Karnataka High Court
The Commissioner vs Shri Manjunath Guttedar And Partner on 3 March, 2017
Author: Aravind Kumar
Bench: Aravind Kumar
1
IN THE HIGH COURT OF KARNATAKA
KALABURAGI BENCH
DATED THIS THE 3RD DAY OF MARCH 2017
PRESENT
THE HON'BLE MR.JUSTICE ARAVIND KUMAR
AND
THE HON'BLE MR.JUSTICE B.A.PATIL
W.A.NO.200557/2016 (GM-RES)
C/W
W.A.NO.200558/2016 (GM-RES) AND
W.A.NO.200004/2017(GM-RES)
In W.A.No.200557/2016:
BETWEEN:
The Commissioner
Urban Development Authority
Kalburagi-585102.
... Appellant
(By Sri Shivakumar Tengli, Advocate)
AND:
1. Shri Manjunath Guttedar and Partner
Office at plot No.100,
Bapuggouda Darshanapur Layout
Opp: GT and TC College,
M.G. Road, Kalaburagi-585105
Represented by its Managing Partner
2
Shri Manjunath Guttedar.
2. The State of Karnataka
By its Secretary
Urban Development Department
Vidhan Soudha, Bangalore-560 001.
...Respondents
(By Sri Srinath Kulkarni, Advocate for
Sri K. Diwakara, Advocate for C/R1
Sri A. Syed Habeeb, AGA for R2)
This Writ Appeal is filed under Section 4 of the
Karnataka High Court Act, praying to call for records in
W.P.No.204591/2016 and set aside the order dated
18.11.2016 passed by the learned Single Judge in W.P.No.
204591/2016 consequently, dismiss W.P.No.204591/2016
filed by the respondent No.1.
In W.A.No.200558/2016:
BETWEEN:
The Commissioner
Urban Development Authority
Kalburagi-585102.
... Appellant
(By Sri Shivakumar Tengli, Advocate)
AND:
1. Dr. Sanjeev Patil
S/o Shri. Malkajappa Patil
Aged about 41 years
R/o House No.84,
Shanti Nagar, MSK Mill Road,
Kalaburagi-585103.
3
2. The State of Karnataka
By its Secretary
Urban Development Department
Vidhan Soudha, Bangalore-560 001.
...Respondents
(By Sri Srinath Kulkarni, Advocate for
Sri K. Diwakara, Advocate for C/R1
Sri A. Syed Habeeb, AGA for R2)
This Writ Appeal is filed under Section 4 of the
Karnataka High Court Act, praying to call for records in
W.P.No.204592/2016 and set aside the order dated
18.11.2016 passed by the learned Single Judge in W.P.No.
204592/2016 consequently, dismiss W.P.No.204592/2016
filed by the respondent No.1.
In W.A.No.200004/2017:
BETWEEN:
1. The Commissioner
Urban Development Authority
Kalaburagi-585102.
2. The Chairman
Urban Development Authority
Kalaburagi-585102.
... Appellants
(By Sri Shivakumar Tengli, Advocate)
AND:
Sanjeev Kumar
S/o Veerabhadrappa
Aged about: 42 years
Occ: Business
R/o H.No.4-601/23B
4
1st Cross, M.B. Colony
Kalaburagi-585103.
...Respondent
(By Sri R.S. Sidhapurkar, Advocate)
This Writ Appeal is filed under Section 4 of the
Karnataka High Court Act, praying to call for records in
W.P.No.202035/2016 and set aside the order dated
21.11.2016 passed by the learned Single Judge in W.P.No.
202035/2016 consequently, dismiss W.P.No.202035/2016
filed by the respondent.
These Writ Appeals coming on for orders this day,
Aravind Kumar J., delivered the following:
JUDGMENT
Heard the learned Advocates appearing for the parties. Perused the records.
2. These intra-court appeals are directed against the order dated 18.11.2016/21.11.2016 passed in W.P.Nos.204591/2016, 204592/2016 and 202035/ 2016 respectively, whereunder writ petitions came to be allowed by setting aside the communications dated 25.02.2016, 06.01.2016 and 24.02.2016 issued by Urban Development Authority intimating the respective writ petitioners of the Resolution of the Authority in not 5 confirming the auction sale held on 19.10.2015 and issuing direction to the second respondent - Urban Development Authority, Kalaburagi to take action in accordance with law, in the light of observations made in the order dated 18.11.2016 within the time-frame fixed thereunder.
3. Facts in nutshell are as under:
Urban Development Authority, Kalaburagi issued a notification dated 21.09.2015 notifying conducting of public auction of the sites owned by it. Under said notification 29 sites located at different portions of M.S.K.Mill Commercial Layout was proposed to be sold by public auction amongst other sites. The auction proposed to be conducted was in accordance with the Karnataka Urban Development Authorities (Disposal of Corner Sites and Commercial sites) Rules, 1991 (for short 'Rules'). Pursuant to said notification, auction came to be held on 19.10.2015 and in respect of three 6 sites writ petitioners were declared as the successful highest bidders since they had quoted highest price and it was more than the base or reserve price which had been fixed by the Urban Development Authority. As indicated in the auction notification-Annexure-A, petitioners had to deposit 25% of the bid amount immediately after auction and accordingly all the petitioners deposited 25% of the total auction bid amount by demand draft drawn in favour of the Urban Development Authority, Kalaburagi. However, the Urban Development Authority by intimation dated 25.02.2016 Annexure-A (in W.P.No.204591/2016 & W.P.No. 204592/2016) and intimation dated 24.02.2016 Annexure-G (in W.P.No.202035/2016) intimated the petitioners about non-confirmation of their auction sale by the Urban Development Authority Council in its meeting held on 06.01.2016. In the light of said factual matrix, successful bidders namely petitioners approached this Court by filing writ petitions 7 assailing said communications, contending inter alia that non-confirmation of sale or rejection of their bids are without any proper reason; without extending opportunity of hearing to the petitioners; though petitioners were ready and willing to deposit the entire remaining amount, same had been ignored. In fact, records of the writ petition would also disclose that petitioners had deposited the entire auction bid amounts during the pendency of the writ petitions in W.P.No.204591/2016 and W.P.No.204592/2016 and petitioner in W.P.No.202035/2016 deposited the balance 75% amount after disposal of the writ petition.
4. Learned Single Judge after considering the rival contentions raised in respective pleadings and after taking note of Rule 7 of the Rules was of the view that purpose behind imposing duty on authority to assign reasons for non-confirmation of sale is to avoid or remove arbitrariness, unfair and discriminatory exercise 8 of power and if reasons are so assigned, it must be rationale and reasonable and must reflect the fact, situation and context in which such reasons emanate and learned Single Judge was also of the considered view that when price offered by the writ petitioners was much more than reserved price fixed by the Urban Development Authority it could not have rejected their bids. It was also further held that making bare assertion in the statement of objections that Sub-Registrar value of commercial sites was much more and the prices offered by the highest bidders like the petitioners and similarly placed persons was not the amount anticipated by the authority is not a valid reason and same cannot be accepted and as such it came to be held that reasons assigned for non-confirmation of sale by the resolution passed by Urban Development Authority stating that anticipated and expected amount/income was not forthcoming or generated in the auction is vague and same cannot be accepted as rationale reason. 9 On these grounds, learned Single Judge set aside the impugned communications and directed the second respondent - Development Authority to consider the matter and take action in accordance with law. Hence, the Urban Development Authority is before this Court challenging said order dated 18.11.2016.
5. We have heard the arguments of Sri Shivakumar Tengli, learned counsel appearing for the appellant, Sri Diwakar, learned counsel appearing along with Sri Shrinath Kulkarni, for respondent No.1 in W.A.No.200557/2016 and W.A.No.200558/2016, Sri R.S. Sidhapurkar, learned counsel appearing for the respondent in W.A.200004/2016 and Sri A. Syed Habeeb, learned AGA appearing for the State. Perused the records.
6. There is no dispute to the fact that in the auction held on 19.10.2015 petitioners were the highest bidders in respect of the sites bearing Nos.5, 4 and 67 10 respectively. After such auction being conducted, the matter was placed before the meeting of the Urban Development Authority Council held on 06.01.2016 under subject No.(2), whereunder it was resolved that insofar as the public auction held in respect of 29 sites situate in M.S.K.Mill Commercial complex layout is not to be accepted or approved for the reasons that there was less participation of the persons or larger section of the public had not participated; expected revenue was not generated in said auction conducted, since sites in question are situated in a prestigious layout and located in the heart of the city and in the event of re-auction being conducted, it is likely to fetch better price or higher price and on these grounds public auction conducted on 19.10.2015 was not confirmed and accordingly petitioners were intimated of such resolution passed by Development Authority under impugned communications to petitioners. 11
7. At this juncture it would be apt and appropriate to note the rules which govern the right, manner and mode in which decision can be undertaken by the authority namely Rule 7 and it reads as under:
"7.Decision of the Authority.- (1) The Authority shall have the right to confirm any sale in auction. The authority may cancel any such sale after recording reasons. And when the sale is cancelled, the amount received from the auction purchaser as deposit shall be refunded to him.
Provided that authority shall not cancel the sale where the auction proceeding is confirmed."
(Emphasis supplied by us)
8. A bare reading of above rule would indicate that the authority would have right to confirm any sale in auction and it also possesses the right to cancel such sale after "recording reasons" as indicated in sub-rule (1). When such sale is cancelled, the amount that has been received from the auction purchaser is required to 12 be refunded to the auction purchaser. Proviso to sub- rule (1) of Rule 7 would indicate that the authority shall not cancel the sale so conducted where it is confirmed. Thus, under sub-rule (1) of Rule 7 Authority has a right to confirm any sale in auction and it may also cancel such sale, and of course after assigning reasons. However, once sale is confirmed, Authority cannot cancel the auction sale. In the instant case, undisputedly the sale was not yet confirmed and as such proviso is not attracted. In exercise of the power vested in sub-rule(1) of Rule 7 the authority has cancelled the auction sale. As to whether the reasons assigned by the authority can be gone into by Courts is the question and said issue is no more res integra. The Courts will not go into the decision as such and it is the decision making process, if flawed, Constitutional courts would interfere in exercise of its power vested under Article 226 of the Constitution of India and set right the illegality that has been committed by the 13 authorities by way of judicial review. For this proposition, judgment of the Hon'ble Apex Court in the case of Tata Cellular vs. Union of India reported in AIR 1996 SC 11 can be looked-up where under it has been held that the duty of the Court is to confine itself to the question of legality of the decision making process and held that Courts concern should be:
(i) Whether a decision-making authority exceeded its powers?
(ii) committed an error of law;
(iii) committed a breach of the rules of
natural justice;
(iv) reached a decision which no
reasonable Tribunal would have
reached; or
(v) abused its powers.
9. Judicial review of administrative act is
inherent in the constitutional courts to prevent
arbitrariness or favouritism and ensuring exercise of the power in a justifiable manner. The judicial power of review is exercised to rein in such exercise of the power 14 arbitrarily. It has been held by the Apex Court in Tata Ceullular's case that these restraints bear hallmarks of judicial control over administrative action and the judicial review is concerned with reviewing not the merits of the decision in support of which the application for judicial review is made, but the decision-
making process itself.
10. The constitutional courts exercising the extra-ordinary jurisdiction under Article 226 would not sit as an appellate Court to examine the decision arrived at by the statutory authorities. The preliminary duty is to ascertain as to whether there is any infirmity in the decision making process. This view is also supported by the judgment of the Hon'ble Apex Court in the case of Sterling Computers Ltd. vs. M/s. M & N Publications Ltd. and others reported in AIR 1996 SC 51.
11. Keeping these authoritative principles laid down by the Hon'ble Apex Court in mind, we have 15 examined the decision of the appellant - Development Authority in its meeting held on 06.01.2017 to cancel the auction sale held on 19.10.2015 or its decision resolving not to confirm the auction held on 19.10.2015, whereunder development authority has cancelled the sale by assigning reasons as noticed herein above. As to whether said reasons would appeal to logic would not be the subject matter of judicial scrutiny or fall within the realm of scrutiny by Court exercising the jurisdiction under Article 226 of the Constitution of India. Sub-rule (1) of Rule 7 empowers the Urban Development Authority to cancel such auction sale by assigning reasons. If the reasons are not flimsy, not serving the public interest or said reasons would indirectly sub- serve the interest of some unknown hands, it is only in such circumstances the Constitutional Court would exercise its extra-ordinary jurisdiction to scuttle such attempts. As otherwise, the exercise of jurisdiction by the authority in not confirming the sale cannot be held 16 as one without power. The merits of the decision arrived at by the Development Authority as analysed herein above cannot be gone into and it is only the manner and method adopted by the authority to arrive at such decision which can be gone into and same is found to be contrary to the rules, then only Constitutional Court can undertake exercise of its powers under Article 226 of Constitution of India to quash/set aside. At the cost of repetition, it requires to be observed by us that Development Authority in the interest of generating more income and also on account of lack of participation of larger number of persons in the auction held on 19.10.2015, it has resolved to re- auction the sites and by adopting said process it cannot be contended by the writ petitioners that their rights would be prejudiced. In fact, no right had vested in the petitioners by their mere participation in the auction and as such they cannot be heard to contend that their right has been infringed. In fact, in the auction 17 notification - Annexure-A itself it has been indicated by Development Authority that it has power to cancel the auction without assigning any reasons and in the facts obtained the appellant - Development Authority has assigned the reasons as already noticed herein above which cannot be termed as perverse. In that view of the matter, we are of the considered view that order of the learned Single Judge cannot be sustained.
Hence, we proceed to pass the following:
ORDER
(i) Writ appeals are hereby allowed.
(ii) Orders dated 18.01.2016 and
21.11.2016 passed in W.P.No.204591/
2016, W.P.No.204592/2016 and
W.P.No.202035/ 2016 respectively are hereby set aside.
(iii) Writ petition Nos. 204591/2016, 204592/2016 and 202035/2016 are hereby dismissed.18
(iv) In the facts and circumstances of the case, cost made easy.
In view of writ appeals having been disposed of on merits, I.A.No.1/2017 filed by writ petitioners - respondents for vacating stay does not survive for consideration and they stand rejected.
The appellate authority shall refund the entire amount paid by respective bidders including the initial deposit with interest earned, expeditiously, at any rate within two weeks from today.
Sd/-
JUDGE Sd/-
JUDGE swk