Karnataka High Court
C Rajamallaiah S/O. Late Venkaiah vs The State Of Karnataka on 13 January, 2023
Bench: Alok Aradhe, S Vishwajith Shetty
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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
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(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:
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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 4 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 5 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.
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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
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.
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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 9 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 10 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 11 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 12 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 13 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 14 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, 15 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.
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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.
17STATUTORY 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.18
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 19 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 20 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 21 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 22 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.23
(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 24 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 25 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 26 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.27
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/-, 28 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 29 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 30 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 31 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 32 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.
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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 34 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.
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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. 36
In the result, appeal is disposed of.
Sd/-
JUDGE Sd/-
JUDGE SS