Ram Niwas vs State of Haryana

R.K. Nehru, J.—This judgment disposes of C.W.P. No. 14403, 14405, 14743, 15134, 15107 and 1536 of 1990 since common questions of law and facts arise for determination therein. In these writ petitions, challenge has been made to the order of the Chief Administrator, Haryana State Agriculture Marketing Board, Panchkula, refusing to grant approval under Section 18 of the Punjab Agricultural Produce Markets Act, 1961, as applicable to the State of Haryana, to the auction of shop sites in New Anaj and Wool Market, Panipat held on March 26, 1990.

A reference to relevant facts has been made from the pleadings in C.W.P. No. 14403 of 1990 except where otherwise necessary. It is alleged in the petition that the petitioners are Commission Agents. The Haryana State Agricultural Marketing Board, Panchkula (for short, the Board) offered to sell shop sites in New Anaj and Wool Market Panipat by open auction. The auction was held on March 26, 1990 at 11.00 a.m. The details of sites, including the category, serial number and the general terms and conditions of auction sale were duly published. These are as under :

1) Any person can participate in open auction.

In case he desires to be present on behalf of any person he will have to produce a valid authority letter.

2) The participant of open auction will deposit Rs. 5000/ as earnest money before participation in the auction.

3) Successful bidder will have to deposit 25% of the price at the fall of hammer. The remaining 75% amount will be covered in six half yearly instalments together with 121/2% interest or lumpsum amount can be deposited with the Market Committee within one month of the issuance of allotment letter without any interest.

4) All rights to accept or reject the sale of plots vest in the Chief Administrator, HSAM Board who can reject any sale by auction without assigning any reason.

6) Contact Secretary, Market Committee, Panipat for more details. Other conditions will be announced at the time of auction.

The petitioners participated in the open auction. They were the highest bidders of various categories of shop sites. They deposited 1/4th of bid money. They allegedly raised some construction on the shop sites and were carrying on the business of commission agency. The auction sale was subject to confirmation by the Chief Administrator of the Board. The Chief Administrator did not grant approval to the auction sale as enjoined under Section 18 of the Punjab Agricultural Produce Markets Act, 1961, as applicable to the State of Haryana (for short, the Act) for unsustainable reasons.

Joint written statement has been filed on behalf of Market Committee, Panipat and the Board, respondent Nos. 2 and 3 respectively. A preliminary objection has been raised that the petitioner had filed a civil suit in the Court of Additional Senior SubJudge, Panipat for permanent injunction restraining the answering respondents from cancelling the licence issued by the Market Committee, and interfering in their peaceful possession of the shop/site No. 97 New Grain Market, Panipat. This fact has not been disclosed in the writ petition and this per se disentitles them from approaching this Court for the equitable relief under Articles 226/227 of the Constitution of India. The auction sale was subject to confirmation by the Chief Administrator of the Board. The Chief Administrator did not approve the auction sale and directed that 1/4th of the auction money deposited by the petitioners be refunded to them. Cheque bearing No. 0467, dated November 14, 1990, representing the 1/4th amount deposited by the petitioner was issued by the respondent No. 3 but the same was returned with the remarks that "petitioner has refused to accept the same." They petitioners neither applied for transfer of possession of the shop site to them nor it was ever delivered to them. Similar deference was taken in the civil suit filed by the petitioners. Since the bid of the petitioners was not accepted, no legal right accrued to them to continue their business in the disputed shop sites. The possession of the petitioners, if any, is unauthorised and illegal. Construction, if any, made by them is also unauthorised. The auction sale was not approved by the Chief Administrator of the Board as he found that there had been pooling with regard to every shop site by 4/5 persons and that the highest price offered by the bidder was quite less. The total number of plots offered for sale in auction were 30, out of which 10 were auctioned. The persons who had actually deposited the earnest money were 25 and the persons who participated in the auction were only 22. The reserve price of the shop was fixed at Rs. 2,25,000/ whereas the highest bid had gone upto Rs. 2,40,000/. This was the result of pooling. Auction sale of similar types of plots was conducted after a gap of 6/7 months of the auction sale conducted on March 26, 1990 and the highest bid offered was of Rs. 3,65,000/.

The writ petition came up for motion hearing before G.S. Mittal, J (as he then was) and H.S. Bedi, J. on March, 19, 1991, and the following order was passed :

"Civil Misc. is allowed.

Admitted (DB) very early.

In this bunch of Civil Writ Petition Nos. 14403, 14405, 14743, 15017, 15134 and 15636 of 1990, two of the petitioners have constructed their shops completely, whereas the others have not. The case of the petitioner(s) is that though they have been delivered possession of the shop sites by the Market Committee, Panipatrespondent No. 2 yet the respondents have raised objections for the construction of the same. Accordingly, we modify the earlier interim order to the effect that in case the possession of the shop sites have been delivered to the petitioner(s), the respondents are directed to hand over the possession of the premises to the petitioner(s) forthwith and the petitioner(s) would be entitled to raise constructions thereon after getting approval from the respondents."

The aforesaid interim order was challenged by Market Committee Panipat and the Board before the Apex Court in Civil Appeals No. 270275 of 1992 (arising out of SLPs (Civil) Nos. 1011110116 of 1991) and the same were disposed of by order dated January 22, 1991 observing thus :

"Leave granted.

Heard both the learned counsel and perused the records. We feel that the interest of justice demands that thee main writ petitions itself are disposed of at an earlier point of time. Having that in view, we set aside the impugned order and request the High Court to dispose of the main writ petitions within two months from the date of receipt of this order. In the meantime, statusquo as on today will continue. The appeals are disposed of accordingly."

It is how the matter has been placed before us for disposal.

Learned counsel for the petitioner made the following submissions :

(i) There was no justification for the Chief Administrator of the Board to refuse approval to the auction sale of the shop sites in the auction conducted on March 26, 1990;

(ii) The petitioner(s) entered into possession of the shop sites after auction and raised constructions thereon, thereby acted to their detriment, creating a legal right to purchase shop sites at the price offered by them.

We summoned the official record from the Chief Administrator of the Board. A perusal of the same reveals that after receipt of the papers from Market Committee, Panipat for obtaining approval under Section 18 of the Act, the same were laid before the Chief Administrator and he appended his note dated September 3, 1990 and the same reads thus :

"In view of less number of participants, it is not unviable uncompetitive bids which have been offered ? Moreover, the difference between the open auction price Reserve price is quite less. Besides, huge enhancement in land acquisition price has been ordered by the Courts. Is the increase in compensation spread on the auctioned plots also ? Approximately what would be the revised reserve price in view of enhanced compensation ? Pl. offer your comments in the light of above observations."

The Chief Administrator marked the file to the Additional Chief Administrator, who appended the following note date September 5, 1990 :

"Please put up with additional facts so that the query raised by worthy C.A. can be replied to."

The Additional Chief Administrator marked the file to the Senior Town Planer, who appended the following note dated September 6, 1990 and marked the file of the Additional Chief Administrator :

"It is pointed out that reserve price was got approved by C.A. Board at NP/185 ante. It is pointed out that it (Reserve price) includes all the enhancements of compensation paid by M.C. Panipat upto 31.3.1990. No allowance was made for the enhancement of compensation to be paid by the M.C. in future.

However, it has worked out that in NGM Panipat an increase of Rs. 1.00 lakh in compensation raises the reserve price of plot by 21 paise per s.ft. app. No enhancement has been paid by M.C. Panipat after 31.3.1990, but on the basis of calculations submitted by L.A.O.(P), sanction for payment of Rs. 25,13,337/17 has been accorded. It''ll raise the reserve price by Rs. 5.28 per s.ft. The cost of plot measuring 20''x85'' will be increased by Rs. 8976/ and that of plot of size 20''x50'' by Rs. 5280/.

It is pointed that No. of shop plots in NGM were 170 against 60 old licences operating at present. Almost all the old licencees have now been allotted plot at confessional price. Any auction in future is not likely to fetch highly competitive price because of less competition and in order to fetch high price. No. of auction will need to be arranged spread over a longer period.

It is pointed out that open auction on 26/3/90 was held in unfavorable and odd circumstance created by strict opposition of old licencees who were bent upon foiling the auction proceedings. So only 10 plots were sold out/could be auctioned, against 30 plots offered for sale. The bidders deserve appreciation.

The price fetched in open auction is more than the reserve price then applicable and the reserve price worked out today after adding the incidence of enhanced compensation sanctioned for payment. (Reserve price comes to Rs. 2,31,676/ for plot size 20''x85'' and Rs. 1,36,280/ for plot of size 20''x50'').

It is pertinent to mention here that as per terms and conditions of allotment, incidence of enhancement in compensation announced by any Court of law is recoverable from the allottees who are allotted plots in draw of lots at fixed price (concessional/reserve price), but it is not recoverable from those allottees who are allotted plots in open auction."

Submitted with above observations for favour of further order please."

The Additional Chief Administrator appended the following note dated September 18, 1990 and submitted the file to the Chief Administrator :

"Reference C.A.''s observation at NP242/23. The matter has been further examined by STP and his comments are available in the preceding note. I have been informed that while calculating reserve price the enhancement to be shared by the plots sold through auction is to be borne by the Market Committee. However, in respect of other allottees, the enhancement component falling to their share is distributed pro rata. Since that letter of allotment, offering plots at reserve/concessional price indicate only a tentative price for such plots, the enhancement falling to their share is recoverable as and when it falls due. Since the highest bid in the respect of each plot offered for sale through auction has been above the reserve price fixed at the relevant time, it will be appropriate to accord approval for the sale of these plots. However, we may consider revising our reserve price formula to take into account any future enhancements which might accrue after the auction. In my view, the reserve price should be stepped up by 10% (as a contingency measure) to take into account these enhancements and increased litigation in the acquisition of land.

C.A. may kindly see it for further orders."

The Chief Administrator marked the file to Additional Chief Administrator/Senior Town Planner with the following note dated September 18, 1990 :

"Please speak."

The Senior Town Planner appended the following note dated October 1, 1990 and marked the file to the Chief Administrator :

"Discussed with C.A. Board on 1.10.1990. It was clarified that the reserve price worked out on the basis of approved formula of the Board does not take into account the incidence of enhancement in compensation in future. Also there is no clause in the allotment letter for the recovery of enhanced compensation from those persons who purchase plots in open auction.

In the present case, the difference between reserve price and highest bid in open auction held on 26/3/90 is too little to compensate the incidence of enhanced compensation announced/likely to be announced by the Court of law.

Moreover, the competition was almost absent at the time of open auction. 30 plots were advertised for auction there were 22 competitors/participants in draw of lots and only 10 plots could be put to auction. Highest price was just above the reserve price. Sale of plots, if approved, may be rejected."

S.F.O. Please."

The Chief Administrator thereafter passed the following order dated October 3, 1990 :

"Yes. Fresh auction be also fixed."

In the light of the order of the Chief Administrator of the Board dated October 5, 1990, reproduced supra, the Executive Officer and the Secretary of Market Committee, Panipat were informed that approval to the open auction of shop sites in the New Anaj and Wool Market held on March 26, 1990 had not been granted under Section 18 of the Act.

Section 18 of the Act is in the following terms :

"18. Incorporation of Committees : Every committee shall be a body corporate as well as a local authority by such name as the State Government may specify in the notification establishing it, shall have perpetual succession and a common seal, may sue and be sued in its corporate name, and shall subject to the provisions of section 32, be competent to acquire and hold property, both moveable and immovable to lease, sell or otherwise transfer any moveable and immovable property which may have become vested in or been acquired by it, and to contract and to do all other things necessary for the purpose for which it is established :

Provided that no committee shall permanently transfer any immovable property except in pursuance of resolution passed at a meeting specially convened for the purpose by a majority of the Committee and with prior approval of the Chief Administrator."

Proviso to the Section says that the Market Committee can permanently transfer any immovable property by passing a resolution at a meeting specially convened for the purpose by a majority of not less than threefourth of its members and with prior approval of the Chief Administrator. In the instant case, the Chief Administrator of the Board, after examining the factual position, viz., the manner in which the auction was conducted and pooling of the participants (including the petitioners), refused to grant the approval to the transfer of shop sites. The approval was refused for sound reasons as the action sale was not in public interest.

Now we deal with the submission of the learned counsel for the petitioners in seriatim. The first submission is devoid of any merit. The general terms and conditions of auction sale of shop sites were duly publicized. One of the terms and conditions of the auction sale is to the effect that "all rights to accept or reject the sale of plots vest in the Chief Administrator, who can reject any sale by auction without assigning any reasons." This condition is in conformity with the provisions to Section 18 of the Act. The participants in the open auction cannot be allowed to urge that they are not bound by the condition of auction sale which is inconvenient. The auction sale was subject to the prior approval of the Chief Administrator of the Board. The Chief Administrator refused to accord approval to the auction sale for the reasons detailed supra. The Chief Administrator has given reasons for refusing to accord his approval to the auction sale. Relevant reasons have been given for refusing to accord approval to the auction sale. It cannot be suggested that reasons for refusing to accord approval to the auction sale have not been given. Learned counsel for the petitioner relied upon a Full Bench judgment of this Court in Surja Ram v. State of Haryana and another, 1984 PLJ, 282 : 1984 R.R.R. 104, and the apex Court''s judgment in M/s Star Enterprises etc. v. City and Industrial Development Corporation of Maharashtra Ltd. and others, 1990(2) RLR 1.

In Surja Ram''s case (supra), a Full Bench of this Court was considering the scope and ambit of Rule 5 of the Rules for sale of Surplus Rural Properties. One of clauses pertaining to procedure for sale of property by public auction postulated that the Settlement Commissioner or any other officer empowered to sell such property by public auction was not bound to accept the highest or other bids and was not bound to disclose the reasons for nonacceptance. The Full Bench opined that irrespective of the provisions in the Rules, the Settlement Commissioner was bound to record reasons for refusing to accept the highest bid.

In M/s Star Enterprises case (supra), the City and Industrial Development Corporation of Maharashtra Ltd. had invited tenders for the disposal of specified plots. The appellants before the apex Court had given the highest tender for certain specified plots but their bid was not accepted. The action of the City and Industrial Development Corporation of Maharashtra Ltd. was challenged on the ground of arbitrariness. The writ petition was dismissed in limine by the High Court of Bombay. One of the grounds pressed into service by the appellants was that when the highest offer of the type in question in the case was to be rejected, sufficient reasons must have been given by the appropriate authority. This submission was appreciated by their Lordships of the apex Court, but on merits it was found that the test approved by the apex Court in that case was not to be applied to the facts of that case and the order of the High Court of Bombay dismissing the writ petition in limine, was upheld.

We fail to understand how the ratio of the aforesaid two judgments helps the petitioners on the proved facts of the instant case. As observed earlier, relevant reasons for refusing to accord approval to the auction sale have been recorded by the Chief Administrator. Some of the bidders, including the petitioners, had pooled together and they offered bid only for 10 of the shop sites. The offer was slightly more than the reserve price. The Chief Administrator found that the highest bid offered at the open auction of shop sites was low and if the shop sites were sold at the price, in fact the Board would suffer loss, because no provision had been made, when the original reserve price was fixed for the escalation in price of land in the event of enhancement of compensation by the higher Courts in the acquisition proceedings.

The second submission is also equally untenable. We fail to understand the rationale of the argument. The petitioners entered into possession of the shop sites illegally and thereafter raised construction without any sanction from the competent authority. Apprehending their dispossession, they moved the civil court for injunction restraining the respondents from interfering in their possession. On the strength of the order from the civil court, they succeeded in retaining the possession of the disputed sites. They cannot be allowed to urge that the rank trespasser is entitled to the protection of the Court on the ground that after having illegally entered into possession, they raised the construction on the disputed property and they were not stopped. No amount of acquiescence will legalise the act which is otherwise illegal.

For the reasons stated above, these writ petitions fail and are dismissed with costs. Counsel''s fee is assessed at Rs. 2,000/ in each case.

Petitions dismissed.