Sukhmohinder Singh vs Union of India

H.S. Bedi, J.—The facts giving rise to the petition are as under :

Respondent No. 6, Prahlad Singh purchased property No. 92/5, Patiala, in an auction held on 15th May, 1961 making the highest bid of Rs. 12,175/. 10% of the auction bid was deposited by him at the spot as earnest money. The confirmation of the sale was conveyed to him on 21.8.1961 and he was required as per Rules to pay the remaining purchase price within 15 days thereafter. Respondent No. 6, however, instead of depositing the balance price in cash adopted the alternative permissible course and associated the compensation claim of one Thakari Bai and requested the department to adjust that claim towards the sale price. The department thereafter issued a sale certificate to respondent No. 6 on 16.1.1962. It appears that there was some complaints regarding the genuineness of the claim of Thakari Bai and on investigation, it was found that in fact there was no claim standing in her name. The department accordingly lodged a report with the police and the petitioner as also some of the employees of the department were tried and convicted under various sections of the Indian Penal Code and on the proceedings having become final upto the High Court level, respondent No. 6 underwent a term of imprisonment as well.

It appears from the pleadings that when the department found that the claim of Thakari Bai was in fact not available to respondent No. 6, it moved for the cancellation of the sale certificate issued to the said respondent but simultaneously gave him another opportunity to make good the shortfall. The respondent, however, declined to pay the balance amount and insisted that the claim of Thakari Bai being genuine required to be adjusted. This would be clear from a joint reading of annexures P9 to P13. Keeping in view the recalcitrant attitude of respondent No. 6, the Deputy Chief Settlement Commissioner accordingly vide orders, dated 27.12.1962, annexure P14, to the petition, cancelled the conveyance deed as also the sale certificate issued in favour of the respondent and remitted the case to the subordinate authorities, observing that the order would not affect the right of Prahlad Singh to get the amount of the association adjusted from the claim of Thakari Bai provided the association was proved to be genuine. This rider was apparently made because at that stage, the matter regarding the compensation claim of Thakari Bai was sub judice and no final decision had been taken thereon. It is further clear from the written statement filed by the official respondents that some time in the year 1977, on the criminal proceedings having finally terminated, respondent No. 6 made an application before the authorities for finalising the case of the disputed property in his favour after allowing him to deposit the remaining amount of Rs. 10957.50. It appears that the deposit was actually made and the petitioners who had been allotted the disputed property vide annexure P5 way back in 1955, thereafter moved the authorities that the permission to deposit the balance amount should not be allowed to respondent No. 6, at this belated stage and for the additional reason that a fraud had admittedly been committed by him on the department. Vide annexure P2 dated 13.9.1978 the competent authority declined to interfere, and ordered the acceptance of the balance amount. Aggrieved by the order aforesaid, the petitioners filed an appeal before the Settlement Commissioner, Punjab, who set aside the order annexure P2 vide annexure P3 dated 22.2.1979 and directed that the property in dispute be disposed of according to Rules. Respondent No. 6 thereafter filed a revisionpetition before the Chief Settlement Commissioner, who, vide his order dated annexure P4 declined to interfere. The matter was thereafter taken by respondent No. 6 under section 33 of the Displaced Persons (Compensation & Rehabilitation) Act, 1954 (hereinafter called ''the Act'') to the Financial Commissioner, Punjab, exercising the powers under the section. This petition was allowed vide order dated 28th November, 1980, annexure P1 to the petition which has now been impugned before me.

The learned Financial Commissioner while setting aside the orders of the two subordinate authorities took the view that under subrule Rule 90 of the Displaced Persons of (Compensation & Rehabilitation) Rules, 1955 (hereinafter called `the Rules'') it was incumbent upon the Regional Settlement Commissioner to call upon the defaulting respondent to make good the shortfall on the claim of Thakari Bai having been found to have been false. He was also of the view that as the matter had been remanded by the Chief Settlement Commissioner vide orders dated 27.12.1962, annexure P14, respondent No. 6 was entitled to an opportunity of making good the deficiency in the amount payable by him.

The decision of this case would hinge on an interpretation of sub rules (8) to (15) of Rule 90. Subrule (8) provides that at the fall of hammer, an initial deposit by way of earnest money would be deposited with the Officer conducting the sale. Subrule (1) provides that on the initial deposit having been accepted the bid made would be approved by the competent authority and subrule (11) provides that the intimation of the approval shall be given to the highest bidder in the manner stipulated within a period of 15 days of this approval, the said period being subject to extension, and that the payment shall be made in cash within the aforesaid stipulated period. Subrule (12) gives the option to the highest bidder to get the balance of the purchase money adjusted against the compensation payable to him in respect of any verified claim within a specified period. Sub rules (13) to (15) which are relevant are reproduced below:

"(13) If the Regional Settlement Commissioner on scrutiny of the compensation application of the auction purchaser or such other persons as he may have associated with him finds that a further sum is due to make up the purchase price, he shall send an intimation to that effect to the auction purchaser calling upon him to deposit the balance in cash or to make up the difference by associating other persons having verified claims within fifteen days of the receipt of such intimation and where such other persons are associated, the provisions of subrule (12) shall so far as may be, apply.

(14) If the auction purchaser does not deposit the balance of the purchase money within the period specified in subrule (11), or does not make an application for the payment of compensation within the period specified in subrule (12) or if the net compensation admissible to the auction purchaser and to his associate claimants, if any, is found to be less than the balance of the purchase money and the auction purchaser does not make up the deficiency as provided in subrule (13), the initial deposit made by the auction purchaser under subrule (8) shall be liable to forfeiture and he shall not have any claim to the property.

(15) When the purchase price has been realised in full from the auction purchaser, the Managing Officer shall issue to him a sale certificate in the form specified in Appendix XXII or XXIII, as the case may be. A certified copy of the sale certificate shall be sent by him to the Registering Officer within the local limits of whose jurisdiction the whole or any part of the property to which the certificate relates, is situated. If the auction purchaser has associated with himself any displaced person having a verified claim whose net compensation is to be adjusted in whole or in part against the purchase price the sale certificate shall be made out jointly in the name of all such persons: and shall specify the extent of interest of each in the property :

Provided that if every such displaced person who has associated himself with the auction purchaser sends an intimation in writing to the Regional Settlement Commissioner that the sale certificate may be made out in the name of the auction purchaser, the sale certificate may be made out in the name of the auction purchaser.

Mr. K.S. Cheema, learned counsel for the petitioners has urged that subrule (13) really does not come into play in the present case as there had been noncompliance with sub rule (12). He has urged that after the initial deposit of 10 per cent was made, the balance of the purchase money was to be deposited either in cash or adjusted against a verified claim as provided by subrules (11) and (12) and it was only after the compliance with these sub rules had been made that recourse could be made to sub rule (13) in case some further sum was found due. He has also urged with reference to subrule (14) that once it was found that there has been noncompliance with subrules (11) to (13) the auction purchaser would have no further claim to the property. On the question of locus standi that had also been raised before the authorities below but not finally decided by the learned Financial Commissioner, he has stated that his client was allotted the property as far back as in 1955 and continues to be in occupation thereof till today which makes his client a deeply interested party.

Mrs. Charu Tuli, learned AAG has urged while supporting order Annexure P1 that subrule (13) itself postulated an opportunity to the auction purchaser to make good the shortfall and that having not been done, the order had to be maintained. She further urged that vide annexure P14 dated 27.12.1962 respondent No. 6 had been granted an opportunity to make good the deficit and, as such, the deposit sought by the department in 1977 was perfectly in order.

I have considered the arguments of the learned counsel for the parties and find that the petition must succeed. The interpretation put by the learned Financial Commissioner on subrule (13) cannot be sustained. It is clear that this subrule would come into the picture only after there has been full compliance with subrules (11) and (12) and if some further sum was found due, then and then alone could recourse be made to subrule (13). It appears to me that subrule (13) is intended to cover situations where some shortfall has been occasioned due to a miscalculation or some bona fide mistake made by the department or the auction purchaser but certainly not in a case where the shortfall has been occasioned due to the fact that the auction purchaser sought to cheat the department by tendering a claim in terms of subrule (12) knowing it to be nonexistent and fraudulent. It is also pertinent to note that despite the claim of Thakari Bai having been found to be false, the department in good faith gave a number of opportunities to respondent No. 6 to deposit the amount in cash as would be clear from annexure P10 to P13. In reply to a notice calling upon him to pay the balance amount, respondent No. 6 vide annexure P12 dated 14.6.1962 declined to do so and still insisted that the claim of Thakari Bai was perfectly genuine. It would also be clear from these annexures that the order annexure P14 cancelling the sale certificate as also the conveyance deed was passed as a last resort as respondent No. 6 declined to pay the balance amount in cash. In view of these facts, even if the interpretation of the state counsel is accepted, it appears to me that there has been substantial compliance with subrule (13) as well as, the department had repeatedly called upon respondent No. 6 though unsuccessfully to make good the shortfall after having found the claim of Thakari Bai to be false.

The argument of the state counsel that as the matter had been remanded by the Deputy Chief Settlement Commissioner vide annexure P14 while setting aside the sale certificate and the conveyance deed issued in favour of respondent No. 6, an opportunity ought to have been yet again granted to the said respondent to make good the deficit, is again without force. It would be clear from order annexure P14 and the portion specifically referred to in the earlier part of the judgment that the benefit of adjustment was to be given in favour of respondent No. 6 only from the association of the claim of Thakari Bai if it was proved to be genuine as at that stage, there had been no final determination of the veracity of her claim. Admittedly there was no permission granted to respondent No. 6 to deposit the balance amount in cash. As the claim was subsequently confirmed as being fraudulent there was no occasion to allow the said respondent to deposit the amount in cash instead.

The further argument of the respondent that the sale by way of auction had not been set aside by the Chief Settlement Commissioner vide annexure P14 and as such continued to subsist is also of no avail in view of the clear provisions of subrule (14) that in case there had been noncompliance with subrules (11) to (13) of Rule 90, the auction purchaser so defaulting would have no claim to the property. In my view the implication of this rule is that although there is no specific order cancelling the sale yet as respondent No. 6 can have no claim to the property, the sale is also deemed to be cancelled.

Much argument was raised by Sh. Patwalia, learned counsel for respondent No. 6, that as the petitioners had not raised any objection in terms of Rule 92 at the time of the sale in 1961, they had no locus standi to challenge the transfer in favour of respondent No. 6. I am, however, of the view that in the present case, the petitioners are not challenging the sale made in 1961 but the permission granted to respondent No. 6 to deposit the balance amount in the year 1977, the claim of Thakari Bai having been finally adjudicated upon and found to be fraudulent. It is also relevant that the petitioners were allotted the disputed property as far back as in the year 1955 and as such, have a deep and vested interest in determining its fate. Mr. Cheema has also relied on the provisions of Section 24 of the Act and subrule (4) of Rule 92 and argued that the Chief Settlement Commissioner or the Commissioner, as the case may be, can take suo motu action to set aside a sale if it is found fraudulent and which has resulted in substantial injury. A joint reading of the section and Rules do indicate that wide powers are given to the authorities to set aside the transactions which are fraudulent. Mr. Cheema is, in my view, right in urging that even assuming that the petitioners had no locus standi at this stage to challenge the auction, even then the authorities, could act suo moto on information having been provided to them, and as such, having so acted on the information provided by the petitioner, the matter could be gone into at this moment. The question of locus standi was raised before the subordinate authorities and decided in favour of the petitioners but no such argument appears to have been made before the learned Financial Commissioner. I, therefore, do not deem it proper in the facts and circumstances of the case, to dispose of this matter after a lapse of so many years on the ground of locus standi.

Mr. Patwalia has finally urged that in case the petition is to be allowed, the money deposited by his client should be refunded with interest. The argument of the learned counsel does indeed reflect creditably on his courage. It is to be noted that the initial deposit on the fall of hammer was made in the year 1961 and respondent No. 6 contumaciously continued to hold out till 1977 that the claim of Thakari Bai being genuine should have been adjusted. It appears that when all avenues had failed that respondent No. 6 finally in the year 1977 decided to make the balance deposit. It is, therefore, apparent that respondent No. 6 attempted to cheat the department and to direct that the money deposited by him after his attempts to do so were unsuccessful, should be refunded to him with interest, would be to add insult to injury.

For the reasons recorded above, the present petition is allowed, annexure P1 is quashed and a direction is issued to the official respondents to dispose of the property in terms of the Rules. It is further directed that the amounts deposited by respondent No. 6 shall be refunded to him as no order with regard to these amounts has been made as required by subrule (14) of Rule 90. The amounts shall be refunded within a period of four months from the receipt of a copy of this judgment. There will be no order as to costs.