Gujarat High Court
Snehalkumar Naranbhai Rupareliya vs Registrar, Cooperative Societies on 4 August, 2023
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 15060 of 2022
With
CIVIL APPLICATION (FOR VACATING INTERIM RELIEF) NO. 1 of 2022
In R/SPECIAL CIVIL APPLICATION NO. 15060 of 2022
With
R/SPECIAL CIVIL APPLICATION NO. 18857 of 2022
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
==========================================================
1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
==========================================================
SNEHALKUMAR NARANBHAI RUPARELIYA
Versus
REGISTRAR, COOPERATIVE SOCIETIES
==========================================================
Appearance:
MR BS PATEL, SENIOR ADVOCATE WITH MR BAIJU JOSHI(1207) for the
Petitioner(s) No. 1
for the Respondent(s) No. 1
MR KK TRIVEDI(934) for the Respondent(s) No. 3,4,5
NOTICE SERVED BY DS for the Respondent(s) No. 1,10,11,12,14,2,9
UNSERVED REFUSED (N) for the Respondent(s) No. 13
MR MIHIR JOSHI, SENIOR ADVOCATE WITH MR VINAY D
BAIRAGAR(8360) for the Respondent(s) No. 6,7,8
==========================================================
CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Page 1 of 96
Downloaded on : Sun Sep 17 00:08:33 IST 2023
NEUTRAL CITATION
C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023
undefined
Date : 04/08/2023
CAV JUDGMENT
1.Heard learned Senior Advocate Mr.B.S.Patel with learned advocate Mr.Baiju Joshi for the petitioners, learned Senior Advocate Mr.Mihir Joshi with learned advocate Mr.Vinay Bairagar for respondent nos. 6 to 8, learned advocate Mr. Mr.K.K.Trivedi for respondent nos. 3 to 5 and learned AGP Ms.Dhwani R. Tripathi for respondent State.
2.These petitions are filed challenging the auction proceedings held on 09.05.2022 by respondent no. 3 - Surat Mercantile Cooperative Bank Ltd., respondent no.4- Recovery Officer of the bank and respondent no.5-Sales Officer of the bank. The petitioners have further prayed for cancelling the Sale Certificate issued in favour of respondent nos. 6, 7 and 8 by the respondent nos. 4 and 5 by finalising the bid Page 2 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined in their favour.
3.The petitioners of both the petitions have submitted their bids for purchase of property being Industrial Plot No.C-1 having area of 450.24 sq. mtrs, Plot No.C-2 having area of 497.12 sq. mtrs and Plot No.C-3 having area of 424.98 sq. mtrs. situated at Revenue Survey No.352, T.P Scheme No.4, Final Plot No.34 at Katargam, Surat in auction held by respondent nos. 3 to 5 of the aforesaid property belonging to the original borrower namely, M/s. Suryanarayan Silk Mills, a partnership firm and its partners.
4.The notice for auction was issued by respondent no.3 bank to sell the property in question on "As is where is basis" in Gujarati Daily newspaper "Gujarat Mitra"-
Surat Edition on 05.03.2022 in the name of respondent no.5. As per the said Page 3 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined advertisement, person who is desirous to participate in the auction proceedings was directed to deposit/submit the Demand Draft of 10% of the offer value by 05.05.2022 and the auction was to be held on 06.05.2022 at the head office of the respondent no.3 bank at Surat.
5.The petitioners upon reading the notice for auction approached the respondent no.3 bank so as to understand the detailed procedure and the petitioners were specifically told to submit cheque of local bank or local cheque of 10% of the bidding amount as per the auction notice.
6.The petitioners were further instructed that Demand Draft in place of cheque may be submitted at the time of auction. The petitioners of Special Civil Application No. 15060/2022 accordingly therefore, submitted Page 4 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined cheque of Rs. 69 lakhs whereas the petitioners of Special Civil Application No.18857/2022 submitted a cheque of Rs.85,10,000/- being 10% of the offer price.
7.On 06.05.2022, the petitioners were informed by respondent nos. 3 to 5 that the auction has been postponed as some close relatives of the Sales Officer or the Recovery Officer had passed away and auction was rescheduled on 09.05.2022. The cheques given by the petitioners and other similarly situated bidders were also returned on the ground that instead of Demand Draft, cheque was deposited and therefore, such bidders were not permitted to take part in the auction proceedings.
8.It is the case of the petitioners that on 09.05.2022 the petitioners remained present along with the Demand Draft of Rs. 69 lakhs Page 5 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined and Rs.85,10,000/- respectively and it was learned by the petitioners that all the seven bidders who had submitted their bids were held to be not qualified and eligible as per the remarks of Sales Officer. The petitioners were disqualified on the ground that instead of Demand Draft, the petitioners had submitted cheque of 10% of the offer price.
However, the petitioners submitted the Demand Draft on the date of auction which was rescheduled on 09.05.2022.
9.It is the case of the petitioners that after rejecting the bid of all the seven bidders, respondent nos. 3 to 5 called just two of the bidders who had submitted Demand Draft but whose bids were also refused around 8:30 pm or 9:30 pm on 09.05.2022 and bids of respondent nos. 6 to 8 was accepted for Rs.
6,75,00,000/- which is admittedly less than the bid amount of the petitioner of Special Page 6 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Civil Application No. No.18857/2022 of Rs.
8,51,00,000/-.
10. The petitioners on coming to know about such action on part of respondent no.4 -
Recovery Officer, accepting the bids of respondent nos. 6 to 8, submitted written objections. The petitioners also made a detailed complaint dated 02.07.2022 to the District Registrar against respondent nos. 3 to 5 to have finalised the bid in favour of respondent nos. 6 to 8 though their bids were cancelled and they were also held disqualified by the Sales Officer. It was pointed out by the learned advocate for the petitioners that the Sales Officer scored off word "Nathi" and has written "che" to accept the bids of respondent nos. 6 to 8.
11. Thereafter Special Civil Application No.15060/2022 was filed on 20.07.2022 and Page 7 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Special Civil Application No.18857/2022 was filed on 13.09.2022. The petitioners were also not supplied with relevant documents by respondent nos. 3 to 4.
12. This Court issued notice on 23.08.2022 in Special Civil Application No.15060/2022 directing the parties to maintain status-quo with regard to the property in question as on the date of order which has continued till further orders.
13. During the pendency of the petition, respondent nos. 3 and 4 issued Sale Certificate on 05.08.2022 in favour of the respondent nos. 6 to 8 and respondent nos. 6 to 8 have also filed Civil Application No.1/2022 for vacating the interim relief granted by this Court.
14. The petitioners thereafter amended the Page 8 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined petitions by filing draft amendment which was allowed by order dated 20.09.2022 by this Court and both the petitions were ordered to be heard together as the same pertained to setting aside auction held on 09.05.2022 by respondent nos. 3 to 5.
15. Learned advocates for the petitioners were also provided with Pen-drive containing the video recording of the auction proceedings conducted by respondent nos. 3 to 5 on 09.05.2022 which is annexed in the draft amendment filed by the petitioners and allowed by this Court by order dated 20.12.2022 along with the bill for purchase of such Pen-drive.
16. As per the say of the petitioners on perusal of such auction proceedings provided to the petitioners, though entire proceedings have been recorded by a single movie camera Page 9 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined through the professional, the recorded version which is produced at Annexure-E which runs into 33 different files, having different length of videos, is not the continuous process which is given to the petitioners. It was therefore, prayed that the complete recording of the auction held by respondent no.3 bank be provided to the petitioners. It was submitted that such recording is about 26 GB and 3.30 hours of length and it also appears that there are sudden and abrupt disruption in all video files. The petitioners therefore, submitted that on perusal of the videos provided it appears that when the auction started terms and conditions were read out wherein there is no mention of deposit of Demand Draft at all and during the auction proceedings, it was found that at certain crucial time, some of the bank officials and participants of the auction went out and came back after few Page 10 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined minutes or in such case, after a period of about 15 minutes. It was therefore, submitted that respondent no.6 to 8 in whose favour auction has been finalised are being favoured by the bank officials as narrated by the petitioners in detail in the amended petition and the same is not reproduced for the sake of brevity. It was therefore, submitted by the learned advocates for the petitioners that auction once cancelled on 09.05.2022, respondent nos. 3 to 5 have no such power to again continue with auction and accept the offer of respondent nos. 6 to 8 who were not the highest bidders to the auction and therefore, the entire proceedings stand vitiated.
17. Learned Senior Advocate Mr. B.S. Patel for learned advocate Mr. Baiju Joshi for the petitioners submitted that the petitioner of Special Civil Application No. No.18857/2022 Page 11 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined is the highest bidder for offer price of Rs.8,51,00,000/- and he remained present in the auction proceedings along with Demand Draft of Rs. 85,10,000/- being 10% of the offer price and inspite of such fact the offer of all the bidders was cancelled and the same was not considered by respondent nos. 3 to 5 and surreptitiously, after all the bidders were asked to go, the bid of respondent nos. 6 to 8 was accepted which is illegal and contrary to the provisions of Rule 120 and Rule 128 of the Gujarat Cooperative Societies Rules, 1965 ( For short "the Rules, 1965").
17.1) In support of his submissions, learned Senior Advocate Mr. B.S. Patel referred to and relied upon the following decisions:
i) Ram and Shyam Company v. State of Page 12 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Haryana and others reported in (1985) 3 Supreme Court Cases 267, wherein the Apex Court held as under:
"(11.) It was never disputed nor could it have been disputed that minerals vest in the State. The minor minerals vest in the State where the land from which they are to be extracted is situated and minerals other than minor minerals vest in the Union. 'Minor minerals' have been defined in The Mines and Minerals (Regulation and Development Act, 1957, to mean "building stones, gravel, ordinary clay, ordinary sand other than sand used for prescribed purposes, and any other mineral which the central government may, by notification in the Official Gazette, declare to be a minor mineral". Minor minerals vest in the State in which the land is situated. The first respondent State of Haryana notified that an auction would be held for mineral quarries of Faridabad District. The appellant gave his bid at the auction so notified. It is an admitted position that his was the highest bid. Anyone conversant with auction would not be naive enough to believe that one can go on raising his own bid. His was the highest bid in the amount of Rs. 3,87,000.00 p.a. Though the Presiding Officer accepted the bid of the appellant, being the highest bid at the auction, yet the State government in exercise of the power Page 13 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined conferred by clause (4) of sub-rule (2) of Rule 30 declined to confirm the same presumably under the belief that the highest bid did not represent the adequate lease rent which the State government was entitled to, get. The right of the State government not to confirm the bid as also its action of not confirming the highest bid of the appellant is not questioned.
Therefore, various decisions laying down that the government is not bound to accept the highest bid. to which our attention was drawn by Mr. P.P. Rao, learned counsel for the fourth respondent are of no relevance in this case. This court in Trilochan Mishra V/s. State of Orissa{(1971) 3 SCC 153], State of Uttar Pradesh V/s. Vijay Bahadur Singh[(1982)2 SCC 365] and State of Orissa V/s. Harinarayan Jaiswal [(1972) 2 SCC 36] held that the government is under no obligation to accept the highest bid and that no rights accrue to the bidder merely because his bid happened to be the highest. The court also observed that the government had the right, for good and sufficient reason, not to accept the highest bid but even to prefer a tenderer other than the highest bidder. In Vijay Bahadur Singh case the court further observed that the power conferred on the government by the Act to refuse to accept the highest bid, cannot be confined to inadequacy of bid only. There may be variety of other good and sufficient reasons to reject the Page 14 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined same. The appellant has no grievance that even though his was the highest bid, the same was not accepted nor Mr. Sorabjee on his behalf contends that the highest bid of the appellant was rejected on grounds which are either irrelevant or extraneous. This aspect therefore need not detain us any more.
(12.) Let us put into focus the clearly demarcated approach that distinguishes the use and disposal of private property and socialist property. Owner of private property may deal with it in any manner he likes without causing injury to any one else. But the socialist or if that word is jarring to some, the community or further the public property has to be dealt with for public purpose and in public interest. The marked difference lies in this that while the owner of private property may have a number of considerations which may permit him to dispose of his property for a song. On the other hand, disposal of public property partakes the character of a trust in that in its disposal there should be nothing hanky panky and that it must be done at the best price so that larger revenue coming into the coffers of the State administration would serve public purpose viz. the welfare State may be able to expand its beneficent activities by the availability of larger funds. This is subject to one important limitation that socialist property Page 15 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined may be disposed at a price lower than the market price or even for a token price to achieve some defined constitutionally recognised public purpose, one such being to achieve the goals set out in Part IV of the Constitution. But where disposal is for augmentation of revenue and nothing else, the State is under an oblation to secure the best market price available in a market economy. An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as personal attachment, or affinity, kinship, empathy, religious sentiment or limiting the choice to whom he may be willing to sell, may permit him to sell the property at a song and without demur. A welfare State as the owner of the public property has no such freedom while disposing of the public property. A welfare State exists for the largest good of the largest number more so when it proclaims to be a socialist State dedicated to eradication of poverty. All its attempt must be to obtain the best available price while disposing of its property because the greater the revenue, the welfare activities will get a fillip and shot in the arm. Financial constraint may weaken the tempo of activities. Such an approach serves the larger public purpose of expanding welfare activities primarily for which the Constitution envisages the setting up of a welfare State. In this connection we Page 16 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined may profitably refer to Ramana Dayaram Shetty V/s. International Airport Authority of India [(1979) 3 SCC 489] in which Bhagwati, J. speaking for the court observed :
It must, therefore, be taken to be the law that where the government is dealing with the public, whether by way of giving jobs or entering into contracts or issuing quotas or licences or granting other forms of largesse, the government cannot act arbitrarily at its sweet will and, like a private individual, deal with any person it pleases, but its action must be in conformity with standard or norms which is not arbitrary, irrational or irrelevant. The power or discretion, of the government in the matter of grant of largesse including award of jobs, contracts, quotas, licences etc. must be confined and structured by rational, relevant and non- discriminatory standard or norm and if the government departs from such standard or norm in any particular case or cases, the action of the government would be liable to be struck down, unless it can be shown by the government that the departure was not arbitrary, but was based on some valid principle which in itself was not irrational, unreasonable or discriminatory.
At another place it was observed Page 17 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined that the government must act in public interest, it cannot act arbitrarily or without reason and if it does so, its action would be liable to be invalidated. It was further observed that the object of holding the auction is generally to raise the highest revenue. The government is entitled to reject the highest bid if it thought that the price offered was inadequate. But after rejecting the offer, it is obligatory upon the government to act fairly and at any rate it cannot act arbitrarily. Following this line of thought, in Kasturi Lal Lakshmi Reddy V/s. State of J & K [(1980) 4 SCC 1] while upholding the order of the government of Jammu and Kashmir dated 27.04.1979 allotting to the second respondent 10 to 12 lacs blazes annually for extraction of resin from the inaccessible chir forests in Poonch, Reasi and Ramban Divisions of the State for a period of 10 years on the terms and conditions set out in the order, observed as under:
Where any governmental action fails to satisfy the test of reasonableness and public interest discussed above and is found to be wanting in the quality of reasonableness or lacking in the element of public interest, it would be liable to be struck down as invalid. It must follow as a necessary corollary from this proposition that the government cannot act in a manner which would benefit Page 18 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined a private party at the cost of the State; such an action would be both unreasonable and contrary to public interest. The government, therefore, cannot, for example, give a contract or sell or lease out its property for a consideration less than the highest that can be obtained for it, unless of course there are other considerations which render it reasonable and in public interest to do so. (emphasis supplied) At one stage, it was observed that the government is not free like an ordinary individual, in selecting recipient for its largesse and it cannot choose to deal with any person it pleases in its absolute and unfettered discretion. The law is now well-settled that the government need not deal with anyone, but if it does so, it must do so fairly and without discretion and without unfair procedure. Let it be made distinctly clear that respondent 4 was not selected for any special purpose or to satisfy any Directive Principles of State Policy. He surreptitiously ingratiated himself by a back-door entry giving a minor raise in the bid and in the process usurped the most undeserved benefit which was exposed to the hilt in the court. Only a blind can refuse to perceive it.
xxx Page 19 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined (14.) What happened in this case must open the eyes both of the government as well as the people at large. How an uncontrolled exercise of executive power to deal with socialist property in which entire community's interest was sacrificed so as to cause huge loss to the public exchequer would have gone unnoticed but for the vigilance of the appellant who no doubt is not altruistic in its approach but its business interests goaded it to expose the unsavoury deal. Conceding that on weighty and valid considerations, the highest bid can be rejected by the State, one such consideration which can be foreseen is that the highest bid does not represent the adequate market price of the concession, yet before giving up the auction process and accepting a private bid secretly offered, the authority must be satisfied that such an offer if given in open would not be outmatched by the highest bidder. In the absence of such satisfaction, acceptance of an offer secretly made and sought to be substantiated on the allegations without the verification of the truth, which was not undertaken, would certainly amount to arbitrary action in the matter of distribution of State largesse which by the decisions of this court is impermissible. Even though repeatedly, this court has said that the State is not bound to accept the highest bid, this proposition of law Page 20 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined has to be read subject to the observation that it can be rejected on relevant and valid considerations, one such being that the concession is to be given to a weaker section of the society who could not outbid the highest bidder. In the absence of it the approach must be as clearly laid down by the Constitution bench of this court in K.N. Guruswamy V/s. State of Mysore[AIR 1954 SC 592]. In that case, the appellant and the fourth respondent were rival liquor contractors for the sale of the liquor contract for the year 1953-54 in the State of Mysore. The contract was auctioned by the Deputy Commissioner under the authority conferred upon him by the Mysore Excise Act, 1901. The appellant's bid was the highest and the contract was knocked down in his favour subject to formal confirmation by the Deputy Commissioner. The fourth respondent was present at the auction but did not bid. Instead of that he went direct to the Excise Commissioner and made a higher offer. The Excise Commissioner cancelled the sale in favour of the appellant and directed the Deputy Commissioner to take action under the relevant rule. The latter accepted the tender of the respondent. The appellant moved the High court for a writ of mandamus which was dismissed. In appeal by the certificate, it was urged on behalf of the State that the Deputy Commissioner acted within the ambit Page 21 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined of his powers under the relevant rule which gave him an absolute discretion either to reauction or to act otherwise and no fetters are placed upon the 'other- wise' method. The court negatived this contention observing that arbitrary improvisation of an ad hoc procedure to meet the exigencies of a particular case is ruled out. Therefore, the grant of the contract to the fourth respondent was wrong. Repelling the contention that a writ petition at the instance of the appellant would not be maintain- able, the Constitution bench observed as under:
The next question is whether the appellant can complain of this by way of a writ. In our opinion, he could have done so in an ordinary case. The appellant is interested in these contracts and has a right under the laws of the State to receive the same treatment and be given the same chance as anybody else. Here we have Thimmappa who was present at the auction and who did not bid - not that it would make any difference if he had, for the fact remains that he made no attempt to outbid the appellant. If he had done so it is evident that the appellant would have raised his own bid. The procedure of tender was not open here because there was no notification and the furtive method adopted of setting a matter of this moment behind the Page 22 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined back of those interested and anxious to compete is unjustified. Apart from all else, that in itself would in this case have resulted in a loss to the State because, as we have said, the mere fact that the appellant has pursued this writ with such vigour shows that he would have bid higher. But deeper considerations are also at stake, namely, the elimination of favouritism and nepotism and corruption: not that we suggest that that occurred here, but to permit what has occurred in this case would leave the door wide open to the very evils which the legislature in its wisdom has endeavoured to avoid. All that is part and parcel of the policy of the legislature. None of it can be ignored. We would therefore in the ordinary course have given the appellant the writ he seeks. But, owing to the time which this matter has taken to reach us (a consequence for which the appellant is in no way to blame, for he has done all he could to have an early hearing ), there is barely a fortnight of the contract left to go. We were told that the excise year for this contract (1953-54) expires early in June.
A writ would therefore be ineffective and as it is not our practice to issue meaningless writs we must dismiss this Page 23 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined appeal and leave the appellant content with an enunciation of the law.
xxx
18.) The position that emerges is this. Undoubtedly Rule 28 permits contract for winning mineral to be granted by the government by auction or tender. It is true that auction was held. It is equally true that according to the State government, the highest bid did not represent the market price of the concession. It is open to the State to dispose of the contract by tender. Even here the expression 'tender' does not mean a private secret deal between the Chief Minister and the offered. Tender in the context in which the expression is used in Rule 28, means "tenders to be invited from intending contractors". If it was intended by the use of the expression 'tender' in Rule 28 that contract can be disposed of by private negotiations with select individual, its validity will be open to serious question. The language ordinarily used in such rules is by public auction or private negotiations. The meaning of the expression 'private negotiations' must take its colour and prescribe its content by the words which precede them. And at any rate disposal of the State property in public interest must be by such method as would grant an opportunity to the public at large to Page 24 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined participate in it, the State reserving to itself the right to dispose it of as best subserve the public weal. Viewed from this angle, the disposal of the contract pursuant to the letter by the fourth respondent to the Chief Minister is objectionable for more than one reason. The writer has indulged into allegations, the truth of which was not verified or asserted. The highest bidder whose bid was rejected on the ground that the bid did not represent the market price, was not given an opportunity to raise his own bid when privately a higher offer was received. If the allegations made in the letter influenced the decision of the Chief Minister, fair-play in action demands that the appellant should have been given an opportunity to counter and correct the same. Application of the minimum principles of natural justice in such a situation must be read in the statute and held to be obligatory. When it is said that even in administrative action, the authority must act fairly, it ordinarily means in accordance with the principles of natural justice variously described as fair play in action. That having not been done, the grant in favour of the fourth respondent must be quashed."
ii) Vadi and Patwa v. Union of India and others reported in AIR 1993 Gujarat 100, Page 25 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined wherein this Court held as under :
"12. However, the position of law as it stands today is altogether different. In the case of Srilekha Vidyarthi v. State of U.P.s, the question of applicability of Article 14 of the Constitution in the matters of contract with the State had arisen. It was a case in which the action of the State Government of U.P. was challenged whereby the Government had terminated by a general order the appointments of all Government counsels (Civil, Criminal Revenue) in all the districts of the State of U.P. Therein it was contended that the matter was in the realm of contract and it was not permissible to the petitioners to invoke the provisions of Article 14 of the Constitution. Repelling the contention, the Supreme Court observed that there was difference in the contracts between the private parties and contracts to which the State is party. Private parties are concerned only with their personal interest whereas the State while exercising its power and discharging its functions, acts indubitably, as is expected of it, for public good and in public interest. The impact of every State action is also on public interest. This factor alone is sufficient to import at least the minimal requirements of public law obligations and impress with this character the contracts made by the State or its instrumentality. The Page 26 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Supreme Court further observed that wherever a challenge is made on the ground of violation of Article 14 alleging that the impugned act is arbitrary, unfair or unreasonable, the fact that the dispute also falls within the domain of contractual obligations would not relieve the State of its obligation to comply with the basic requirements of Article 14. The Supreme Court held that an additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the hands of the State in any of is actions.
13. In para 24 of the judgment, it is further held that the requirement of article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act even in contractual matters. There is a basic difference between acts of the State which must invariably be in public interest and those of a private individual engaged in similar activities being primarily for personal gain, which may or may not promote public interest.
14. Thus the position of law laid down by the Supreme Court is that even in respect of contractual rights and obligations of the parties, the State is not relieved of its obligations to comply with Page 27 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the provisions of Article 14 of the Constitution of India i.e. to act justly, fairly and reasonably. The State action should be governed by reason and should be free from arbitrariness. It should be just and reasonable whether the State action is at the entering stage of the contract or during its execution of the contract or even at the conclusion stage of the contract. At all stages, State is bound by Article 14 of the Constitution. In this connection in para 22 of the judgment, the Supreme Court has also observed that the scope of judicial review in respect of disputes falling within the domain of contractual obligations may be more limited and in doubtful cases the parties may be relegated to adjudication of their rights by resort to remedies provided for adjudication of purely contractual disputes. This being the position of law, the contention that now when the contract has been executed, the petition under Article 226 of the Constitution of India wherein the provisions of article 14 of the Constitution of India have been invoked is not maintainable cannot be accepted."
iii) Collector of Customs and Excise, Cochin and others v. M/s. A.S. Bava reported in AIR 1968 Supreme Court 13, wherein Apex Page 28 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Court held as under:
"4. There is no force in the first point. First, the point was no taken in the High Court. Secondly, it is settled that the existence of a remedy by way of revision does not bar the jurisdiction of the High Court to entertain a petition under art. 226. Moreover the petitioner had alleged that the Collector had no jurisdiction to demand the deposit or duty pending the appeals as the notification dated May 4, 1963, was bad insofar as it applied s. 129 of the Customs Act. In these circumstances it was not necessary for the petitioner to have filed revisions."
iv) Mihan India Ltd. v.GMR Airports Ltd. & Ors. reported in AIR 2022 Supreme Court 2745, wherein the Apex Court held as under:
"46. In view of the above, it is apparent that in government contracts, if granted by the government bodies, it is expected to uphold fairness, equality and rule of law while dealing with contractual matters. Right to equality under Article 14 of the Constitution of India abhors arbitrariness. The transparent bidding process is favoured by the Court to ensure that constitutional requirements are satisfied. It is said that the constitutional Page 29 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined guarantee as provided under Article 14 of the Constitution of India demands the State to act in a fair and reasonable manner unless public interest demands otherwise. It is expedient that the degree of compromise of any private legitimate interest must correspond proportionately to the public interest. It is specified that using a ground of public interest or loss to the treasury cannot undo the work already undertaken by the authority."
v) Kalol Taluka Sales and Purchase Union Limited v. State of Gujarat reported in AIR 2012 Guj 113, wherein this Court held as under:
"11 As stated here-in-above, the advertisement does not show the size and area of the property which is to be auctioned, date of the auction and the amount, for recovery if which sale is ordered. In absence of these important information, the public at large would not be in a position to take part in the said auction.
12 The Bank as well as the auction purchasers could not satisfy us on these mandatory provisions which were not followed by the Bank. We are also not satisfied with the procedure undertaken by the Recovery Page 30 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Officer of the Bank in selling the disputed property.
xxx 15 We have gone through the above two judgments relied upon by the auction purchasers. The facts of said two cases are in no way comparable with the facts of the present case. In those two cases, the auction took place before the learned Company Judge in open court in which the property was transferred to the highest bidder and subsequent to that some other persons offered more amount than the amount offered by the original purchaser and in this context of the factual aspect, the Apex Court has held that once the sale is confirmed by the authority, certain rights accrue in favour of the auction purchaser, and these rights cannot be extinguished except in exceptional cases such as fraud or collusion.
16 The case on hand, in view of the palpable breach of Rule 119 of the said Rules committed by the respondent No.2 Bank, we have no other alternative but to quash and set aside the auction which took place on 26.9.2008 as the same creates some doubts in the minds of the Court."
vi) Jayantilal Nathubhai Jariwala v. Surat Page 31 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Peoples Co Op Bank Limited reported in 2012 JX(Guj) 1171, wherein this Court held as under :
"11. We are not at all impressed by such submission. It appears that proclamation of sale has to be published at least 30 days before the date fixed for sale and the same should be affixed not only in the office of the Recovery Officer and Taluka Office but the notice of the same should also be given to the decree holder and the defaulter specifying the time and place of the sale. The object of giving such notice is to give 30 days' time as a last chance to the defaulter to make the payment so that he can deposit that amount before the Sale.
12. In case before us, admittedly such notice having been issued on June 30, 2012 and the sale having taken place on July 20, 2012, the proclamation of sale was invalid and consequently, the sale is also invalid. Although Mr. Shah tried to impress upon us that in that event, the purchasers are necessary party and in their absence, the writ application is not maintainable, we are not impressed by such submission. It appears that the purchaser deposited Rs. 6.00 Lac on 19th July, 2012 and further Rs. 3.00 Lac on 20th July, 2012. Thereafter, he has further deposited Rs. 10.00 Lac on 13th August, 2012; further Page 32 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Rs. 10.00 Lac on the same day i.e. on 13th August; Rs. 1.00 Lac on 17th August, 2012; Rs.15.00 Lac on 17th August and Rs.13.51 Lac on 18th August, 2012. Thus, on the date of filing of the writ-application, i.e. 30th July, 2012, no right accrued in favour of the purchaser and the position of the purchaser is that of a "purchaser during the pendency of the writ-application". Therefore, he is bound by the decision that is passed on the writ-application. Moreover, according to Rule-122 of the Rules, the balance payment should be paid within 15 days from the date of the sale and in this case, it appears that the balance amount has been paid on August 18, 2012, whereas the sale had taken place on July 20, 2012. Therefore, on that ground also, the sale is liable to be set aside as the balance amount has not been paid within 15 days from the date of the sale and in the rule discretion is given for extension only for the payment of cost of stamp and not for the sale price.
13. On consideration of the entire materials on record, we thus find that the learned Single Judge erred in law in overlooking the aforesaid aspect that the mandatory provision of giving proclamation notice has not been complied with and on that ground alone, the sale is liable to be quashed as the appellant has not got the opportunity of making payment within 30 days from the date Page 33 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined of such notice."
vii) Central Coalfields Limited and another v. SLL-SML (Joint Venture Consortium) and others reported in (2016) 8 Supreme Court Cases 622, wherein the Apex Court held as under :
"(45.) Rashmi Metaliks was a comparatively different case inasmuch as clause (j) of the NIT was the subject matter of consideration. This clause required a bidder to submit "Valid PAN No., VAT No., copy of acknowledgment of latest income tax return and professional tax return." The employer interpreted this to be an essential term for qualifying in the bidding process. This view was upheld by a learned Single Judge and the Division Bench of the Calcutta High Court. This Court reversed in the following words:
"We think that the income tax return would have assumed the character of an essential term if one of the qualifications was either the gross income or the net income on which tax was attracted. In many cases this is a salutary stipulation, since it is indicative of the commercial standing and reliability of the tendering entity. This feature being absent, we think that the filing of the latest income tax Page 34 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined return was a collateral term, and accordingly the Tendering Authority ought to have brought this discrepancy to the notice of the appellant Company and if even thereafter no rectification had been carried out, the position may have been appreciably different."
Essentially therefore, this Court substituted its view for that of the employer who interpreted this term of the NIT to be mandatory for compliance. Rashmi Metaliks followed Poddar Steel and apparently overlooked the dictum laid down in Ramana Dayaram Shetty, G. J.
Fernandez, Tata Cellular and Jagdish Mandal and must be confined to its own peculiar facts. In any event, this decision does not advance the case of any of the parties before us.
(46.) It is true that in Poddar Steel and in Rashmi Metaliks a distinction has been drawn by this Court between essential and ancillary and subsidiary conditions in the bid documents. A similar distinction was adverted to more recently in Bakshi Security and Personnel Services Pvt. Ltd. v. Devkishan Computed Pvt. Ltd. 2016 (7) SCALE 425 through a reference made to Poddar Steel. In that case, this Court held a particular term of the NIT as essential (confirming the view of the employer) and also referred to the "admonition" given in Jagdish Mandal followed in Page 35 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Michigan Rubber (India) Limited v. State of Karnataka, (2012) 8 SCC
216. Thereafter, this Court rejected the challenge to the employer's decision holding Bakshi Security and Personnel Services ineligible to participate in the tender.
(47.) The result of this discussion is that the issue of the acceptance or rejection of a bid or a bidder should be looked at not only from the point of view of the unsuccessful party but also from the point of view of the employer. As held in Ramana Dayaram Shetty the terms of the NIT cannot be ignored as being redundant or superfluous. They must be given a meaning and the necessary significance. As pointed out in Tata Cellular there must be judicial restraint in interfering with administrative action. Ordinarily, the soundness of the decision taken by the employer ought not to be questioned but the decision making process can certainly be subject to judicial review. The soundness of the decision may be questioned if it is irrational or mala fide or intended to favour someone or a decision "that no responsible authority acting reasonably and in accordance with relevant law could have reached" as held in Jagdish Mandal followed in Michigan Rubber.
(48.) Therefore, whether a term of the NIT is essential or not is a Page 36 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined decision taken by the employer which should be respected. Even if the term is essential, the employer has the inherent authority to deviate from it provided the deviation is made applicable to all bidders and potential bidders as held in Ramana Dayaram Shetty. However, if the term is held by the employer to be ancillary or subsidiary, even that decision should be respected. The lawfulness of that decision can be questioned on very limited grounds, as mentioned in the various decisions discussed above, but the soundness of the decision cannot be questioned, otherwise this Court would be taking over the function of the tender issuing authority, which it cannot.
(49.) Again, looked at from the point of view of the employer if the Courts take over the decision-making function of the employer and make a distinction between essential and non-essential terms contrary to the intention of the employer and thereby re-write the arrangement, it could lead to all sorts of problems including the one that we are grappling with. For example, the GTC that we are concerned with specifically states in Clause 15.2 that "Any Bid not accompanied by an acceptable Bid Security/EMD shall be rejected by the employer as non- responsive." Surely, CCL ex facie intended this term to be mandatory, yet the High Court held that the bank guarantee in a format not Page 37 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined prescribed by it ought to be accepted since that requirement was a non-essential term of the GTC. From the point of view of CCL the GTC has been impermissibly re- written by the High Court.
(50.) Yet another problem could be faced by an employer (such as CCL) if the language used in the terms of the NIT or the GTC is not adhered to and its plain meaning discarded. A problem could be faced by an employer if every bidder furnishes a bank guarantee in a different format or one that it is comfortable with. In such a situation, CCL would have to scrutinize each bank guarantee to ascertain whether it meets with its requirements and the NIT and the GTC. Apart from the text of the bank guarantee, minor changes could be made by a bidder such as enforceability in a place other than Ranchi (but in Jharkhand) etc. This would place an avoidable and undue burden on the employer particularly if there are a large number of bidders.
(51.) Not only this, any decision taken by the employer in accepting or rejecting a particular bank guarantee in a format not prescribed by it could lead to (avoidable) litigation requiring the employer to justify the rejection or acceptance of each bank guarantee. This is hardly conducive to a smooth and hassle-free bidding process.
Page 38 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined (52.) There is a wholesome principle that the Courts have been following for a very long time and which was articulated in Nazir Ahmad v. King Emperor AIR 1936 PC 253 namely "Where a power is given to do a certain thing in a certain way the thing must be done in that way or not at all. Other methods of performance are necessarily forbidden." There is no valid reason to give up this salutary principle or not to apply it mutatis mutandis to bid documents. This principle deserves to be applied in contractual disputes, particularly in commercial contracts or bids leading up to commercial contracts, where there is stiff competition. It must follow from the application of the principle laid down in Nazir Ahmed that if the employer prescribes a particular format of the bank guarantee to be furnished, then a bidder ought to submit the bank guarantee in that particular format only and not in any other format. However, as mentioned above, there is no inflexibility in this regard and an employer could deviate from the terms of the bid document but only within the parameters mentioned above.
(53.) Nazir Ahmed has been followed in dozens of decisions rendered by this Court and by other constitutional Courts in the country. The Central Vigilance Page 39 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Commission has accepted this principle in a modified form as a guiding principle in its circular dated 31st December, 2007 wherein it is mentioned that all organizations ought to evolve a procedure for acceptance of bank guarantees that is compatible with the guidelines of banks and the Reserve Bank of India. One such requirement is that the bank guarantee should be in a proper prescribed format and should be verified verbatim on receipt with the original. Adherence to this principle of verbatim verification would not only avoid undue problems for the employer but would also virtually eliminate subjectivity on the part of the employer.
(54.) In this context, and in the present times, it is important to note that the World Bank has ranked India extremely low in matters relating to enforcement of contracts and ease of doing business. Out of 189 countries worldwide, India is ranked 178 in the matter of enforcement of contracts and 130 in the matter of ease of doing business [11*]. One of the possible reasons for this extremely low ranking given to our country is the failure of all parties concerned in strictly adhering to the terms of documents such as the NIT and the GTC. In so far as the present case is concerned, the NIT was floated on 5th August, 2015 and one year later, we are still struggling with the issue of acceptance of a bank Page 40 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined guarantee for a contract of about Rs.2000 crores - certainly not a small sum.
Conclusion (55.) On the basis of the available case law, we are of the view that since CCL had not relaxed or deviated from the requirement of furnishing a bank guarantee in the prescribed format, in so far as the present appeals are concerned every bidder was obliged to adhere to the prescribed format of the bank guarantee. Consequently, the failure of JVC to furnish the bank guarantee in the prescribed format was sufficient reason for CCL to reject its bid.
(56.) There is nothing to indicate that the process by which the decision was taken by CCL that the bank guarantee furnished by JVC ought to be rejected was flawed in any manner whatsoever. Similarly, there is nothing to indicate that the decision taken by CCL to reject the bank guarantee furnished by JVC and to adhere to the requirements of the NIT and the GTC was arbitrary or unreasonable or perverse in any manner whatsoever."
viii) Manager, Adarsh Mahila Nagri Sahakari Bank Ltd. & Anr. v. State of Page 41 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Maharashtra & Ors. reported in (2012) 2 Bom CR 163, wherein Bombay High Court held as under:
"8. It is pertinent to note that the revision is possible either sue motu or on application in respect of only an order passed in a inquiry or proceeding by a subordinate officer of the revisional authority. Since respondent No.4 did not avail opportunity under sub rule 13 and did not avail remedy available to her under sub rule 14, the order confirming the sale was mere formality. He was not asked by respondent No.4 not to pass such a order. Thus, it was not an order in real sense. Order is also an expression of opinion by judicial or quasi judicial authority after hearing the parties and after recording reasons for the same. Before an order is passed a judicial or quasi judicial authority hears submissions made by rival parties, applies his mind to the facts and law and then it comes to a conclusion forming an opinion as to what ultimate action is required to be taken in the case. In view of this, the order confirming the sale can not be said to be an order contemplated under section 154. On the other hand, learned counsel appearing for respondent No. 4 Shri R.T. Nagargoje asserted that his client did not challenge the order of Recovery Officer confirming the Page 42 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined sale as contemplated under sub-rule 14 (v). He said that as per a 'direction' of the Registrar Cooperative Societies, Recovery Officer was required to send the proposal of sale for confirmation to the District Deputy Registrar. He said that such direction is given to each Recovery Officer by the Registrar vide his order dated 19th January, 2005. This order is issued in the form of Circular, a copy of which shown to this Court today. He said that as per this direction, the Recovery Officer in this case also sent the proposal of sale for confirmation to the District Deputy Registrar and the District Deputy Registrar thereafter passed an order for confirmation of the sale. He suggested that when District Deputy Registrar examined the proposal for confirmation of an auction sale, he is supposed to examine all the pros and cons of such proposal. He said that the District Deputy Registrar then had an ample power to set aside the proposed sale. He said that in this case, the District Deputy Registrar has passed the order confirming the sale on 18th July, 2009. He said that this order was passed without giving notice and hearing to his client, respondent No. 4. He said, it is this order he had challenged before respondent No. 2 - Divisional Joint Registrar. He, therefore, asserted that the revision was maintainable. I am afraid, this submission is completely devoid of merit. The Page 43 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Circular, referred to above, issued by the Registrar Cooperative Societies on 19th January, 2005 has no basis in law, it has no legal sanctity in law. As said above, the Recovery Officer was appointed as per the provisions of Rule 2 (h) of the Rules. Once a person is appointed as Recovery Officer, he becomes the representative of the Registrar having all the powers to do whatever is required to be done under the Rules. He wields all the powers given to him by the Rules. So, if clause (v) of sub-rule 14 empowers him to confirm the sale, such power cannot be diluted or diverted by issuing a Circular. Even the Registrar cannot do so. Sub-rule 14 does not require the Recovery Officer to send the proposal for confirmation to either District Deputy Registrar or the Registrar himself. So, by sending Circular, the Registrar could not have limited the powers of the Recovery Officer, lawfully appointed under the provisions of the Act and Rules. So, the procedure adopted by the Recovery Officer in this case for sending the proposal for confirmation to the District Deputy Registrar was unnecessary and had no basis in law. If such step taken by the Recovery Officer was unnecessary, then the order passed pursuant to such unnecessary step has no legal sanctity. The order passed by the District Deputy Registrar confirming the sale is not an order in the eye of law and has Page 44 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined no sanctity of law. If such an order was no order in the eye of law, there was no possibility of challenging it before the revisional authority under Section 154 of the Act. In view of this discussion, I hold that the revision filed by respondent No. 4 before respondent No. 2 was not maintainable and the order passed by respondent No. 2 on such revision has no legal sanctity and cannot be upheld. So, apparently since there was no order which was capable of being examined before the revisional court, the revisional authority could not have entertained the revision."
17.2) It was further submitted that in view of the above settled legal position when the auction proceedings are conducted arbitrarily, the same is required to be quashed and set aside and highest bidder should be declared as successful bidder.
18. On the other hand learned Senior Advocate Mr. Mihir Joshi for respondent nos.
6 to 8 at the outset submitted that the auction conducted by the Bank is not amenable to the writ jurisdiction of this Court, Page 45 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined inasmuch as, admittedly the Bank being a Co-
operative Bank, is also not falling within the purview of "State" under Article 12 of the Constitution of India and more particularly, in case where no public duty is discharged by the Bank. It was submitted that even though the Bank has exercised the powers conferred under Section 159 of the Gujarat Cooperative Societies Act, 1961 vested with the Registrar, the same is only for recovering the dues of the Bank by auctioning the mortgaged property of the defaulter and hence, there is no public law element involved in such exercise. In support of such contention, reliance was placed on the following decisions:
i) S.S. Rana v. Registrar Coop. Societies and another reported in (2006) 11 Supreme Court Cases 634, wherein the Apex Court held as under:Page 46 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023
NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined "(12.) It is well settled that general regulations under an Act, like Companies Act or the Cooperative Societies Act, would not render the activities of a company or a society as subject to control of the State. Such control in terms of the provisions of the Act are meant to ensure proper functioning of the society and the State or statutory authorities would have nothing to do with its day-to-day functions.
(14.) As the respondent no.1 does not satisfy any of the tests laid down in Pradeep Kumar Biswas (supra), we are of the opinion that the High Court cannot be said to have committed any error in arriving at a finding that the respondent-
Bank is not a State within the meaning of Art. 12 of the Constitution of India."
ii) Arvindbhai M. Bhutiya & Ors. v. Amreli District Central Cooperative Bank Ltd & another reported in (1998) 1 GLH 846, wherein this Court held as under:
"27. I have considered the aforesaid submissions. I find that even with the aid of the submissions, as aforesaid, it is not possible to hold that the functions, as aforesaid, discharged by the Page 47 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined respondent - Bank are of public importance closely related to Governmental functions. In such matters, when a Co-operative Society is working as a Banking Society, it may have to conform to the Scheme, which may be evolved by the agencies like NABARD or the Scheme such as the Comprehensive Crop Insurance Scheme by the Central Government and the Societies like the respondent - Bank may be used for the purpose of implementation of such Scheme as a part of the Co-operative movement. However, it cannot be said that they are essentially Governmental functions nor it can be said that by seeking implementation of this Scheme through the Society like the respondent - bank, the Government or other bodies like NABARD or the Gujarat State Co-operative Bank acquires any control over the respondent - Bank merely because a Society like the respondent - Bank is financed for the purpose of distributing the finance to the primary level Co-operative Societies. Similarly, there is nothing in the Scheme of the Gujarat Co-operative Societies Act or the Rules made thereunder and the bye- laws of the respondent - Bank, to which reference has been made herein above, to indicate or show either the holding of the substantial share capital by the State Government or the deep and pervasive control by the State Government or any monopoly rights have been conferred by the State or protected by the State or Page 48 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined that the functions are of public importance closely related to Governmental functions and, therefore, on consideration of all the aspects in entirety, it cannot be held that the respondent - Bank is an 'authority' within the meaning of Article 12 of the Constitution of India or an 'agency' or 'instrumentality' of the State. Thus, the conclusion is that in a given case, a Co-operative Society, whether created by the Statute or not or even a Limited Company for that purpose may be an 'authority' under Article 12 or an 'agency' or 'instrumentality' of the State but it will depend upon the nature of functions and duties, which it seeks to discharge under the provisions of the Act under which it was registered, Rules made thereunder and its own bye-laws and that would also depend upon the question as to how much finance is shared by the Government, what is the extent of the control over the management and functions of such Society, whether the functions discharged by the Society are of public importance closely related to Governmental functions, whether any monopoly rights have been conferred by the State or protected by the State, but on consideration of the various submissions, which have been made by the parties in the present case, this Court is of the considered opinion that the respondent - Bank does not withstand the touchstone laid down by the Supreme Court and Page 49 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined our own High Court and it does not meet the test so as to come within the ambit of 'other authorities' or 'agency' or 'instrumentality' of the State within the meaning of Article 12 of the Constitution of India. 22. However, the matter does not end here. The question still remains as to whether in the facts and circumstances of the case, any writ,order or direction can be issued against the respondent - Bank under Article 226 of the Constitution of India. Mr. Jayant Patel appearing on behalf of the petitioners has resolutely argued that the scope of Article 226 is wider than that of Article 32 of the Constitution of India. The jurisdiction of the Supreme Court under Article 32 can be invoked only in cases where there is a breach of the fundamental right and fundamental rights can be enforced only against those bodies which are covered by Article 12 of the Constitution of India. But so far as Article 226 is concerned, the writ can be issued even for the purpose of rights, which are not fundamental, and as has been provided in Article 226 it is to any person and for any other purpose. Therefore, Article 226 is couched in a large and wider terminology and it has been so considered, construed and explained in various decisions and even after holding that a particular body is not covered by the term 'State' or 'other authority' or an 'agency' or Page 50 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 'instrumentality' within the scope of Article 12,the writs have been issued when the Court has found that such body has failed to discharge the duty cast upon it under any statute and such writs, orders or directions in the nature of writ have been issued by this Court itself. Mr. Patel has placed strong reliance on the five decisions; three of which have been rendered by the Supreme Court, one by Andhra Pradesh High Court and one by our own High Court. Reference has already been made to the aforesaid decisions in the earlier part of this order. I have considered the aforesaid submissions made by Mr. Patel on the question of the scope of Article 226 and find that this submission made by Mr. Patel is not without force. In Shri Anadi Mukta's case (Supra), the case went to the Supreme Court from our own High Court. It has been clearly ruled by the Supreme Court that the issue of the writ of mandamus under Article 226 is not confined to statutory authorities and instrumentalities of the State only and further that it can be issued to any other person or authority performing public duty and that such duty need not be imposed by the State Government. Para 19 of Shri Anadi Mukta's case (Supra) is reproduced as under:-
"The term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in Article 12. Article 12 is Page 51 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined relevant only for the purpose of enforcement of fundamental rights under Art.32. Article 226 confers power on the High Courts to issue writs for enforcement of the fundamental rights as well as non- fundamental rights. The words "Any person or authority" used in Article 226 are, therefore, not to be confined only to statutory authorities and instrumentalities of the State. They may cover any other person or body performing public duty. The form of the body concerned is not very much relevant. What is relevant is the nature of the duty imposed on the body. The duty must be judged in the light of positive obligation owed by the person or authority to the affected party. No matter by what means the duty is imposed. If a positive obligation exists mandamus cannot be denied."
18.1) Learned Senior Advocate Mr. Joshi further submitted that even assuming without admitting that the writ petition is maintainable, then in that eventuality also, the same cannot be used to expand the scope of challenge which is already prescribed under the relevant provisions of the Act and the Rules framed thereunder. It was submitted that as per the Rules of 1965, more Page 52 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined particularly, Rule 120 to Rule 128 thereof, all immovable properties are to be sold in public auction, the successful purchaser has to deposit the sum within the prescribed time limit, the sale can be within a period of 30 days by those persons whose interest are affected, where substantial injury is shown to have been caused by any material irregularity, mistake or fraud and after the expiry of 30 days, confirmation of sale is to be made, which is the conclusive evidence of purchase of the auction property.
18.2) It was submitted that in auction proceedings, there is no question of affecting the rights of a bidder, as the same does not have ratable interest in the auction property. It was submitted that the petitioners have neither made any application for setting aside the auction sale nor shown as to what substantial injury have been cause Page 53 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined to the petitioners by reasons of such material irregularity, fraud or mistake.
18.3) It was submitted that the reliance placed by the petitioners on the letters dated 10.05.2022 and 18.05.2022 is totally misplaced inasmuch as, the same are merely requesting for copies of the auction papers, which in any case, would not extend/save the mandatory time period of 30 days, as prescribed under Rule 128 of the Rules, 1965.
It was submitted that the aspect of the said period of 30 days in challenging the auction sale has been interpreted by this Court in case of Patel Dwarkadas K. and others v.
State of Gujarat and others reported in (2001) 42 (3) GLR 2488, wherein it is held as under:
"5. A bare reading of section 178 of the Code makes it clear that the objections are required to be filed within 30 days from the date of sale of immovable property. Here in the Page 54 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined present case, it is an admitted position that the auction was confirmed by the appropriate authority on 1.4.1981 as per order at annexure 'A' at page 18 to the petition. There is no dispute on the said fact between the parties. Therefore, it is an admitted position that the sale was confirmed on 1.4.1981. The sale in question was held on 27.6.1980 which can be gathered from the confirmation order dated 1.4.1981. Therefore, the objection was required to be filed within one month from the said date i.e. 27.6.1980. In other words, the objection was required to be filed on or before 26.7.1980. It is further an admitted fact that objector-respondent no.5 had not come out with objections within a period of thirty days from the date of sale i.e. from 27.6.1980. It appears from the order of the Dy. Collector at page 24 that respondent no.5 had submitted objections before the learned Collector, Mehsana dated 23.4.1981. This would clearly mean that the objections were not filed within one month from the date of sale i.e. 27.6.1980 and as such the objection was clearly time barred.
6. It is to be seen that even before the objections were filed on 23.9.1981, the sale was confirmed by the appropriate authority on 1.4.1981 which can be gathered from Annexure 'A' at page 18 to the petition. It is, therefore, clear that the sale was confirmed before Page 55 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the objections were filed. The Code does not envisage any power, function or jurisdiction with any authority to set aside the sale which has already been confirmed. So, on the one hand, the objection was not filed by respondent no.5 within thirty days from the date of sale of the immovable property in accordance with section 178 of the Code. On the other hand, the objection was received subsequent to the confirmation of sale. There is no provision providing for entertaining any objection subsequent to the confirmation of sale. Therefore, on going through the scheme of the Code, it is very clear that the Dy. Collector was not required, authorized or competent to consider the objection of the objector-respondent no.5 herein after a passage of 30 days from the date of sale and after the confirmation of the sale in question. In other words, the order of the learned Dy. Collector, setting aside the sale ignoring the provisions of section 178 is ex- facie illegal."
18.4) Learned Senior Advocate Mr. Joshi submitted that even in any case, because of the delay on the part of the petitioners, as aforesaid, the auction purchaser has made the entire payment of Rs.6,75,00,000/- to the Page 56 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Bank, as well as, incurred expenses towards Stamp duty of Rs.33,07,500/- and Registration fee of Rs.6,77,000/- and consequently, rights have been crystalized in favour of the auction purchaser, while the petitioners have remained indolent. It was submitted that after confirmation of sale on 14.06.2022 and issuance of certificate of sale dated 05.08.2022 in favour of the auction purchaser, it would not be open for the petitioners to challenge the alleged irregularity for setting aside the auction sale, as such rights created in favour of the auction purchaser cannot be extinguished except in exceptional cases such as fraud or collusion, which is not established in the present writ petition.
18.5) It was submitted that even otherwise, Rule 128 of the Rules of 1965, contemplates twin conditions namely, (i) only Page 57 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the decree holder or a person whose interests are effected by sale may challenge the auction proceedings for the material irregularity and (ii) no sale can be set aside unless it is proved that the applicant has sustained substantial injury. In the present case, neither there is any material irregularity nor the petitioners are able to show and/or prove that they have sustained any injury, much less, substantial injury, by reason of such irregularity and therefore, there is no locus of the petitioners to challenge the same as neither their rights are affected nor any substantial injury is caused to the petitioners. In support of such contention, reliance was placed on decision of Apex Court in case of Deenadayal Nagari Sahakari Bank Limited and another v. Munjaji and others reported in (2022) 7 Supreme Court Cases 594, wherein it is held as under:
"1. Feeling aggrieved and Page 58 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined dissatisfied and order dated 30.07.2021 passed by the High Court of Judicature at Bombay, Bench at Aurangabad in Writ Petition No. 570 of 2012, by which the High Court has allowed the said writ petition preferred by respondent no.1 herein and has set aside the auction sale in respect of the lands in question and also ordered that the Sale Certificate dated 19.01.2011 executed by the appellant-bank in Civil Appeal No. 818/2022 in favour of the auction purchaser stands cancelled, both, the Bank as well as the auction purchaser have preferred the present appeals.
xxx 2.5 A Sale Certificate was issued in favour of the auction purchaser on 17.01.2011 and the sale deed was also executed in favour of the auction purchaser on 19.01.2011. No further steps were taken by respondent no.1 immediately. He also did not come forward to deposit 5% of the amount equal to the purchase money within 30 days from the date of the sale so as to seek setting aside of the sale in terms of Rule 107(13) of the MCS Rules, 1961. No objection was raised before the Recovery Officer about any irregularity or fraud as required under Rule 107(14) of the MCS Rules, 1961. It appears that the officers of the bank went to take possession of the property, they were attacked and therefore the officers of the Page 59 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined bank lodged an FIR on 24.02.2011 for an attack on them while acquiring possession of the property.
xxx
4. By the impugned judgment and order dated 30.07.2021, the High Court has allowed Writ Petition No. 570/2012 challenging order dated 13.04.2011 passed by the Divisional Joint Registrar in Revision Application No. 11/2011 upholding the auction proceedings and consequently has set aside the auction sale in respect of lands survey nos. 440, 437 and 102 dated 29.11.2010. By the impugned judgment and order, the High Court has also set aside the Sale Certificate in favour of the auction purchaser dated 19.01.2011. The High Court has directed the appellant-bank to refund the sale price to the auction purchaser along with interest @ 10% per annum from the date of deposit till payment. From the impugned judgment and order passed by the High Court, it appears that the High Court has allowed the writ petition and set aside the auction sale on the ground that there was a non- compliance of mandatory provisions of Rule 107(11) (e) (f) and Rule 107(11)(h) of the MCS Rules, 1961.
xxx
9. We have heard the learned counsel for the respective parties at length.Page 60 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023
NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined
10. By the impugned judgment and order, the High Court has set aside the auction sale conducted on 29.11.2010 and has cancelled the Sale Certificate dated 19.01.2011 in favour of the auction purchaser on the ground that the auction sale/sale was in breach of Rules 107(11) (e), (f),(g) & (h) of the MCS Rules, 1961.
11. What was challenged before the High Court was the order passed by the Divisional Joint Registrar passed in Revision Application No. 11/2011 under Section 154 of the MCS Act, 1960. However, it is required to be noted that even the High Court in the impugned judgment and order has specifically observed in paragraph 31 that as the borrower did not exercise the right under Rule 107(13) of the MCS Rules, it was not competent for the borrower to prefer revision before the Divisional Joint Registrar under Section 154 of the MCS Act, 1960. Therefore, once the revision application before the Divisional Joint Registrar under Section 154 of the MCS Act, 1960 was held to be not maintainable and/or competent at the instance of the borrower - respondent no.1 herein, thereafter the High Court ought not to have considered the writ petition on merits.Page 61 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023
NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 12 Even otherwise on merits also, the High Court has erred in entertaining the writ petition filed by the borrower and quashing and setting aside the auction sale/sale by not bearing in mind the following aspects:
12.1 Firstly, that after conducting the auction sale and sale of the property in favour of the auction purchaser, the borrower never applied to the Recovery Officer to set aside the sale on the grounds of material irregularity, mistake or fraud in publishing or conducting it;
12.2 secondly, as per proviso to Rule 107(14)(i) of the MCS Rules, no sale shall be set aside on the ground of irregularity or fraud unless the Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of such irregularity, mistake or fraud;
12.3 Thirdly, as per Rule 107(14)
(iii), on the expiration of thirty days from the date of sale, if no application to have the sale set aside is made or if such application has been made and rejected, the Recovery Officer shall make an order confirming the sale. Rule 107(14) reads as under:Page 62 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023
NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined "(14)(i) At any time within thirty days from the date of the sale of immovable property, the applicant or any person entitled to share in a rateable distribution of the assets or whose interests are affected by the sale, may apply to the [District Deputy Registrar] to set aside the sale on the ground of a material irregularity or mistake or fraud in publishing or conducing it:
Provided that no sale shall be set aside on the ground of irregularity or fraud unless the [District Deputy Registrar] is satisfied that the applicant has sustained substantial injury by reason of such irregularity, mistake or fraud.
(ii) If the application be allowed, the Recovery shall set aside the sale and may direct a fresh one
(iii) On the expiration of thirty days from the date of sale, if no application to have the sale set aside is made or if such application has been made and rejected, the [District Deputy Registrar] shall make an order confirming the sale;
Provided that if he shall have reason to believe that the sale ought to be set aside notwithstanding that no such application has been made or on grounds other than those alleged in any application which has been made and rejected, he may, after Page 63 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined recording his reasons in writing, set aside the sale.
(iv) Whenever the sale of any immovable property is not so confirmed or is set aside, the deposit or the purchase money, as the case may be, shall be returned to the purchaser.
(v) After the confirmation of any such sale, the [District Deputy Registrar] shall grant a certificate of sale bearing his seal and signature to the purchaser, and such certificate shall state the property sold and the name of the purchaser."
13. In the present case, Sale Certificate was issued in favour of the auction purchaser on 19.01.2011 after a period of thirty days from holding the auction sale. At this stage, it is required to be noted that even the Sale Certificate was issued by the Bank/Recovery Officer only after the receipt of the approval of the District Deputy Registrar. While approving the sale, the District Deputy Registrar noted in the approval dated 29.11.2010 that the valuation of the land was determined at Rs. 98,10,000/- according to the letter issued by the Government approved Valuer dated 10.06.2010 which was the upset price and the amount realised was Rs.1,26,00,000/-, which is higher than the upset price. Therefore, as such, even the District Deputy Registrar also did not doubt the valuation and the amount realised, Page 64 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined i.e., Rs. 1,26,00,000/- against the upset price of Rs.98,10,000/-. Therefore, once the borrower failed to apply to the Recovery Officer to set aside the auction sale on the grounds of material irregularity, mistake or fraud in publishing or conducting the auction sale within a period of thirty days from the date of sale of immovable property, thereafter it was not open for the borrower to challenge the sale on the ground of material irregularity. All the grounds on which the High Court has set aside the auction sale/sale were available with the borrower and the borrower did not apply to set aside the sale on the said grounds of material irregularity, mistake or fraud. Therefore, once the borrower failed to apply to the Recovery Officer to set aside the sale on the ground of material irregularity within a period of thirty days from the date of sale of the immovable property and thereafter the Sale Certificate has been issued, normally the borrower cannot be permitted to challenge the same subsequently, having not raised any objection at the appropriate time and stage as per the statute, otherwise the statutory provisions would become nugatory and unworkable.
14. It is also required to be noted that even under Rule 107(14)(i) of the MCS Rules, 1961, no sale shall be set aside on the ground of material irregularity, mistake or Page 65 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined fraud unless the Recovery Officer is satisfied that the applicant had sustained substantial injury by reason of such irregularity, mistake or fraud. In the present case, there is no finding recorded by the High Court that the borrower had sustained substantial injury and by reason of such irregularity the auction sale had to be set aside. Under the above circumstances also, setting aside of auction sale/sale by the High Court is just contrary to the proviso to Rule 107(14)(i) of the MCS Rules, 1961."
18.6) It was further submitted that the disputed question of facts giving rise to filing of this petition cannot be decided under the writ petition filed under Article 226 of the Constitution of India and even otherwise, the challenge to the auction proceedings cannot be made at the behest of the petitioners, inasmuch as, the auction notice dated 05.04.2022 specifically provides that all bidders are required to submit Demand Draft to the tune of 10% of the offer amount latest by 05.05.2022. However, Page 66 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined undisputedly both the petitioners have not complied with the said mandatory condition and consequently, they are unsuccessful, who are otherwise not eligible to challenge the auction proceedings. In support of such contention reliance is placed on the decision in case of Runaq International Ltd. v. I.V.R. Construction Ltd. and others reported in (1999) 1 Supreme Court Cases 492, wherein the Apex Court has held as under:
"(27.) In the present case, however, the relaxation was permissible under the terms of the tender. The relaxation which the Board has granted to M/s. Raunaq International Ltd. is on valid principles looking to the expertise of the tenderer and his past experience although it does not exactly tally with the prescribed criteria. What is more relevant, M/s. IVR Construction Ltd. who have challenged this award of tender themselves do not fulfil the requisite criteria. They do not possess the prescribed experience qualification. Therefore, any judicial relief at the instance of a party which does not fulfil the requisite criteria, seems to be misplaced. Even if criteria can be relaxed both for M/s. Raunaq Page 67 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined International Ltd. and M/s. IVR Construction Ltd., it is clear that the offer of M/s. Raunaq International Ltd. is lower and it is on this ground that the Board has accepted the offer of M/s. Raunaq International Ltd. We fail to see how the award of tender can be stayed at the instance of a party which does not fulfil the requisite criteria itself and whose offer is higher than the offer which has been accepted. It is also obvious that by stopping the performance of the contract so awarded, there is a major detriment to the public because the construction of two thermal power units, each of 210 MWs., is held up on account of this dispute. Shortages of power have become notorious. They also seriously affect industrial development and the resulting job opportunities for a large number of people. In the present case there is no overwhelming public interest in stopping the project. There is no allegation whatsoever of any mala fides or collateral reasons for granting the contract to M/s. Raunaq International Ltd."
18.7) Insofar as the aspect of providing cheque by the petitioners against the requirement of providing Demand Draft is concerned, it was submitted that the said Page 68 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined condition of the auction notice of providing Demand Draft on or before 05.05.2022 is a mandatory condition and that, the decision thereupon is vested with the Respondent Bank, who has considered the petitioners as ineligible. Consequently, the bids of petitioners are rightly been considered as not eligible. It was further submitted that providing Demand Draft after the last date of submission cannot be considered by the Bank, which would amount to deviating the mandatory condition and would be against the principle of 'privilege-of-participation principle". In support of such contention, reliance was placed on the decision in the following cases:
i) Central Coalfieds Limited and another v. SLL-SML (Joint Venture Consourtium) and others reported in (2016) 8 Supreme Court Cases 622, wherein the Apex Court held as Page 69 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined under:
"39. Poddar Steel [(1991) 3 SCC 273] was a rather interesting case and added a new dimension to the discourse. The decision of the Allahabad High Court records that the relevant clause in the NIT gave the bidder the option of depositing the earnest money in cash or by a "demand draft drawn on DLW Branch of SBI in favour of Assistant Chief Cashier, DLW/- Varanasi. As many as 21 parties had responded to the NIT, but 8 of them had not deposited any earnest money at all and the remaining 13 bidders had "deposited the earnest money by one mode or the other but not necessarily in the manner provided in the NIT except perhaps a few." The Tender Committee deviated from the terms of the NIT and considered the bids of these 13 bidders and accepted the bid of Poddar Steel, who had given the earnest money not by cash or a demand draft but by "a loose cheque drawn on its C/D account in the Union Bank of India, Sonarpura, Varanasi." On the issue of discriminatory treatment, the contention of the employer was that since all the 13 bidders who had made the earnest money deposit were treated equally, there was no issue of any discriminatory treatment.
(40.) However, the High Court took the view, following Ramana Dayaram Shetty[[(1979) 3 SCC 489] and the privilege of participation Page 70 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined principle, that it was possible that if those who did not deposit any earnest money had known that a crossed cheque (drawn on a bank other than SBI) towards earnest money was acceptable to the employer, they too could have been in the fray. Under these circumstances, the High Court held that excluding them from competition, through this unannounced deviation affecting bidders and potential bidders alike, rendered the bidding process unfair. The High Court introduced an "essential term" concept and held that the clause in the NIT relating to deposit of earnest money was an essential term thereof and could not be deviated from. The Allahabad High Court held:
"The mere fact that all the tenderers who had deposited the earnest money, whether in terms of Clause 6 or not had been treated alike cannot make any difference. It is quite possible to visualise that the parties who had failed to deposit the earnest money may also have been in the fray had they known that earnest money through cheque was also acceptable. Thus they have obviously been deprived from competing with others and this makes the action of Respondents 1 to 5 unfair when condition No. 6 of the NIT so specifically points out that deposit of earnest money in any other mode Page 71 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined except in cash or by demand draft would not be acceptable. It leads us to think that this was an essential precondition for submitting tenders and the Respondents were not entitled to deviate from this. All tenders which were not accompanied by deposit of earnest money strictly in the manner indicated in the NIT deserved to be rejected. We reject the contention of the Respondents that the earnest money could be accepted even when it was deposited by some mode other than those in NIT. We also hold that Clause 6 of NIT is not merely ancillary or subordinate condition but in view of the language in which is couched the same was a crucial and essential terms of the tender which could not be deviated from."
(41.) In appeal, this Court accepted the theory of essential and non- essential or ancillary or subsidiary terms of an NIT. It was held that the cheque of the Union Bank of India issued by Poddar Steel (though a deviation from the terms of the NIT) was sufficient for meeting the conditions of the NIT, the condition being ancillary or subsidiary to the main object to be achieved by the condition and that the employer could waive the "technical literal compliance" of the earnest money clause of the NIT "specially when it was in its interest not to reject Page 72 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the said bid which was the highest." In other words, this Court concluded that an essential term of the tender document could not be deviated from but an ancillary or subsidiary or non-essential term could be deviated from, and that the deviation could be without any reference to potential bidders.
(42.) Unfortunately, this Court did not at all advert to the privilege- of-participation principle laid down in Ramana Dayaram Shetty and accepted in G. J. Fernandez. In other words, this Court did not consider whether, as a result of the deviation, others could also have become eligible to participate in the bidding process. This principle was ignored in Poddar Steel."
18.8) Insofar as bids submitted by the successful auction purchaser i.e. respondent Nos.6 to 8 as well as one M/s.Vavya Associates is concerned, it was submitted that they were rightly considered to be qualified by the Bank, inasmuch as, admittedly and undisputedly both the said bidders had submitted their earnest money (i.e. 10% of the offer amount) by way of Page 73 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Demand Draft before the Bank on or before 05.05.2022 and hence, there was no question of rejecting the bids submitted by the said two bidders. It was further submitted that insofar as the aspect of non-mentioning the offer amount in the bids is concerned, the same is totally misconceived inasmuch as, as per the public auction notice, a bidder was required to deposit 10% of the offer amount as earnest money. In compliance of the said condition, the auction purchaser vide letter dated 05.05.2022, had deposited 10% of the offer amount towards earnest money i.e. Rs.67,00,000/- (10% of Rs.6,70,00,000/-) by way of Demand Draft bearing No.188320 drawn on Standard Chartered Bank, before the Bank.
It was submitted that the decision of interpreting the said condition is vested upon the respondent Bank, who has considered the aforesaid bidders as eligible.
Page 74 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 18.9) It was therefore, submitted that the petitioners have not complied with the mandatory conditions of the auction notice, and hence, the same cannot be equated with the mere fact of not mentioning of the offer amount in the bid, more particularly, where the bid contains the details with respect to the earnest money, which is 10% of the offer amount.
18.10) Insofar as the alleged violation of Rule 120 of the Rules, 1965 is concerned, it was submitted that there is no pleadings in that regard in either of the writ petitions and hence, in absence of any pleadings, it would not be open for the petitioners to contend about there being no order of postponing the auction from 06.05.2022 to 09.05.2022, albeit without reasons. It was further submitted that the said contention has been raised directly for the first time Page 75 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined before this Court during the oral arguments and was never questioned prior thereto and hence, on that sole ground, the same deserves to be rejected. It was further submitted that even otherwise, assuming without admitting that there is a violation of Rule 120 of the Rules, 1965 of not adjourning the auction sale to any other date by recording reasons, then in that eventuality also, it is not open for the petitioners to challenge/question the same, more particularly, when the petitioners have themselves participated in the auction proceedings conducted on 9th May, 2022, i.e. on the adjourned date, without any protest or demur. Hence, in any event, no prejudice/ injury has been caused to the petitioners by reasons of such alleged irregularity. It was submitted that even otherwise, after completion of the hearing, the advocate appearing on behalf of the Bank submitted the order dated 06.05.2022 passed by the Bank for Page 76 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined adjourning the auction to 09.05.2022.
Therefore, in any event, the said contention of the petitioners is also baseless and totally misconceived.
18.11) It was submitted that even otherwise, the valuation of the auction property is also fair, correct and reasonable inasmuch as, at the time of first auction, which was fixed at Rs.7.60 Crores, there was no bidder and only at the time of second auction, the respondent Bank got bidders. It was further submitted that it is settled principle of law that mere providing the higher value would not make the auction proceedings invalid or should not be the ground to re-auction the same, which is even otherwise valid and proper, more particularly, in view of the fact that the public auction proceedings have sanctity in the eyes of law. In support of such Page 77 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined contention, reliance was placed on the following decisions of Apex Court:
i) Vedica Procon Private Limited v.
Balleshwar Greens Private Limited and others reported in (2015) 10 Supreme Court Cases 94, wherein the Apex Court has held as under:
"40. In other words, in Navalkha case[(1969) 3 SCC 537], this Court only recognized the existence of the discretion in the Company Court either to accept or reject the highest bid before an order of confirmation of the sale is made. This Court also emphasized that it is equally a well-settled principle that once the Company Court recorded its conclusion that the price is adequate, subsequent higher offer cannot be a ground for refusing confirmation.
xxx
47. A survey of the abovementioned judgments relied upon by the first respondent does not indicate that this Court has ever laid down a principle that whenever a higher offer is received in respect of the sale of the property of a company in liquidation, the Court would be justified in reopening the concluded proceedings. The earliest judgment Page 78 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined relied upon by the first respondent in Navalkha & Sons (supra) laid down the legal position very clearly that a subsequent higher offer is no valid ground for refusing confirmation of a sale or offer already made. Unfortunately, in Divya Manufacturing Company (supra) this Court departed from the principle laid down in Navalkha & Sons (supra). We have already explained what exactly is the departure and how such a departure was not justified."
ii) K. Kumar Gupta v. Sri. Markendaya and Sri Omkareswara Swamy Temple and others reported in (2022) 5 Supreme Court Cases 710, wherein the Apex Court held as under:
"16. It is also required to be noted that the sale was confirmed in favour of the appellant by the Commissioner, Endowments Department after obtaining the report of the Assistant Commissioner. Therefore, we are of the opinion that in the aforesaid facts and circumstances of the case, the High Court ought not to have ordered re-auction of the land in question after a period of 23 years of confirmation of the sale and execution of the sale deed in favour of the auction purchaser by observing that the value of the Page 79 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined property might have been much more, otherwise, the object and purpose of holding the public auction and the sanctity of the public auction will be frustrated. Unless there is concrete material and it is established that there was any fraud and/or collusion or the land in question was sold at a throw away price, the sale pursuant to the public auction cannot be set aside at the instance of strangers to the auction proceeding.
xxx
18. Further, the Division Bench of the High Court ought to have appreciated that the objector - Shri L. Kantha Rao, who did not participate in the auction proceedings and submit any bid can be said to be a fence sitter having no stakes on his shoulder and had simply come forward just to nullify the registered sale deed executed in favour of the appellant by adopting an indirect method of making a public offer by way of filing a "Public Interest Litigation" before the High Court. The so-called lucrative offer initially made by Shri Jagat Kumar and the subsequent offer made by Shri L. Kantha Rao appears to be made only to frustrate the auction proceedings with a mala fide intent. As observed hereinabove, if there was any error in the decision-making process adopted by the authority, the remedy available was to question the sale Page 80 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined deed in an appropriate proceeding available under the law and not by filing a petition under Article 226 of the Constitution of India."
18.12) Learned Senior Advocate Mr. Joshi submitted that the judgments cited by the petitioners are not applicable to the facts of the present case, as the facts of the present case are entirely different than the judgments cited by the petitioners. It was therefore, submitted that no interference is warranted by this Court in writ jurisdiction and the writ petitions therefore, may be dismissed.
19. Learned advocate Mr. K.K. Trivedi appearing for the respondent nos. 3 to 5 submitted that no reasons are recorded to adjourn the auction on 06.05.2022 by respondent no.5-Sales Officer. It was further submitted that now Sale Certificate is already issued and therefore, auction is Page 81 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined complete and no interference is required to be made in the impugned action of respondent nos. 3 to 5 for recovery of its outstanding dues.
19.1) It was submitted that Public Notice was issued in the local daily newspaper, namely, "Gujarat Mitra" in its edition dated 05.04.2022 fixing the date of public auction on 06.05.2022 of the attached properties on "As is where is" basis. The public auction was however, postponed to 09.05.2022. The Sale Officer received total seven bids from the bidders. The public auction started at 5.00 pm on 09.05.2022. The Public Notice was, once again read by the Sale Officer in presence of all the bidders and their representatives who remained present. The sealed covers of all the bidders were opened in presence of all the bidders and their representatives by the Sale Officer. During Page 82 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the auction proceedings, the bidders and their representatives raised their voices and loudly argued with regard to the auction proceedings. At one point of time, due to commotion amongst the bidders and exchange of hot words /arguments going on amongst the Bidders, the Sale Officer announced to stop/ cancel the Public Auction. However, as the Bidders who have deposited the Demand Drafts in time represented that they have followed the condition of the Public Auction and, therefore, it was decided that the bidders who deposited Demand Draft in time were allowed to participate in the auction. The bidders who produced Cheques on or before 05.05.2022 were not entitled to participate in the auction proceedings. The bidders, who have submitted Demand Draft on or after 06.05.2022 also were not entitled to participate in the auction.
Page 83 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 19.2) It was submitted that the respondent no.5 Sale Officer has reviewed and changed his decision of stopping the Public Auction of the properties within a period of 5 minutes on the spot in presence of all the bidders and continued the auction because the bidders who have submitted Demand Drafts on or before 05.05.2022 have valid claims in participating in the auction proceedings.
That is why there are deletions and corrections in the record of the bidders who have deposited Demand Draft but not quoted offers. It was submitted that though the offered price has not been quoted, it is to be considered in proportion to the Demand Draft amount. It was submitted that the decision was taken by the Sale Officer openly, fairly, and immediately. It was submitted that the petitioners have filed the petitions after the period of limitation prescribed under the law.
Page 84 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 19.3) It was submitted that the Sale Officer has taken the aforesaid decision with absolute bona fide intention, he has kept in mind that it was the second attempt to sell the property by way of public auction on behalf of the Bank. As respondent nos. 6.
7and 8 offered the highest amount, they were declared successful bidders by the Sale Officer and the sale was confirmed in their favour.
19.4) It was submitted that the video recording of the auction proceeding of the properties is also preserved by the bank.
19.5) It was submitted that after auction, the Sale Officer intimated respondent nos. 6, 7 and 8 by the letter dated 10.05.2022 to pay the remaining amount of the purchase price of the property within a period of 15 days. The Page 85 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined Sale Officer even issued notice dated 10.05.2022, as per Rule 128(3) of the Rules, 1965 to the original borrower - Suryanarayan Silk Mills Pvt. Ltd and its partners intimating them that the respondent nos.6, 7 and 8 are declared as the purchasers of the properties in question as they have offered the highest amount, further asking them to pay the bank dues within a period of 30 days.
It is intimated in the notice that if they would pay the dues, the auction proceedings shall stand canceled.
19.6) In response to such letter, one Rameshchandra Ishwarlal Gandhi, the partner of the said firm, wrote a letter dated 29.06.2022, inter-alia stating that he is not able to pay the entire outstanding dues of Bank and so whatever the amount received by the Bank through the Public Auction is reasonable and acceptable to him.
Page 86 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 19.7) It was submitted that the auction purchaser has made the payment of the entire amount on 20.05.2022 and the consent letter dated 29.06.2022 issued by the original borrower was recorded in the Board Meeting of the Bank convened on 18.07.2022. The Sale Certificate was also executed by the Recovery Officer in favor of respondent nos.6, 7, and 8 on 05.08.2022, as per rule 128(5) of the Rules, 1965.
19.8) It was submitted that the Sales Officer and Recovery Officer and the Bank have taken the decision to confirm the sale of the properties in question in favor of the respondent nos. 6, 7 and 8 with absolute bona fide intention and there is no mala fide intention on the part of any of the officials of the Bank.
Page 87 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined 19.9) It was further submitted that the present petitioners does not have any locus standi to question the price of the properties in question. It was submitted that the petitioners has not shown his bona fide by way of depositing the entire amount offered by him. The Bank is in need of funds so that the Bank can grant loans to other needy persons and the bank needs liquidity.
The Bank is not in business of property dealing. If the auction would be cancelled, the liquidity of the Bank's money would be considerably reduced. Therefore, the cancellation of the public auction is not in the interest of the business of the Bank.
19.10) It was submitted that there are all chances that there may be collusion between the petitioners and the respondent nos.6, 7 and 8, as the land/property in question is sold on "As is where is" basis. It was Page 88 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined therefore, submitted that the petition deserves to be dismissed.
20. Having heard the learned advocates for the respective parties and having considered the factual matrix in which these petitions are filed it is clear that respondent nos.3 to 5 have acted arbitrarily on 09.05.2022 in accepting the bid offer of respondent nos. 6 to 8 though the petitioner of Special Civil Application No.18857/2022 had offered highest bid of Rs.8,51,00,000/-.
21. It is also pertinent to note that auction once postponed on 06.05.2022 without recording any reason, then fresh auction proceedings ought to have been initiated as per the provisions of Rules 119 and 120 of the Rules, 1965 which read as under:
"119. Proclamation before sale.- Proclamation of sale shall be published by affixing a notice in Page 89 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined the office of the Recovery Officer and the Taluka Office atleast thirty days before the date fixed for the sale and [the Recovery Officer shall cause the publication of the proclamation regarding the time and place of intended sale to be made by beat of drum in the village on the day prior to a fortnight and on two consecutive day previous to the date fixed for sale and on the date of sale prior to the commencement of the sale]. Such proclamation shall where attachment is required before sale, be made after the attachment has been effected. Notice shall also be given to the decree-holder and the defaulter. The proclamation shall state the time and place of sale and specify as fairly and accurately as possible:
(i) The property to be sold,
(ii) any encumbrance to which the property is liable,
(iii) the amount, for the recovery of which sale is ordered, and
(iv) every other matter which the Sale Officer considers material for a purchaser to know in order to judge the nature and value of the property.
120. Sale by public auction. When any immovable property is sold under Page 90 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined these rules the sale shall be subject to the prior encumbrances on the property, if any. The decree- holder shall, when the amount for the realisation of which sale is held exceeds Rs. 100 furnish to the Sale Officer within such time as may be fixed by him or by the Recovery Officer, an encumbrance certificate from the Registration Department for the period of not less than twelve years prior to the date of attachment of the property sought to be sold, or in a case falling under the proviso to Rule 114 prior to the date of attachment of the application for execution. The time for production of the encumbrance certificate may be extended at the discretion of the Sale Officer or the Recovery Officer as the case may be. The sale shall be by public auction to the highest bidder, provided that it shall be open to the Sale Officer to decline to accept the highest bid where the price offered appears to be unduly low or for other reasons and provided also that the Recovery Officer or the Sale Officer may in his discretion, adjourn the sale to a specified day and hour, recording his reasons for such adjournment. Where a sale is so adjourned for a longer period than 7 days, a fresh proclamation shall be made, unless the judgment debtor consents to waive it. The sale shall be held after the expiry of not less than thirty days calculated from the date on which notice of the proclamation Page 91 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined was affixed in the office of the Recovery Officer. The time and place of sale shall be fixed by the Recovery Officer and the place of sale shall be the village where the property to be sold is situated or such adjoining prominent place of public resort as may be fixed by the said Recovery Officer:
Provided that in cases where an encumbrance certificate is not obtainable owing to the destruction of the connected records, and affidavit from the village Patwari in regard to the encumbrances known to him supported by a certificate from the Registration Department that the encumbrance certificate cannot be granted owing to the destruction of the connected records, shall be accepted in the place, of an encumbrance certificate."
22. On perusal of the above Rules, it is clear that once the auction is postponed, then respondent bank is required to issue fresh auction notice inviting the offers as per the prescribed procedure. However, the auction was adjourned to 09.05.2022 without recording any reason by respondent nos. 4 and Page 92 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined
5. Therefore, auction proceedings which were held on 09.05.2022 was without any authority and contrary to the Rules. Even otherwise it is emerging from the record that at first instance respondent nos. 4 and 5 rejected the bids of all the seven bidders who remained present on 09.05.2022 and in the late night at around 8:30 pm to 9:30 pm, respondent nos.
6 to 8 were called and their offer was accepted by respondent nos. 3 to 5. Moreover, during pendency of Special Civil Application No.15060/2022, Sale Certificate was issued in favour of respondent nos. 6 to 8 though respondent nos. 3 to 5 were aware with regard to pendency of the petition and merely because no interim relief was granted, respondent nos. 3 to 5 should not have issued the Sale Certificate in favour of respondent nos. 6 to 8 so as to see that petition becomes infructuous.Page 93 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023
NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined
23. The Apex Court as well as this Court have time and again held to the effect that this Court can exercise the writ jurisdiction invoking Article 226 in facts of the case when it is revealed that the conduct of auction for recovery proceedings of the bank which is a public money has resulted into a loss by such auction to the financial institution and therefore, the writ jurisdiction is available to see that the maximum amount is recovered by the financial institutions.
24. In facts of the case admittedly there was a highest offer of Rs.8,51,00,000/- but for the reasons best known to respondent nos.
3 to 5, offer of respondent nos. 6 to 8 was accepted for Rs. 6,75,00,000/- less than the offer made by petitioner of Special Civil Application No.15060/2022 for Rs.
6,90,00,000/-. This fact only shows that Page 94 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023 NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined respondent nos. 3 to 5 wanted to favour respondent nos. 6 to 8 and therefore, auction held on 09.05.2022 is nothing but an arbitrary exercise of power contrary to the Rules and therefore, the same is liable to be quashed and set aside.
25. Accordingly, the petition succeeds and the impugned auction held on 09.05.2022 is quashed and set aside and as a consequence thereof, Sale Certificate dated 05.08.2022 also stands cancelled. Respondent no.3 shall refund the amount of consideration of Rs.
6,75,00,000/- lakhs received from respondent nos. 6 to 8 within a period of four weeks from the date of receipt of this order and thereafter hold fresh auction in accordance with the Rules after following the prescribed procedure in accordance with law.
Page 95 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023NEUTRAL CITATION C/SCA/15060/2022 CAV JUDGMENT DATED: 04/08/2023 undefined
26. Petitions are accordingly disposed of.
Rule is made absolute to the aforesaid extent with no order as to costs. Civil Application also stands disposed of accordingly.
(BHARGAV D. KARIA, J) After prononcement of the Judgment and Order, learned advocate Mr.Vinay D. Bairagar for respondent nos.6, 7 and 8 prayed for stay of the implementation of the same.
Considering the fact that the Sale Certificate was issued in the month of August, 2022, the implementation of this Judgment and Order shall remain stayed for a period of four weeks from today.
(BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 96 of 96 Downloaded on : Sun Sep 17 00:08:33 IST 2023