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PETITIONER: LAXMIKANT & ORS.

       Vs.

RESPONDENT: SATYAWAN & ORS.

DATE OF JUDGMENT:       19/03/1996

BENCH: SINGH N.P. (J) BENCH: SINGH N.P. (J) SEN, S.C. (J)

CITATION:  1996 AIR 2052            1996 SCC  (4) 208  JT 1996 (3)   746        1996 SCALE  (3)30

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T N.P.SINGH, J.      This appeal  has  been  filed  for  setting  aside  the judgment of  the High  Court quashing  the resolution  dated 27.2.1981 of  the  respondent  -  Nagpur  Improvement  Trust (hereinafter referred  to as  the Trust)  and directing  the Trust  to   transfer  the   land   in   question   to   writ petitioner/respondent  (hereinafter   referred  to   as  the respondent) being the highest bidder.      The said  Trust had  framed a  scheme known as "Central Avenue Scheme"  and plot  No.57 in Circle No.7/12 was leased out to  C.P. Syndicate,  Nagpur. However, the aforesaid C.P. Syndicate on  30.10.1957 transferred  its right,  title  and interest in the lease-hold to the appellant No.1, Laxmikant. The other  appellants are brothers of appellant No.1. One of the conditions  imposed by  the  Trust  in  respect  of  the aforesaid lease  was  that  the  construction  should  start within four  years from  the date  of the agreement of lease and it should be completed within three years thereafter. As this condition was not complied with, a notice was issued to the appellants  alongwith other  defaulters as  to  why  the lease be  not cancelled.  Show cause  was filed on behalf of the  appellants  which  was  accapted  by  the  Trust  on  a condition that  the appellants  should make the construction on the  plot on  or before 30.6.1971. As there was a default on the part of the appellants, the allotment of the plot was cancelled on  11.1.1972. Again  representations  were  filed before the Trust but the plot in question was put on auction on  21.1.1974.  The  respondent  participated  at  the  said auction and  offered Rs.3,12,000/-  and he  was the  highest bidder till  the second  round of  the bid.  But before  the third round  of the  bid could  be held an order staying the auction was  received. There  is no  dispute that  the third round of  bid could  not be  held. However,  the  respondent deposited an  amount of Rs.31,200/as an earnest money as per

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conditions of the auction.      The writ  petition (W.P.No.102 of 1974) filed on behalf of the appellants was admitted on 11.3.1974. It appears that in the  meantime the  Trust took a decision to reinstate the allotments which had been cancelled due to non completion of the construction  over the  plots of  different lessees.  We were informed  that there  were  17  lessees  including  the appellants. It is an admitted position that the cancellation order in  respect of 16 lessees have been recalled and their allotments  have  been  reinstated  with  reference  to  the different plots  allotted in  their favour. On behalf of the appellants, it was stated that as the writ petition on their behalf was  pending, they were required to withdraw the writ petition,  so  that  further  action  could  be  taken.  The appellants withdrew  the said  writ petition  on  30.9.1980. Thereafter, a  meeting of the Board of the Trust was held on 27.2.1981 to consider the question as to whether the highest bid of the respondent be rejected and the plot be reinstated in favour  of the  appellants.  The  relevant  part  of  the resolution says:      "The Board,  therefore, decided  by      majority of  votes that the highest      bid of  Shri S.S.  Bhojwani,  Chief      Promoter,    Indus     Co-operative      Housing Society,  Ltd., received in      the auction  should be rejected and      the plot  should be  reinstated  in      favour of  the  original  allottees      Shri Laxmikant  Itkelwar and others      on   the    following   terms   and      conditions........" This very  resolution has  been quashed by the High Court by the impugned  judgment saying that as the respondent was the highest bidder  at the  auction aforesaid,  the Trust had to perform its  statutory obligation  under Rule  4(3)  of  the Nagpur Improvement  Trust Land Disposal Rules, 1955 which is as follows:      "Where it  is proposed to depose of      any  Trust  land  by  auction,  the      premium to be paid for the transfer      of  such   land  shall  be  put  to      auction after  giving due publicity      to the  date and  place of  auction      and the  Trust land to be auctioned      and the  land shall  be transferred      to the highest bidder subject among      other things,  to be  condition  of      payment of  ground rent  at two per      cent of the premium annaully:           Provided that  if, for  reason      to  be  recorded  in  writing,  the      Chairman or  the Officer authorised      by him in this behalf considers-      (a)  that   it  would   be  in  the      interest of  the Trust  to accept a      lower bid, he may accept such lower      bid  and   that   land   shall   be      transferred accordingly, or      (b)   that    no   fair    bid   is      forthcoming, he  may  withdraw  the      land from  the auction  of the  day      and put it up for auction on future      date to be announced later."                      (emphasis supplied) According to  the High  Court, as  sub-rule (3)  of  Rule  4

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aforesaid provides  that once  a decision  had been taken to depose of the land by auction, after the auction of the land it has  to  be  transferred  to  the  "highest  bidder",  no discretion was  left with  the trust  to refuse to make such transfer. The proviso to the said sub-rule (3) of Rule 4 provides that under conditions prescribed therein a lower bid may be accepted or the land in question may be withdrawn from auction.  It will  be proper to refer to the finding of the High Court in respect of the auction so held:      "It is  also clear  that unless the      third bid  is accepted, there is no      completed contract and the question      of enforcement  of any rights under      the contract  does not arise in the      present case.  If it  is brought to      the  notice   of  this  Court  that      statutory  Body   like  the  Nagpur      Improvement Trust  is  refusing  to      perform its  statutory  obligation,      then  certainly   this  Court   can      entertain a  petition to  find  out      whether that grievance be redressed      or not.  In my  opinion, therefore,      no such question of any enforcement      of a  contract or rights thereunder      arises in this case. The High Court having held that because of the order of stay, the third round of bid could not be held and as such there was no completed contract which could be enforced in Court, issued the impugned direction, directing the Trust to transfer the land in question to the respondent, who was the highest bidder at the auction aforesaid. We are not able to reconcile the findings of the High Court. If the public auction had not culminated to its logical end because the third round of bid was a must, then how the High Court came to conclusion that the respondent had acquired any right in respect of the plot in question? When sub-rule (3) of Rule 4 aforesaid requires the trust to transfer the land in question after the auction it assumes that a valid right has accrued to the highest bidder which has been accepted by the Trust. Sub-rule (3) of Rule 4 has to be read along with the proviso thereto referred to above which vests power to accept a lower bid or to withdraw the land itself from auction inspite of the highest offer being made by any person.      Apart  from   that  the   High  Court   overlooked  the conditions of auction which had been notified and on basis of which the aforesaid public auction was held. Condition No.3 clearly said that after the auction of the plot was over, the highest bidder had to remit 1/10 of the amount of the highest bid and the balance of the premium amount was to be remitted to the trust office within thirty days ’from the date of the letter informing confirmation of the auction bid in the  name of  the person  concerned’. Admittedly, no such confirmation letter  was issued to the respondent. Condition Nos. 5, 6 and 7 are relevant:      "5. The  acceptance of  the highest      bid shall  depend on  the Board  of      Trustees.      6.  The   Trust  shall  reserve  to      itself  the  right  to  reject  the      highest or any bid.      7. The  person making a hishest bid      shall have  no right  to take  back      his  bid.   The  decision   of  the

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    Chairman of  the Board  of Trustees      regarding acceptance  or  rejection      of the  bid shall be binding on the      said  person.   Before  taking  the      decision as above and informing the      same to  the individual  concerned,      if the  said individual  takes back      his bid, the entire amount remitted      as deposit  towards the  amount  of      bid  shall   be  forfeited  by  the      Trust". From a  bare reference  to the  aforesaid conditions,  it is apparent and  explicit that  even if  the public auction had been completed and the respondent was the highest bidder, no right had  accrued to  him till  the confirmation letter had been issued  to him.  The conditions  of the auction clearly conceived  and  contemplated  that  the  acceptance  of  the highest bid  by the  Board of  Trustees was  a must  and the Trust reserved  the right to itself to reject the highest or any bid.  This Court  has examined  the right of the highest bidder at  public auctions in the cases of Trilochan Mishra. etc. vs.  State of  Orissa & ors., 1971(3) SCC 153, State of Orissa and  ors. vs.  Harinarayan Jaiswal and ors., (1972) 2 SCC 36,  Union of  India & ors. vs. M/s Bhim Sen Walaiti Ram (1970) 2 SCR 594 and State of Uttar Pradesh and ors. vs. Vijay Bahadur  Singh and ors., (1982) 2 SCC 365. It has heen repeatedly pointed out that State or the authority which can be held  to be State within the meaning of Article 12 of the Constitution is  not bound  to accept  the highest tender or bid. The  acceptance of  the highest  bid is  subject to the conditions of  holding the  public auction  and the right of the highest  bidder has  to be  examined in context with the different conditions under which such auction has been held. In the  present case  no right had accrued to the respondent either on  the basis  of the  statutory provision under Rule 4(3) or  under the  conditions of  the sale  which had  been notified before the public auction was held.      The learned  counsel appearing for the respondent urged that in  view of the statutory provision of Rule 4(3) it was not open to the Trust to prescribe the conditions of auction referred to above. The respondent having participated at the said public  auction on basis of those conditions which were in  nature  of  supplementary  provisions  for  holding  the auction could  not be questioned by the respondent. The High Court, was  not justified  in quashing  the resolution dated 27.2.1981 of the Trust, to reinstate the Plot in question in favour of the appellants on conditions mentioned in the said resolutlon. That  decision had  been taken  by the  Board of Trustees which  power was  neither challenged nor could have been challenged.  As  such  no  right  had  accrued  to  the respondent which  could have been enforced by the High Court in  the   writ  jurisdiction.  Accordingly,  the  appeal  is allowed. The  impugned judgment  of the  High Court  is  set aside. In  the facts  and circumstances  of the  case, there shall be no orders as to cost.