Punjab-Haryana High Court
Bikkar Singh And Others vs State Of Punjab And Others on 14 February, 2012
Author: Paramjeet Singh
Bench: Paramjeet Singh
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP No. 10772 of 2010
Date of Decision : February 14, 2012
Bikkar Singh and others ...... Petitioners
Versus
State of Punjab and others ..... Respondents
CORAM: HON'BLE MR. JUSTICE PARAMJEET SINGH.
Present:- Mr. J.S. Yadav, Advocate, for the petitioners.
Mr. B.K. Gupta, Senior DAG Punjab.
PARAMJEET SINGH, J. (Oral)
The instant writ petition under Articles 226/227 of the Constitution of India has been filed for quashing the order dated 15.1.2010 (Annexure-P-12), whereby the sale by way of auction has been cancelled by respondent No. 3/Executive Engineer, Bathinda Canal Division, Bathinda. Further prayer is to direct the respondents to accept the installments which they have refused without any justification and not to disturb the possession of the petitioners.
Brief facts of the case are that respondents published an auction notice dated 8.10.1999 (Annexure-P-8) in 'The Tribune' that an open auction of the land in dispute alongwith some other land situated in the revenue estate of village Bibiwala, Tehsil and District Bathinda will be held on 9.11.1999 as per the terms and conditions mentioned in the notice. Petitioners completed all the formalities and took part in the auction. Petitioners gave the highest bid to the tune of Rs. 6,11,000/- and the same CWP No. 10772 of 2010 -2- was allowed in their favour. As per the condition No. 3 of the auction notice, petitioners deposited 10% of the amount at the spot , i.e. Rs. 61,100/-. Another 15% of the total amount of the bid was required to be deposited within sixty days to make it 25% by including 10% already paid. The possession of the land in question was already with the petitioners. Petitioners deposited the amount of Rs. 91,650/- on 10.1.2000 within the stipulated period of sixty days to make it 25%, i.e., petitioners deposited total Rs. 1,52,750/- and Rs. 10,000/- had been deposited to participate in auction. Further as per the condition No. 5, the balance auction money was required to be deposited either as one time payment or in four equal installments with 15% interest. As per the terms of the agreement, since the petitioners had already deposited 25% within the stipulated period, respondent No. 3 wrote a letter dated 18.11.1999 to respondent No. 2 for approval of the bid. The sanction was required to be given within sixty days as the remaining amount was to be got deposited within this period. In spite of the best efforts of the petitioners, they were not allowed to deposit the amount in installments. Thereafter, petitioners filed a civil suit for mandatory injunction, which was dismissed and then filed an appeal, the appeal too has been dismissed, it was directed that the respondents are required to pass a speaking order. The petitioners filed regular second appeal in this Court. Since the respondents passed order dated 15.1.2010 (Annexure-P-12) the petitioners have withdrawn RSA No. 1816 of 2010. Hence, this writ petition.
I have heard the learned counsel for the parties and perused the record.
Learned counsel for the petitioners vehemently argued that petitioners are the highest bidder and had deposited 10% of the auction money at the spot and 15% thereafter within the stipulated period of 60 days and as CWP No. 10772 of 2010 -3- such they have deposited 25% as per the auction notice. Thereafter, petitioners were required to deposit the remaining amount either in four equal installments or in lump-sum. The petitioners were willing to deposit the amount in installments, but were not permitted to do so as respondent No. 2 did not accord any sanction in spite of letter dated 18.11.1999 written by respondent No. 3. The petitioners even filed a civil suit for mandatory injunction so that the remaining amount may be allowed to be deposited in the treasury or as directed by respondents. But in spite of direction in the appeal arising out of the civil suit that the speaking order be passed, the sanction is not being accorded confirming or declining the auction. In pursuance to those directions, order dated 15.1.2010 (Annexure-P-12) has been passed, which is under challenge before this Court.
Learned counsel for the petitioners has contended that the impugned order passed by the respondents is a non speaking and does not disclose any reason for cancellation of the auction held on 9.11.1999. The authorities are bound to pass a speaking order before cancelling the highest bid.
Learned counsel for the State has opposed this argument stating that as per terms and conditions of the auction, right to cancel auction vests with the Auction Committee. The auction can be cancelled without assigning any reason, therefore, the order dated 15.1.2010 (Annexure-P-12) is legal and valid and has been passed by the authorities in accordance with law. It is further submitted by the State counsel that the petitioners have no locus standi to challenge the order passed by the Auction Committee by way of present writ petition.
I have considered the rival contentions of the parties. CWP No. 10772 of 2010 -4- Admittedly highest bid per se unless it is accepted by the competent authority and consequential sale certificate is not issued, does not grant the highest bidder right to property which is protected under Article 300A of the Constitution of India. It also does not mean that if the highest bid is not accepted by the competent authority either without assigning any reason or in an arbitrary or irrelevant reasons, highest bidder does not even acquire the right to assail the action of the competent authority. The said view cannot be sustained. The Full Bench of this Court in Subhash Chand Versus State of Haryana and others 2007(4) PLR 247 has categorically held that the highest bidder has a legitimate expectation to acquire ownership of the property, unless his bid is found to be suffering from any legal infirmities, the highest bidder has an indefeasible right to knock at the doors of this Court. He has right to question the legality of the decision of the competent authority on the ground that it is contrary to the Statutes or Rules or the Constitution. The refusal to accept the bid cannot foreclose the right of highest bidder to put the action of the competent authority to judicial scrutiny. I am of the definite view, in view of the law laid down by the Full Bench of this Court in the case of Subhash Chand (supra) that the petitioners have every right to challenge the order dated 15.1.2010 (Annexure-P-12 and P-12/T).
The next issue is whether the orders dated 15.1.2010 (Annexure- P-12 and P-12/T) are sustainable in the eye of law or not. The State enters into a contract in consonance with Article 299 of the Constitution of India. The right of the parties shall be determined by the terms of such a contract irrespective of the fact that one of the parties is a State or is a Statutory body. It is a known fact that the State while entering into a contract with an individual party invokes its executive power under Article 298 of the Constitution of India and its decision is assailable on the ground that it is CWP No. 10772 of 2010 -5- arbitrary or is de hors of the Article 14 of the Constitution of India and is contrary to the public law. The act of the State or its instrumentality cannot be whimsical and arbitrary. Even the acts of the State are subject to conditions of reason, fair play and public interest. The Apex Court in number of judgments has decided so. Reference can be made to the cases of (i) Kasturi Lal Luxmi Reddy v. State of J and K, 1980(4) SCC 1; (ii) Mahabir Auto Stores v. Indian Oil Corporation, 1990(3) SCC 752; (iii) Mahender Kumar Gupta v. Union of India, 1995(1) SCC 85 and (iv) Krishanan Kakkanth v. Government of Kerala, 1997(9) SCC 495.
The principle of equitable doctrine of promissory estoppel has been made applicable even against the State as against the private individual, even in the case where no valid contract was entered into between the parties. Even in the case where the Government makes a representation or a promise and an individual alters his position by acting upon such promise, the Government may be required to make good that promise and shall not be allowed to fall back upon the formal defect in the contract, though subject to well known limitations like Larger Public Interest. In this regard reference can be made to the case of Subhash Chand (supra) which reads as under :-
17.It is well known that the State, while entering into contracts with individual parties invokes its executive power under Article 298 of the Constitution and its decision is assailable on the ground that it is arbitrary or is de hors of Article 14 and/or is contrary to 'public law'. In other words, though the State or its instrumentalities are free to enter into a contract with any person yet they cannot act whimsically and their freedom to enter into business etc. is subject to the conditions of 'reason', fair play' and 'public interest' as observed by the Apex Court in a plethora of cases (Ref.:- (i) Kasturi Lal Luxmi Reddy v. State of J and K, 1980(4) SCC 1; (ii) Mahabir Auto Stores v. Indian CWP No. 10772 of 2010 -6- Oil Corporation, 1990(3) SCC 752; (iii) Mahender Kumar Gupta v. Union of India, 1995(1) SCC 85 and (iv) Krishanan Kakkanth v. Government of Kerala, 1997(9) SCC 495).
18.For these precise reasons the equitable doctrine of promissory estoppel has been made applicable against the Government, as against any other private individual, even in the cases where no valid contract in terms of Article 299 was entered into between the parties. Hence, if the Government makes a representation or a promise and an individual alters his position by acting upon such promise, the Government may be required to make good that promise and shall not be allowed to fall back upon the formal defect in the contract, though subject to well known limitations like Larger Public Interest. In this regard reference can be made to the views taken by the Hon'ble Supreme Court in:-
(i)Union of India v. Indo Afghan Ltd., AIR 1968 SC 718;
(ii)Sanctuary Spinning and Manufacturing Ltd. v. Ulhasnagar Municipal Council AIR 1971 SC 1021; and
(iii)K.C.P. Ltd. v. State Trading Corporation of India, 1995 Supplementary (3) SCC 466
19. The State, thus, has no dominus status to dictate unilateral terms and conditions when it enters into a contract and its action must be reasonable, fair and just and in consonance with the rule of law. (Ref. (i) Mahabair Auto Stores v Indian Oil Corporation 1990(3) SCC 752 and (ii) M/s Star Enterprises and others v. City and Industrial Development Corporation of Maharashtra Ltd.
And others 1990(3) SC 280). As a necessary corollary thereto, it is held that the State Government cannot refuse to confirm the highest bid without assigning any valid reason and/or by giving erratic irrational or irrelevant reasons."
Admittedly, no reason has been recorded in impugned order date 15.1.2010 (Annexures-P-12 and P-12/T), whereby the auction held on 9.11.1999 has been cancelled, in spite of the fact that the petitioners have deposited 25% of the bid amount within the stipulated period as per the terms CWP No. 10772 of 2010 -7- of the auction notice and have made an attempt to deposit the remaining amount even through the competent Court. The auction bid has been cancelled after a lapse of ten years, vide impugned orders. The action of the State Government is unreasonable, arbitrary and against the equitable doctrine of promissory estoppel. The State has no dominus status to dictate unilateral terms and conditions when it enters into contract and its action must be reasonable, fair, just and in consonance with the rule of law. In view of this, I hold that the State Government cannot refuse to confirm the highest bid without assigning any valid reason. In the impugned order, the State has declined the sanction of the highest bid merely by saying that it is the exclusive power of the Auction Committee to cancel the auction without assigning any reason. Such an unilateral act on the part of the State without recording cogent reasons is not sustainable in the eye of law being arbitrary, illegal and perverse.
In view of that, I set aside the impugned order dated 15.1.2010 and direct the competent authority to accord sanction to the bid in accordance with law. However, petitioners shall be bound to pay interest @ 12% p.a. on the amount of bid which remains to be deposited. In view of the above terms, writ petition is allowed.
No orders as to costs.
(PARAMJEET SINGH) JUDGE February 14, 2012 sjks