Punjab-Haryana High Court
Nirankar Singh vs State Of Punjab And Others on 10 July, 2012
Author: Mahesh Grover
Bench: Mahesh Grover
CWP No.19593 of 2011 (O&M) 1
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH
CWP No.19593 of 2011 (O&M)
Decided on : 10-07-2012
Nirankar Singh
....Petitioner
VERSUS
State of Punjab and others
....Respondents
CORAM:- HON'BLE MR. JUSTICE MAHESH GROVER Present:- Mr. Puneet Bali, Sr. Advocate with Mr. Abhinav Sood, Advocate for the petitioner Mr. Jaswinder Singh, DAG, Punjab Mr. Gurdip Singh and Mr. Chanderdeep Singh, Advocates for the respondent nos. 2 and 3 MAHESH GROVER, J The petitioner has invoked the jurisdiction of this Court under Article 226/227 of the Constitution of India questioning the action of the respondents in forfeiting the amount deposited by him pursuant to the auction proceedings conducted by the respondents for allotment of plots in which the petitioner was a successful participant.
The auction took place on 29.7.2011 and the petitioner made a bid of 62 crores which being the highest was accepted. According to the terms of the auction notice, 10% of the auction price was to be deposited at the fall of hammer, 15% within 30 days and 75% balance in five equated half yearly instalments. The letter of intent was to be issued to the successful bidder within seven days and letter of allotment within 90 days thereafter.
CWP No.19593 of 2011 (O&M) 2
The petitioner deposited a sum of Rs. 3.2 crores at the fall of hammer and another sum of Rs. 90 lakhs on 30.7.2011 but developed second thoughts regarding the availability of infrastructure and the feasibility of the project and thus requested the official respondents to refund the money deposited by him.
The request was not acceded to and instead a show cause notice dated 3.8.2011 was issued to the petitioner to pay the balance amount or face the consequences of forfeiture by virtue of an order passed on 18.8.2011 (Annexure P-4). Learned counsel for the petitioner contends that there is no provision for forfeiture of the amount and such clause could have become operative if the letter of intent or the letter of allotment has been issued to the petitioner which in this case has not been done and consequently the respondents who seek to rely on clause of proposed letter of allotment cannot do so.
Respondents have objected to the petition by saying that it is a contract and Court cannot exercise its jurisdiction under Article 226/227 of the Constitution of India and as such the unit is not maintainable as the petition has a civil remedy of questioning the action of the respondents if he is so aggrieved by filing an appropriate suit which may include proceedings for recovery as well. In support of the contentions which have been raised by the learned counsel for the respondents an elaborate reference has been made to the numerous judgments of the Hon'ble Supreme Court and other High Courts which have been mentioned in the reply itself.
As against this learned counsel for the petitioner has relied upon judgment of the Hon'ble Supreme Court titled as Yogesh Mehta Vs. CWP No.19593 of 2011 (O&M) 3 Custodian Appointed under the Special Court and others reported as (2007) 2 SCC 624 and Division Bench of this Court in CWP No.23204 of 2010 titled as Manmohan Kumar Garg and another Vs. The Assistant Estate Officer, UT, Chandigarh and others decided on 2.7.2012.
On due consideration of the matter, I am of the considered opinion that a constitutional Court while exercising its powers under Article 226/227 of the Constitution of India should not feel unusually fettered by the objections of the kind raised by the respondents. It is not necessary to throw a litigation into the throes of prolonged litigation if a matter can be adjudicated upon in the exercise of the powers of this Court under Article 226/227 of the Constitution of India. The Hon'ble Supreme Court in case titled as Century Spg. And Mfg. Co.Ltd. Vs. Ulhasnagar Municipal Council reported as (1970) 1 SCC 582 has held as under:-
"Merely because a question of fact is raised, the High Court will not be justified in requiring the party to seek relief by the somewhat lengthy, dilatory and expensive process by a civil suit against a public body. The questions of fact raised by the petition in this case are elementary."
Hon'ble Supreme Court while relying on aforesaid judgment in case titled as ABL International Ltd. And another Vs. Export Credit Guarantee Corporation of India Ltd. And others reported as (2004) 3 SCC 553 has observed as thus:-
"19. Therefore, it is clear from the above enunciation of law that merely because one of the parties to the litigation raises a dispute in regard to the facts of the case, the court entertaining such petition under Article 226 of the Constitution is not CWP No.19593 of 2011 (O&M) 4 always bound to relegate the parties to a suit. In the above case of Gunwant Kaur this Court even went to the extent of holding that in a writ petition, if the facts require, even oral evidence can be taken. This clearly shows that in an appropriate case, the writ court has the jurisdiction to entertain a writ petition involving disputed questions of fact and there is no absolute bar for entertaining a writ petition even if the same arises out of a contractual obligation and/or involves some disputed questions of fact."
Likewise in case titled as Noble Resources Ltd. Vs. State of Orissa and Anr. reported as AIR 2007 SC 119 the Hon'ble Supreme Court has held as under:-
"It is trite that if an action on the part of the State is violative the equality clause contained in Article 14 of the Constitution of India, a writ petition would be maintainable even in the contractual field. A distinction indisputably must be made between a matter which is at the threshold of a contract and a breach of contract; whereas in the former the Court's scrutiny would be more intrusive, in the latter the Court may not ordinarily exercise its discretionary jurisdiction of judicial review, unless it is found to be violative of Art. 14 of the Constitution. While exercising contractual powers also, the Government bodies may be subjected to judicial review in order to prevent arbitrariness or favouritism on its part. Indisputably, inherent limitations exist, but it would not be correct to opine that under no circumstances a writ will lie CWP No.19593 of 2011 (O&M) 5 only because it involves a contractual matter."
If the controversy raised before this Court is to be evaluated in terms of the contentions that have been raised by the respective parties then I am of the considered opinion that there is no clause for forfeiture of the amount in the eventuality of a person backing out after having participated in the auction proceedings. The Division Bench of this Court in CWP no. 23204 of 2011 (supra) has held that such an action in the absence of any forfeiture clause is not justified. The relevant observations of the Division Bench are as below:-
"Though, we have found that condition of forfeiture of the entire initial amount is in contravention of the provisions of Section 8-A of the Act as well Rule 14 of the Rules, but we would like to discuss the legality and validity of the forfeiture of the 25% of the auction amount in the light of the judgments as well. Recently, in Teri Oat Estates (P) Ltd. v. U.T.Chandigarh & others (2004) 2 SCC 130, considering the provisions of the Act, the Hon'ble Supreme Court held that the doctrine of proportionality has to be kept in view while passing the order of resumption. It was held to the following effect:
"40. The issue in the light of the decision of the Full Bench of the Punjab and Haryana High Court in Ram Puri v. Chief Commr., Chandigarh case (supra) as affirmed by this Court in Babu Singh Bains v. Union of India(1996) 6 SCC 565 may have to be considered from another angle.
41. By reason of the auction held, the land in CWP No.19593 of 2011 (O&M) 6 question has been sold in favour of the appellant. A letter of allotment has been issued in terms thereof. The appellant has been put in possession of the purchased property. In law he was entitled to raise constructions and in fact he has raised a six-storeyed building. He has paid a part of the first instalment and during pendency of the proceeding before the High Court has paid a substantial amount together with interest @ 12% p.a. as enhanced from time to time.
42. The respondents were entitled to interest on the unpaid amount @ 7% p.a. which in the event of non- payment was to be paid at a penal rate of 12% and subsequently enhanced to 15 per cent and then to 24 per cent, as well as on the amount of penalty to be levied thereupon. The entire amount was recoverable through the process of law. In a situation of this nature, having regard to the rival claims made by the parties, if the default is not absolutely wilful or a dishonest one but occasioned due to a situation which may be beyond one's control, the statutory right of the respondent in resuming the land may not be appropriate, if the entire dues stand discharged.
43. In terms of the provisions of the Act, the respondents are entitled to: (1) resumption of the land, (2) resumption of the building, and (3) forfeiture of the entire amount paid or deposited. Having regard to the extreme hardship which may be faced by the parties, the same shall not ordinarily be resorted to.CWP No.19593 of 2011 (O&M) 7
44. The situation, thus, in our opinion, warrants application of the doctrine of proportionality.
45. The said doctrine originated as far back as in the 19th century in Russia and was later adopted by Germany, France and other European countries as has been noticed by this Court in Om Kumar v. Union of India (2001) 2 SCC 386.
46. By proportionality, it is meant that the question whether while regulating exercise of fundamental rights, the appropriate or least restrictive choice of measures has been made by the legislature or the administrator so as to achieve the object of the legislation or the purpose of the administrative order, as the case may be. Under the principle, the court will see that the legislature and the administrative authority "maintain a proper balance between the adverse effects which the legislation or the administrative order may have on the rights, liberties or interests of persons keeping in mind the purpose which they were intended to serve".
Therefore, we find that deemed forfeiture of the amount of earnest money deposited in terms of Rule 5(ii) for failure to deposit 75% of the consideration amount violates the doctrine of proportionality as well. Thus the words appearing in Rule 5 (v) "and the payment made under sub-rule (ii) shall be forfeited" are illegal and consequently, are struck down. The terms of the agreement to be executed in terms of Rule 5
(iv) would be deemed to be amended to that extent as well." The case of the petitioner appears to be on a better footing, as CWP No.19593 of 2011 (O&M) 8 there is no clause of forfeiture existing vis-a-vis the extent of proceedings concluded between the parties.
Consequently, the Court finds the action of the respondents in forfeiting the amount to be unreasonable and hence unsustainable. However, the Court cannot be oblivious to the fact that the respondents have been put to unnecessary and avoidable unease on account of the action of the petitioner in backing out from the proceedings after depositing the initial amounts. This certainly is likely to result in pecuniary loss to them if they have to undertake the process afresh.
Accordingly to settle the equities and to discourage such practice which result in frustration of legitimate proceedings, the petitioner is burdened with costs of Rs.10 lakhs which shall be deducted from the amount which the respondents have forfeited. Let the remaining amount be refunded to the petitioner preferably within a period of six months.
Disposed of.
July 10, 2012 (Mahesh Grover) rekha Judge