire remaining amount of Rs.2.63 crores minus 63,25,000/- (Rs.1,99,25,000/-) within a period of one week from today, the operation of the impugned order Annexure-A dated 25.02.2016 shall remain stayed. The respondent UDA, Kalaburagi will not allot the site No.5 in question in favour of any third party without leave of this Court.WP No.204591/2016
C/W WP No.204592/2016 9 Put up on 20.09.2016, as prayed."
Sd/-
Dr. Vineet Kothari, Judge
6. The petitioner has shown his bonafides by depositing entire amount as per the interim direction issued by this Court. Pursuant to this order the petitioner has deposited entire amount of Rs.1,99,25,000/- by deducting 25% of the amount which is already deposited. Similar deposit has been made in the connected case. On 20.10.2016 this Court passed the following order in W.P.No.204591/2016 C/w W.P.No.204592/2016:
"This matter was heard at some length. A short question that falls for consideration in this case is:
Whether there is any arbitrary exercise of power on the part of respondent-Urban Development Authority in refusing to confirm the auction sale on the ground that highest bid fell short of the market value which the property in question fetched in the open market?WP No.204591/2016
C/W WP No.204592/2016 10 Whether respondent-Urban Development Authority has asertained the market value of the property in question before the property was proposed for auction and if so, what was the rate that was being expected and anticipated by the Urban Development Authority, shall be placed on record by the next date of hearing by the respondent.
List on 03.11.2016."
7. It is the case of the petitioner, in both the petitions that highest bid of the petitioner reflects the market value of the properties and that the action of the 2nd respondent in refusing to accept the bid amount and to execute sale deed is arbitrary, unfair and hence unsustainable.
8. The respondents have filed their objections. They have produced resolution passed by the authority dated 06.01.2016 at Annexure R-2. A perusal of the same discloses that expected income could not be realised out of WP No.204591/2016 C/W WP No.204592/2016 11 the public auction and therefore, having regard to the location of the property in a commercial area in the heart of the city, the auction sale was not confirmed.
9. The only point that is required to be examined by this Court in the limited scope of judicial review under Article 226 is whether this decision can be characterised as fair and reasonable. It cannot be forgotten that there cannot be two opinion that for Urban Development Authority has to act in fair, just and reasonable manner in confirming or refusing to confirm the public auction conducted. The auction is conducted in accordance with Rules framed which are known as Karnataka Urban Development Authority (Disposal of Corner sites and Commercial sites) Rules, 1991. Rule 7 of the Rules reads as under;
"7.Decision of the Authority.- (1) The Authority shall have the right to confirm any sale in auction. The authority may cancel any such sale after recording reasons. And when the sale is cancelled, the amount received from the auction purchaser as deposit shall be refunded to him.WP No.204591/2016
C/W WP No.204592/2016 12 Provided that authority shall not cancel the sale where the auction proceeding is confirmed."
Therefore, it is mandatory that reasons have to be recorded before cancelling the sale conducted by public auction. The purpose behind imposition of such requirement regarding reason to be recorded is to remove arbitrary, unfair and discriminatory exercise of power. It is not as if any reason can be recorded. The reason recorded must be rational and reasonable and must reflect the facts, situation and context in which such reasons emanate. In the instant case the minimum expected price prescribed by the Urban Development Authority, Kalaburagi as per the Notification discloses that they were expecting atleast Rs.2,300/- per Sq.ft. If the amount is calculated at Rs.2,300/- per Sq.ft for site No. 4, measuring 10071 Sq.ft. the value would come to Rs.2,31,63,300/-. Whether the respondent Urban Development Authority, Kalaburagi had made any assessment and had arrived at a conclusion that the market WP No.204591/2016 C/W WP No.204592/2016 13 value of the said sites in question would be a specified amount per Sq.ft and that they would not accept any bid which was lesser the said specified amount per Sq.feet was the important aspect, for which this Court directed 2nd respondent Urban Development Authority, Kalaburagi to place on record material by the next date of hearing as per the order passed on 20th October 2016. The said assessment of the market value which the Urban Development Authority expected ought to have been made prior to the public auction. No such material has been placed for perusal of the Court in this regard. Except making bare assertion in the statement of objections filed, stating that Sub-Registrar value of commercial sites was around Rs.4,980/- per Sq.ft and that expected anticipated amount was not generated, no material is placed before the Court as to what was the expected amount resolved to be anticipated for which auction was conducted. Therefore, the reasons assigned in the resolution stating that anticipated and expected amount/income was not forthcoming in the highest bid is WP No.204591/2016 C/W WP No.204592/2016 14 apart from being totally vague, cannot be termed as acceptable rational reason. Therefore, the exercise of power by the authority being arbitrary and unreasonable, this Court can interfere wherever there is violation of rights of the citizens under Article 14 of the Constitution.
10. Although learned counsel for the 2nd respondent has placed reliance on the Division Bench Judgment in case of P.R.Vijayakumar and others vs. Commissioner, Mysore Urban Development Authority and others reported in ILR 2002 KAR 2045, as could be seen from the said judgment apart from the fact that question involved there was totally different, the law laid down in para 13 makes it clear that Article 226 of the Constitution can be invoked if there was any mala fide exercise of power or violation of the rights under Article 14 of the Constitution. In the instant case as I have already pointed out the decision taken not to confirm the auction is arbitrary and unfair and is not founded on any rational or reasonable grounds.
WP No.204591/2016
C/W WP No.204592/2016 15
11. The petitioner in both the petitions has come up with the highest bid for both the sites which is more than the minimum amount prescribed in the notification. In the circumstances I do not find any justification for the 2nd respondent Urban Development Authority, Kalaburagi to reject the said auction.
12. Hence, both the petitions are allowed. The impugned communications Annexure-A in both the petitions are set aside. The 2nd respondent is directed to consider the matter and take action in accordance with law in the light of the observations made above as expeditiously as possible at any rate not later than six weeks from the date of receipt of copy of this order.
Sd/-
JUDGE *MK