Balkar Singh vs State of Haryana

T.H.B. Chalapathi, J.—Evacuee land was sold in an auction by the Department of Rehabilitation on April 10, 1986. The land was also under lease with various persons at the time of auction. The petitioners in this writ petition participated and became the highest bidders in the auctions held on April 10, 1968, and April 30, 1968. The bids offered by the petitioners regarding the land in dispute had not been confirmed by the Settlement Officer (Sales) Before the auction was confirmed, some persons filed a Civil Writ Petition No. 1552 of 1968 on April 24, 1968, for quashing the auction and also to declare them as owners of the land that was sold in the auction. The said writ petition was pending till 1980 and on May 1, 1980, it was dismissed by this Court holding that since the lease in favour of the petitioners therein had been terminated in 1968 and since the lease period has already expired, the writ petition had become infructuous. After dismissal of the writ petition, the case was submitted to the Settlement Officer (Sales), who, by his order dated August 17, 1981, ordered the re auction of the land in dispute.

Aggrieved by the said order, the present writ petition has been filed by the petitioners challenging the same. The learned Counsel for the petitioners contended that the auction took place in the year 1968 and the petitioners deposited 1/4th of the bid amount and there was no reason or valid ground for not confirming the auction in favour of the petitioners and the petitioners are, therefore, entitled to have the auction confirmed in their favour and they have also prayed for putting them in possession of the property in auction. The learned A.A.G. Haryana argued that it is within the powers of the Settlement Officer to accept the bid or to decline the confirmation of the bid and he need not give any reasons for directing the reauction of the land and, therefore, there are no grounds to issue any writ and the writ petition is, therefore, liable to be dismissed.

There is no dispute that the evacuee land was put to auction under the Rules for Sale of Surplus Rural Property which includes surplus evacuee property. The procedure for sale of property for public auction has been laid down in Rule 5. The learned A.A.G., Haryana placed reliance upon clause (i) of Rule 5 which reads as follows :

"The Settlement Commissioner or other Officer shall not be bound to accept the highest or other bids and shall not be bound to disclose his reasons. Therefore, every bidder shall be bound by his bid and shall if he resiles from such bid, be liable to forfeit his deposit of earnest money. The decision of the Settlement Commissioner with regard to the forfeiture of the deposit shall be final."

Relying on this rule and also on two judgments of this Court, the learned A.A.G., Haryana contended that when the Settlement Officer directed reauction of the sale, the petitioners will not have any right to have the sale confirmed in their favour nor they get any right to be put in possession of the property sold in auction. A Division Bench of this Court in C.M. No. 4639 of 1991 in C.W.P. No. 14836 of 1990, Din Dayal and others v. State of Haryana and others, decided on October 8, 1991, held as follows:

"Undisputedly the petitioner was the highest bidder in the auction. The auction was subject to the approval by the respondents which was never effected. Neither the auction has been approved by the respondent nor the highest bid has been accepted.

Learned counsel for the petitioner contends that the respondents can refuse to accept the highest bid by passing a speaking order and for valid reasons. Nothing has been pointed out under which rule or provision or principle, reasons for refusal to accept bid are required to be recorded. It is a contractual right. Order is not a quasijudicial order but purely an administrative one and no reasons are required to be recorded. In view of the observations made above, the writ petition is dismissed. However, the response are directed to return the money deposited by the petitioner within one month."

The learned Assistant Advocate General has also relied upon the decision of this Court in Jassa Ram v. Deputy Secretary, RehabilitationcumSettlement Commissioner, Haryana and others, C.W.P. No. 3199 of 1977, decided on October 17, 1977, which relied upon an earlier decision of this Court in Kanwar Bhan v. Assistant Settlement Officer (Sales), C.W.P. No. 1371 of 1973, wherein it was held as follows :

"When a property is put to auction, it means that invitations are given to public to make offers of its purchase. Unless and until the bid given is either accepted or sanctioned by the Competent Authority, no complete contract of sale comes into being. In this case also since the authority competent to accept the bid or to sanction the auction had not done either of the things, the property in dispute could not be deemed to have been sold in favour of the petitioner. The acceptance of a bid or its non acceptance does not involve the exercise of quasijudicial functions and the authority concerned is under obligation to give any hearing to a bidder at the auction."

It is no doubt true that the highest bidder does not have any right of hearing either before confirmation or rejection of the offer but when it is within the powers of the Settlement Officer either to accept or reject any bid, in doing so, he must act judicially though discharging an administrative function. He cannot act arbitrarily. His acceptance or rejection must be based on reasonable grounds. The fact that no reasons need be disclosed as contained in clause (i) of Rule 5, does not mean that there need not be any existence of valid reason for rejecting or confirming the sale. A Full Bench of this Court in Surja Ram v. State of Haryana and another, 1984 RRR 104 (P&H) : AIR 1984 P&H 282, analysed and considered clause (i) of Rule 5 at length and observed as follows :

"Aanalysis of the aforesaid rule shows that it provides a detailed procedure for the sale of the property by public auction. Without dilating in detail on clauses (a) to (h), reference may straightway be made to clause (i), on the interpretation of which the fate of the case would depend. Under this subrule Settlement Commissioner or other Officer is not bound to accept the highest or other bids nor are they bound to disclose reasons therefor. The question that arises for consideration is whether the Settlement Commissioner or other Officer is also within his power to accept a bid without giving reasons. In my view the answer has to be in the negative and is available in the subrule itself. As earlier observed, under this sub rule, the Settlement Commissioner or other Officer, has an absolute right not to accept the highest or other bids and not to disclose reasons therefor, but refusing to disclose reasons can by no stretch of imagination be interpreted to mean that the Settlement Officer or other Officer is not bound to give reasons. There is difference between `not disclosing the reasons'' and `non giving of reasons''. In Black''s Law Dictionary the meaning of the word `disclose'' is to bring into view by uncovering, to expose, to make know, to lay bare, to reveal to knowledge, to free from secrecy of ignorance or make known. A thing can be disclosed only when it so exists, but in case it does not exist then the question of disclosure does not arise. By using the word `disclose'', the intention of the rulemaking authority is absolutely clear that while declining to accept the highest bid or other bids, the officer concerned is bound to give reasons and the only right available to him is not to disclose those reasons. Moreover, this nondisclosure of reasons, in my view, is meant for the bidders, i.e., that the Settlement Commissioner or other Officer is not bound to tell them as to on what grounds he has not accepted their bid. If the intention of the rulemaking authority had been to vest the officer concerned with a power to refuse to accept the highest bid without assigning any reasons, then instead of `shall not be bound to disclose his reasons'', the words would have been `shall not be bound to give reasons''. In this view of the matter, I hold that the Settlement Commissioner or other Officer is bound to record the reasons for declining to accept the highest or other bids. Once this conclusion is arrived at, there can be no gainsaying `that reasons have to be relevant and not whimsical or arbitrary''. As observed by their Lordships of the Supreme Court in Ramana Dayaram Shetty v. International Airport Authority of India, AIR 1979 S.C. 1628, `every order of the State or its functionary has to meet the twin test of reasons relevance''. They just cannot arbitrarily pass an order for any or no reasons. The officer concerned is duty bound under the Rules to record relevant legal reasons for refusing to accept the highest or other bids.

Further, the contention that no legal right vests in a highest or other bidder so as to entitle him to challenge an action of the appropriate authority in refusing to accept the highest or other bids, is not legally tenable. The aggrieved person whose right to the property as a result of nonacceptance of the highest bid, is being taken away, can certainly challenge the action on the ground that the order of the appropriate authority is arbitrary or has come in existence as a result of extraneous considerations and in case it is so proved, then the order of nonacceptance would certainly be liable to be quashed. The State Government or the appropriate authority can defend its action by disclosing reasons given for nonacceptance of the bid and if the same are found relevant, relief would straightway be declined. But there is no warrant for this proposition that even if, the order of the authority in not accepting the bid is arbitrary and does not disclose any reasons, then also the legality of the same cannot be challenged in a Court of law."

In view of the above Full Bench decision of this Court, I am of the opinion that the decision which was rendered by the Division Bench of this Court in C.W.P. No. 3199 of 1977 is no longer good law. Coming to the decision of this Court in C.M. No. 4639 of 1991 in C.W.P. No. 14836 of 1990, it is not a valid law as it is rendered per incuriam and the earlier Full Bench decision of this Court was not brought to the notice of the Division Bench which decided C.W.P. No. 14836 of 1990. In view of the Full Bench, decision of this Court, I am of the opinion that the decision rendered in C.W.P. No. 14836 of 1990 is not binding on me though the said decision was rendered subsequent to the Full Bench decision. I am bound to follow the Full Bench judgment of this Court.

I have examined the file produced by the learned A.A.G., Haryana. The Settlement Officer has not recorded any reasons for not accepting the bid and for not confirming the sale in favour of the petitioners. According to the Full Bench decision he is bound to record the reasons though he was not bound to disclose the same to the petitioners. The failure on the part of the Settlement Officer to record his reasons for not accepting the bid vitiates his order directing the reacution of the land.

In this view of the matter, the writ petition is liable to be allowed. I accordingly quash the order of the Settlement Officer dated August 17, 1981, and direct the respondents to confirm the sale and put the petitioners in possession of the land, on their depositing the entire bid amount within one month.