REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVILAPPEAL NO.   5177     OF 2010 (Arising out of S.L.P. (C) No.15873 of 2006)

Rakesh Kumar Goel etc.              …..Appellants

Versus

U.P. State Industrial Development  Corporation Ltd. & Ors.                        ….Respondents

J U D G M E N T

AFTAB ALAM,J.

1. Leave granted.

2. On the writ  petitions filed by the UP State Industrial  Development  

Corporation  (respondent  no.1)  the  Allahabad  High  Court  set  aside  the  

auction sale of two pieces of land made in favour of the appellants. The High  

Court held that the auction sale of the two plots was a nullity because in  

violation of rule 285-D of the UP Zamindari Abolition and Land Reforms  

(UPZALR) Rules, 1952 the appellants did not deposit one fourth of their bid

amounts immediately  on the conclusion of the auction, but  deposited the  

requisite amounts on the following day. Having thus held the auction sale  

legally untenable, the High Court did not advert to the other circumstances  

and the manner in which the auction sale was held.  

3. The  appellants  came  to  this  court  taking  the  plea  that  they  had  

deposited one fourth of their bid amounts on the day the auction was held  

and the decision of the High Court was based on a patent error of law. Even  

while  challenging  the  judgment  of  the  High  Court,  the  appellants  were  

anxious to not enlarge the issues and to confine the case to the very limited  

question whether or not the requisite amounts in terms of rule 285-D were  

deposited on the date of the auction. But, earlier in course of hearing of the  

case, we came across certain disturbing features that compelled us to ask the  

State Government to bring on record all the relevant materials concerning  

the auction sale of the two pieces of land in question. And now, the more we  

examine the facts of the case the more we feel dismayed and distressed. It is  

plainly a case of appropriation of large areas of public/government land by  

some  very  unscrupulous  people  both  outside  and  inside  the  State  

Government acting in cahoots. And we have reasons to fear that this is not  

an isolated case.

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4. The two pieces of land that are at the centre of the dispute are plot  

nos.2/1 & 2/2 situated in the Industrial Estate, Sahibabad, in the district of  

Ghaziabad,  UP.  The  two  plots  are  owned  by  the  Uttar  Pradesh  State  

Industrial Development Corporation (UPSIDC). Plot no.2/1 was allotted by  

the UPSIDC to M/s Bramic Suri Private Limited (BSPL) and plot no.2/2 to  

M/s Suri Asbestos Private Limited (SAPL). These two plots were purported  

to be purchased by Rakesh Kumar Goel (one of the two appellants) and M/s  

Moti Board Industries Private Limited, represented by its Director, Moti Lal  

Goel (the other appellant) in an auction sale held by the revenue authorities  

of the State Government. In course of hearing of the case, on our direction,  

the State of UP (respondent no.3) produced all the documents concerning the  

auction proceedings in respect of the two plots. Those were taken on record  

as “Additional Documents- Vol. 8”, (relating to plot no.2/1) and “Additional  

Documents-  Vol.  9”, (relating to plot no.2/2).  The following narration of  

facts is on the basis of the documents as contained in the two volumes.

5. BSPL had dues of Rs.1,55,309.85 plus interest @ Rs.26.38 per day  

from January 12, 1991 under the Employees State Insurance Act, 1948. The  

Regional  Director,  ESI  on  December  13,  1991  sent  a  certificate  to  the  

Collector,  Ghaziabad  under  section  5  of  the  Revenue  Recovery  Act  for  

recovery of the dues. In pursuance of the certificate the Additional Collector,  

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Ghaziabad issued two proclamations on May 12, 1992, one for attachment  

under sections 284/286 of the UP Zamindari Abolition and Land Reforms  

Act, 1950 and the other restraining ‘the defaulter’ (BSPL) from selling or  

transferring the plot in any manner to anyone or from creating any charge on  

it. The service report of the proclamations, scribbled in hand on their reverse  

sides, simply said that, on going to the site the firm was found closed. The  

chowkidar declined to take copies of the proclamations. The copies of the  

proclamations were, therefore, affixed to the gate of the premises in presence  

of witnesses and it was announced in a loud voice that the premises, plot  

no.2/1 was under attachment for non payment of government dues. The next  

step in the proceedings was the issuance of the Sale Proclamation by the  

Additional Collector. In the Sale Proclamation it was stated as follows:

“Permission  has  been  granted  for  the  sale  of  the  above  mentioned property under Section 284 (or Section 286) of the  Uttar  Pradesh  Zamindari  Abolition  and  Land  Reforms  Act,  1950 on account of the arrears of Rs.1,29,048.35, hence it is  hereby ordered that the sale of the aforesaid property will be  held in the forenoon (or in the afternoon as the case may be) of  15.6.1992 at the Tehsil premises. Plot No. 2/1, Site No.4, [full plot along with road].

[Please  write  here that  the land will  be sold in an un- encumbered state or encumbered state under Section 284 and  write  such  other  particulars  which  the  collector  deems  necessary]”

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6. The Sale  Proclamation is  undated but  its  service  report,  written  in  

hand  on  its  reverse,  is  dated  June  5,  1992.  The  service  of  the  Sale  

Proclamation  was  also  effected  in  the  same  way  as  the  earlier  two  

proclamations, that is to say by affixing a copy of the proclamation to the  

gate of the premises and by making announcement in a loud voice that the  

property will be auction sold on the specified date and asking the people to  

come for the auction in large numbers.     

7. On June 9, 1992 a petition was filed on behalf of BSPL requesting the  

Tehsildar,  Dadri  (Ghaziabad)  for  grant  of  some time for  payment  of  the  

government dues for the recovery of which the auction sale proclamation  

was issued. The petition submitted by the BSPL lies in the file of the auction  

proceeding but apparently no notice was taken of it. It seems that Canara  

Bank from where BSPL had taken a loan also got a wind of the auction  

proceedings  concerning plot  no.2/1.  On June 10,  1992,  the  Canara  Bank  

wrote  a letter  to  the ADM (Finance),  Ghaziabad stating that  Site  4,  plot  

no.2/1,  Ghaziabad  was  mortgaged  in  its  favour  as  security  for  the  loan  

advanced to BSPL. The letter further stated that the bank had the first charge  

over the land in question and requested the ADM not to proceed with the  

proposed auction sale.

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8. At  this  stage  BSPL  took  the  matter  to  the  court  and  filed  a  writ  

petition (W. P. no.22295 of 1992) in the Allahabad High Court for quashing  

the Sale Proclamation fixing the auction sale of plot no. 2/1 on June 15,  

1992. A photostat copy of the Sale Proclamation was annexed to the writ  

petition marked as Annexure 1. Along with the writ petition a stay petition  

was also filed in which a prayer was made in the following terms:   

“It is, therefore, MOST RESPECTFULLY PRAYED that this  Hon’ble  Court  may  very  graciously  be  pleased  to  stay  the  operation of the impugned Auction Certificate (Annexure No.1  to the writ  petition)  issued by the respondent No.3—through  which the date of auction has been fixed for 15.6.1992, during  the pendency of the present writ petition before this Hon’ble  Court ……………”   

9. On June 12, 1992 the High Court granted ad interim stay in favour of  

the writ petitioner, BSPL. (We may state here that on these facts being stated  

before us in course of hearing of the case, we summoned the original record  

of the writ petition from the Allahabad High Court and verified the facts  

from the original record). A certified copy of the order was produced later  

on but there is sufficient evidence to show that before the date fixed for the  

auction, the revenue authorities at Ghaziabad were informed about the stay  

order passed by the High Court through the lawyer’s certificate.

10. At  this  stage,  we  may  advert  to  the  other  plot  no.2/2,  which  was  

allotted  by  the  UPSIDC to  SAPL.  The  material  facts  and circumstances  

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concerning the auction sale of this plot are very similar to what is stated  

above in respect of plot no.2/1. SAPL had dues of Central Excise amounting  

to  Rs.4,53,541.92.  For  recovery  of  the  dues,  Superintendent  of  Excise,  

Range I, Sahibabad, issued a certificate to the Collector, Ghaziabad, under  

section 11 of the Central Excise & Salt Act, 1944. The certificate gave rise  

to a proceeding and the Pargana Adhikari, Dadri, asked the Tehsildar to pass  

the  attachment  order  for  recovery  of  the  government  dues,  writing  as  

follows:        

“It  is  heard that  the  firm  owns  a  Plot  No.  2/2.  To  my  information there is no charge in respect of this property.  The firm is closed since a long time. It is also  heard that the  owner of the plot Sardar Jagjeet Singh S/o Harnam Singh wants  to sell this plot. There is a small shed constructed in the said  plot  No.2/2.  It  is  requested  that  orders  to  attach  the  said  property  be  given  so  that,  Government  arrears  may  be  recovered. The estimated value of the Plot No. 2/2 is Rs. 20.00  Lacs.”

                                                                          (emphasis added)

11. Next, proclamations were issued on May 13, 1992, one for attachment  

of  the  plot  and  the  other  prohibiting  SAPL from selling,  transferring  or  

mortgaging the property in favour of any other person. The service of the  

proclamations was effected exactly in the same manner as in the case of the  

other plot (being plot no.2/1). The Pargana Adhikari then made a request to  

the Tehsildar, Dadri for issuing the order for auction sale of the property that  

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was lying  under  attachment.  The  Tehsildar  issued  the  Sale  Proclamation  

(undated)  fixing the  auction sale  of  this  plot  too on June 15,  1992.  The  

service of the Sale Proclamation was effected in the same way as in case of  

the earlier proclamations. A petition for grant of some time for payment of  

the  government  dues  was  filed  before  the  Tehsildar  on  June  9,  1992 on  

behalf of SAPL also.

12. Thus,  with  a  slight  variation  of  dates  in  regard  to  the  earlier  

proclamations,  the two plots came to be fixed up for auction sale on the  

same date, June 15, 1992.

13. There are memos of auction in respect of both the plots showing that  

their auction took place on June 15, 1992. From the memo of auction for  

plot no 2/1, it appears that five (5) bidders, including the appellant, Rakesh  

Kumar Goel, took part in the auction. The appellant made the highest bid of  

Rs.6,30,000/- and his bid was finally accepted. The memo also recorded that  

one fourth of the bid amount was deposited in the Nazarat in Register No.4.

14. The memo of auction for plot no.2/2 shows that there were five (5)  

bidders,  including  Moti  Lal  Goel,  representing  the  second  appellant.  He  

made  the  highest  bid  of  Rs.6,20,000/-  which  came  to  be  accepted.  The  

memo recorded that one fourth of the bid amount was received, vide Receipt  

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no.043560. We shall presently see that the statement in both the memos in  

regard to payment of one fourth of the bid amounts was quite false.

15. The memos of auction did not care to disclose the reserve amounts for  

the two plots but mentioned some terms and conditions subject to which the  

auction was held. Conditions 1 and 3 of the auction as stated in the auction  

memo for plot no.2/2 are relevant and may be reproduced here:

“1. 1/4th of the bid amount shall be deposited by the highest  bidder, just after the close of the Auction Proceedings. The  remaining 3/4th of the bid amount shall be deposited within a  period  of  15  days.  On  failure,  by  the  highest  bidder,  to  deposit  3/4th of  the  bid  amount  within  the  aforesaid  stipulated  period of  15 days,  the  1/4th of  the  bid  amount,  already  deposited  by  the  said  bidder  shall  be  forfeited  in  favour of the State Government.

2. xxxxx

3. The auction shall be approved after the expiry of 30 days  meant for receiving any objection from anyone against the  auction  proceedings.  The  file  shall  be  forwarded  to  the  competent authority for approval of the auction proceeding  after the expiry of the said period.

4. xxxxx”

16. According to the  private  respondents  (BSPL & SAPL),  no auction  

was ever held and the whole thing was mere paper work. Our attention was  

also  drawn  to  certain  facts  coming  to  light  in  course  of  a  departmental  

enquiry later held in the matter. In the departmental enquiry One Harbeer  

Singh,  AWBN stated that auction proceedings with respect  to SAPL and  

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BSPL (lands) were not held in the Tehsil office but papers were prepared at  

the residence of the ADM. In the morning of June 15, 1992 he was called  

there. At the residence of the ADM, the Amin, Ram Kumar was writing the  

proceedings on one of the files and he was asked to write the proceedings on  

the other file. Harbeer Singh said that the auction proceedings at pages 40-41  

were written by him and he wrote about the payment of one fourth of the bid  

amount  on  the  instruction  of  the  Naib  Tehsildar  who  was  his  superior  

officer.

17. In the overall facts of the case (which have only partly unfolded so  

far) the version given by Harbeer Singh appears to be highly probable. But  

even if we discount that and take the documents concerning the auction sale  

of the two plots in the government record at their face value, the auction  

proceedings of the two plots appear to be full of anomalies some of which  

may be enumerated as follows:

i. No notice or information about the attachment or sale of the  two plots  was given to  the  UPSIDC which is  undeniably  their owner.

ii. No attention was paid to the claim of the Canara Bank that it  had  the  first  charge  over  plot  no.2/1  which  was given  in  mortgage to the bank as security for the loan advanced by it  to BSPL.

iii. The Sale Proclamations did not indicate the area of the plots  or the nature of the rights therein that would be the subject  matter of the sale; whether the auction would be in regard to  proprietary  interests  in  the  two  plots  or  only  leasehold  

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rights? In case of latter what would be the limitations and  conditions of the leasehold rights?

iv. There  was  practically  no  public  advertisement  (no  newspaper  publication  or  any  thing  of  that  sort)  to  give  wider information to the general public about the auction.  The  only  public  announcement  was  done  by  the  process  server going to the site and calling out loudly that the two  plots would be put to auction sale on the specified date for  non-payment of government dues and asking the people to  come for the auction in large numbers.

v. No  reserve  price  for  the  plots  in  question  was  indicated  either in the Sale Proclamations or even in the Memos of  Auction.

vi. Even though no reserve  price  was  mentioned  in  the  Sale  proclamations  and  the  Auction  Memos,  from  the  other  materials  on  record  it  appears  that  reserve  prices  were  actually fixed for the two plots in question. The reserve price  for plot no.2/1 was fixed at Rs.25 lakhs and for plot no.2/2  Rs.20  lakhs.  Now,  this  gives  rise  to  two questions.  First,  how could the reserve prices be so low? In the Additional  Affidavit  filed  by  the  State  in  compliance  with  the  order  dated July 7, 2009 it was admitted that “the valuation of the  properties  were  not  computed  in  accordance  with  the  procedure as prescribed under the aforesaid Chapter-XV of  the Revenue Manual and were fixed without any basis”. In  this connection it is worthy to note that plot no.2/1 has an  area of 27,800 Sq. yards and plot no.2/2, 35,700 Sq. yards;  both the plots are situate in the industrial  area, Sahibabad  adjoining Delhi. According to the private respondents, the  market value of those plots in 1992 would be in crores. We  are inclined to think that the value of the two plots would be  nearer the figure quoted by the respondents than the paltry  amounts of Rs.25 lakhs and Rs.20 lakhs. The second and the  far more important question is how the bids of Rs.6,30,000/-  and Rs.6, 20,000/- could be accepted for plot nos.2/1 and 2/2  when their reserve prices were Rs.25 lakhs and Rs.20 lakhs  respectively?  If  the  highest  bid  was  much lower  than the  reserve price, the normal procedure is to reject all bids and  to hold a re-auction on a later date.   

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vii. The  information  about  the  stay  order  passed  by  he  High  Court was completely ignored.

viii. There  is  nothing  to  show that  after  the  government  dues  were satisfied, the balance of the sale price was refunded to  the  land  holders,  the  two  private  respondents  BSPL  and  SAPL.  

18. At this stage, in fairness to all sides, it may be stated that a number of  

the anomalies in the auction proceedings as indicated above were possible  

only due to the grave flaws and lacunae in the relevant provisions of the law.  

The  auction  proceedings  were  held  under  the  provisions  of  the  UP  

Zamindari  Abolition  and  Land  Reforms  Act,  1950  and  UP  Zamindari  

Abolition and Land Reforms Rules, 1952. Section 279 of the Act lays down  

the procedure for recovery of an arrear of land revenue and in so far as  

relevant for the present, provides as follows:  

“279. Procedure for recovery of an arrear of land revenue.- (1)  An arrear of land revenue may be recovered by any one or more  of the following processes-

(a) xxxxxxxxxxxxxxx

(b) xxxxxxxxxxxxxxx

(c) xxxxxxxxxxxxxxx

(d) by attachment of the holding in respect of which the  arrear is due;

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(e) by lease or sale of the holding in respect of which the  arrear is due;

(f) by attachment and sale of other immovable property  of the defaulter, and,

(g) xxxxxxxxxxxxxxx

(2)  The  costs  of  any  of  the  processes  mentioned  in  sub- section(1)  shall  be added to  and be  recoverable  in  the  same  manner as the arrear of land revenue.”

19. Section  284  empowers  the  Collector  (which  includes  an  Assistant  

Collector of the first class, authorized by the State Government to discharge  

the functions of the Collector) to attach the holding of the defaulter, to give  

it on lease for a period of up to 20 years or to sell the holding free from all  

encumbrances and appropriate the proceeds in satisfaction of the arrears and  

refund the excess, if any, to the defaulter. Section 286 gives power to the  

Collector to proceed against the interests of the defaulter in other immovable  

properties. Section 341 provides for the application of the provisions of the  

CPC unless expressly barred by any of the provisions of the UPZALR Act.

20.  Coming now to the provisions of the UPZALR Rules, the relevant  

provisions, dealing with attachment and proclamation of sale, are contained  

in rules 273, 273-A and 282 which are as follows:

“273. Where any land is attached in pursuance of the provisions  of clause (d) or (f) of Section 279 or sub-section (1) of Section  284 or  of  Section 286 or  is  let  out  under  sub-section  (2)  of  

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Section 284, a proclamation in Z.A. Form 73, shall be affixed at  a conspicuous place in the village in which the land is situate,  and it shall also be notified by beat of drum.

273A. The attachment of holing or other  immovable  poperty  under clause (d) or (f) of section 279 or under section 284 or  section 286, shall be effected in the manner prescribed in Order  XXI,  Rule 54 of  the Code of Civil  Procedure,  1908 and the  order to the defaulter shall be issued in Z.A. Form 73-D.

282. Section 286- The proclamation for sale shall be in Z.A.  Form 74”

21. Further details in regard to the sale of a holding or other immovable  

property for recovery of arrear are provided under rules 285-A to 285-N. For  

a very brief summary of the way a sale is to be conducted, we may refer to  

rule 285-A that provides that no sale under sections 284 and 286 would take  

place until after the expiry of at least 30 days from the date on which the  

proclamation under rule 282 was issued; rule 285-C lays down that there  

would be no sale in case, before the date fixed for the sale, the defaulter pays  

the arrears in respect of which the land was to be sold. Rules 285-D and 285-

E are relevant for the present and are reproduced below:

“285-D.  The  person  declared  to  be  the  purchaser  shall  be  required  to  deposit  immediately  twenty-five  per  cent  of  the  amount of his bid, and in default of such deposit the land shall  forthwith be again put up and sold and such person shall  be  liable  for  the  expenses  attending  the  first  sale  and  any  deficiency of price which may occur on the re-sale which may  be recovered from him by the Collector  as  if  same were an  arrear of land revenue.

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285-E. The full amount of purchase money shall be paid by the  purchaser on or before the fifteenth day from the date of the  sale at the district treasury or any sub-treasury and in case of  default  the  deposit,  after  the  expenses  of  sale  have  been  defrayed therefrom, shall be forfeited to Government and the  property  shall  be  re-sold  and  the  defaulting  purchaser  shall  forfeit all claims to the property, or to any part of the sum for  which it may be subsequently sold.”

22. Rule  285-H and 285-I  deal  with  applications/petitions  that  may be  

filed for setting aside the sale; rule 285-J provides for confirmation of sale  

on expiry of thirty days from the date of the auction, provided no objection  

is filed under rules 285-H or 285-I or, if any filed, has been disposed of. If  

no application is made within 30 days rule 285-K bars all claims on grounds  

of irregularity or mistake in publishing or conducting the sale. Rule 285-M  

provides for putting the purchaser of the property in its possession and the  

grant of the Sale Certificate to him.

23. It  is,  thus,  to  be  seen  that  under  the  Rules  the  only  mode  for  

advertisement of auction-sale is by affixation of the Sale Proclamation at a  

conspicuous place in the village where the property is located and by beat of  

drum. There is no provision of advertisement in the newspapers or by any  

other means to spread the information about the proposed auction on a large  

scale. Form ZA 73 (under Rule 273) and form ZA 73-D (under Rule 273-A)  

only provide the physical description of the property and plot/house number  

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and boundaries  of the immovable  property;  Form 74 (rule  282) does not  

provide any description of the type of property (e.g., agricultural, homestead,  

industrial, etc.) or type of rights (e.g., lease and its term or freehold, etc.).

24. There is no provision in the Act or the Rules for fixation of reserve  

price  before  the  property  is  put  up  for  auction  sale.  We were,  however,  

informed that the Collector of the District regularly notifies “circle rate” for  

different types of land and different locations. This circle rate is primarily  

used for computation of stamp duty for registration of document. We were  

informed that in 2007 instructions were given to confirm sale only above the  

market  price.   There  is  also  no  provision  enabling  the  authorities  to  bar  

someone  with  a  criminal  record  or  against  whom there  are  tax  dues  or  

government dues of any other kinds from taking part in the sale of land by  

the government.

25. It  is,  thus,  evident  that  the  law  under  which  the  auction  sale  

proceedings were held was itself quite deficient. But the enumeration of the  

shortcomings and the lacunae in the provisions of an archaic law is not to  

say that the auction proceedings of the two plots were otherwise fair and  

proper and suffered from some irregularities only due to the flaws in the law.  

On the contrary, we have no doubt in our mind that auction sale of the two  

plots  was  illegal,  fraudulent  and  collusive  and  the  appellants  and  their  

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abettors in the revenue department of the State Government fully exploited  

the weaknesses of the law to their advantage. This would be evident as the  

facts of the case further unfold.

26. We have seen above that rule 285-D of the UPZALR Rules requires  

the highest bidder to deposit immediately twenty five percent of the amount  

bid by him. We also noted that this was one of the conditions mentioned in  

the Auction Memos. We have also seen that in the two Auction Memos it  

was stated that the highest bidders for the two plots, namely Rakesh Kumar  

Goel and Moti Lal Goel had deposited one fourth of their  respective bid  

amounts  immediately  after  the  auction.  But  the  payment  recorded in  the  

Auction Memos is  proved to be wrong and incorrect  by reference to the  

Government Records. All such payments are entered in Register no.4. In the  

Allahabad  High  Court  where  the  auction  sale  of  the  two  plots  was  

challenged on grounds of violation of rule 285-D, the Register was produced  

by the Naib Tehsildar on being summoned by the Court. The High Court  

found that in Register no.4 there were only three entries at serial nos.39, 40  

and 55 in respect of the auction sale of the two plots. These were as follows:  

“39. 16.6.1992 1/4th part No.844499/16.6.1992  Immovable  property  of  Ram  Kumar SA, M/s Suri Asbestos  Pvt.  Ltd.  through  ML  Moti  Goel, Director, M/s.Moti Board  

155000.00

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Ind. Pvt. Ltd. 40. 16.6.1992 1/4th part  No.  

844500/16.6.1992  of  Immovable  Property  M/s  Bramic Suri  Pvt.  Ltd.  through  Rakesh Kumar S/o. Lajja Ram,  R/o.  Navyug  Market,  Ghaziabad.

157500.00

55. 29.6.1992 3/4th part  of  No.846590/29.6.1992  of  Immovable  Property  M/s  Suri  Asbestos  property  Pvt.  Ltd  through  ML  Moti  Goel,  Director, M/s. Moti Board Ind.  Pvt. Ltd.”

465000.00

      27. From entries 39 and 40 it is clear that twenty five percent of the bid  

amounts for the two plots in question were deposited on June 16 and not  

immediately  after  the  auction  held  on  June  15,  1992  as  claimed  by  the  

appellants. Mr. Mohta, learned senior advocate, appearing for the appellants  

kept telling us for days on end the appellants had receipts in their possession  

showing that the deposits were made on June 15 itself. Notwithstanding the  

fact that the receipts were not filed in the High Court and neither were those  

enclosed with the SLP at the time of its filing, Mr. Mohta was allowed as  

much time as he wanted for producing those receipts. In the end he said that  

the receipts were misplaced and the appellants were not able to find them  

out. We have no doubt in our mind that all the time Mr. Mohta was wrongly  

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briefed by the appellants. No receipts were produced in court because there  

were, in fact, no receipts showing payment immediately after the auction.     

28. The entries in Register no.4 show something else very important. It  

appears that the balance seventy five percent of the bid (Rs.6,30,000/-) for  

plot no.2/1 of BSPL was never deposited at all. In other words the sale of  

plot no.2/1 was confirmed and sale certificate was issued in favour of the  

appellant even without payment of the full price of the plot.    

29. Let us now see how the sale  of the two plots was confirmed.  The  

appellants  and  their  abettors  inside  the  revenue  department  of  the  

government were so far able to show that for recovery of the Government  

dues the plots of land of BSPL (2/1) and SAPL (2/2) were put to auction on  

June 15, 1992 in which the two appellants were the highest bidders.  The  

next stage was the confirmation of the sale after dealing with the objections.  

It  is  noted above that  even before the  date of  the  auction the concerned  

authorities  were  given  information  about  the  stay  order  passed  by  the  

Allahabad High Court in respect of plot no.2/1. At that time they paid no  

heed to it but later on certified copies of the order were produced. On June  

18, 1992 certified copies of the stay order passed by the Allahabad High  

Court  were  submitted  before  the  Tehsildar,  Dadri,  both  by  the  private  

respondent  and  the  Canara  Bank.  Now,  this  was  a  real  impediment  to  

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overcome before the sales could be confirmed and the appellants and their  

abettors  inside  the  government  could succeed in  their  designs.  The High  

Court order was put away in a highly disingenuous way. A note was put up  

in which referring to the cause title of the writ petition, where the address of  

the writ petitioner, M/s Bramic Suri Pvt. Ltd. was shown as “Gyani Border,  

Post  Office  Chikambarpur,  District  Ghaziabad”,  it  was  declared  that  the  

High Court Order was with respect to some other property, situate at the site  

of the address given in the writ  petition. On June 30, 1992 the note was  

perused by the District Magistrate and on the same date it was approved by  

the ADM (F & R). No one cared to see that Annexure 1 to the writ petition  

was a photostat copy of the very same Sale Proclamation on the basis of  

which the auction sale of plot no.2/1 was held and in the writ petition the  

prayer was to quash the Sale Proclamation at annexure 1 and in the stay  

petition the prayer was to stay its operation. It is not known whether this  

matter was brought to the notice of the High Court and whether the High  

Court took any action in the matter. We can only say that we find it one of  

the crudest manipulations coming to our notice.

30. Coming now to plot  no.2/2  which was put  up for auction sale  for  

recovery  of  the  demand  of  Central  Excise  dues  raised  by  the  Excise  

Superintendent. Against the adjudication order giving rise to the demand an  

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appeal,  along  with  a  petition  for  stay-cum-waiver,  was  filed  before  the  

Central  Excise and Gold Control Appellate  Tribunal.  The appeal  and the  

stay  petition  were  still  pending  before  the  Tribunal  when  the  recovery  

proceedings were started in which the plot in question was put up for auction  

sale.  In  those  circumstances,  in  this  matter  also,  the  private  respondents  

approached  the  Allahabad  High  Court  with  a  writ  petition  which  was  

disposed of by the High Court by order dated July 13, 1992 observing as  

follows:

“Having considered the matter carefully, we find that there is a  good  deal  of  justification  made  by  the  petitioner.  In  the  circumstances,  we consider it  equitable and in the interest  of  justice to direct the respondents to stay their hands and not to  proceed with the recovery proceedings till the stay-cum-waiver  application  is  adjudicated  by  the  tribunal.  Accordingly,  we  direct the Central Excise and Gold Control Appellate Tribunal,  New Delhi to decide the stay-cum-waiver application, within a  period of six weeks, a certified copy of this order is filed before  it. The petitioner undertakes to file a certified copy of the order  within ten days before the Tribunal. We further direct that for a  period of two months or till the disposal of the stay-cum-waiver  application, whichever is earlier, recovery proceedings against  the petitioner shall  remain stayed and no further proceedings  shall  be  taken  in  pursuance  to  sale  proclamation,  a  copy  of  which has been filed as Annexure-3 to the writ  petition.  We  however, make it clear that if the stay-cum-waiver application  has  already  been  decided  or  if  the  petitioner  fails  to  file  a  certified  copy  of  the  order  before  the  Appellate  Tribunal  as  directed above, the stay of the recovery proceedings granted by  this court by this order shall be of no avail to the petitioner and  it  shall  be  open  to  the  respondents  to  proceed  against  the  petitioner in accordance with law.”  

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31. In the counter affidavit filed on behalf of the private respondents it is  

stated that  a  copy of  the  High Court  order  was served upon the District  

Magistrate on July 15, 1992. In the Government record, however, there is no  

trace of the High Court order and there is no discussion about it in any of the  

notes.  On the contrary on the same day (July 15, 1992) Sale Certificates  

were  issued  under  the  signature  of  the  ADM  (Finance),  a  certain  Ram  

Bahadur in favour of the appellants and were sent for registration.  

32. In the facts and circumstances discussed above, we do not have the  

slightest  hesitation  in  holding  that  the  auction  sale  of  the  two  plots  in  

question  was  fraudulent,  collusive,  sham and  mala  fide.  In  the  guise  of  

recovery of the government dues, the two appellants in collusion with their  

abettors  in  the  government  departments  were  trying  to  grab  government  

lands and they almost succeeded but for the interference by the Allahabad  

High Court.

33. It may also be stated here that in the counter affidavit  filed by the  

UPSIDC it was alleged that Moti Lal Goel and his brother Rakesh Kumar  

Goel are notorious land grabbers in the districts of Ghaziabad and Gautam  

Budh  Nagar  and  they  had  misappropriated  about  Rs.1125  crores.  The  

counter  affidavit  gave  a  large  extract  from the affidavit  of  the  Tehsildar  

(judicial),  Ghaziabad,  filed  in  the  case  before  the  High  Court.  In  the  

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Tehsildar’s  affidavit  filed  before  the  High Court  very  serious  allegations  

were made against Moti Lal Goel. In view of the statements made in the  

counter  affidavit  of  UPSIDC,  this  court  on  April  24,  2009  passed  the  

following order:

“………In this  case  serious  allegations  are  made against  the  petitioner on the basis of petitioner indulging in land scam. An  affidavit  has  been  filled  by  the  Deputy  Manager,  U.P.  State  Industrial Development Corporation Limited giving credentials  of the petitioner with regard to the fraud allegedly committed of  rupees  more  than  one  thousand  crores.  Several  cases  are  pending before the Criminal Courts under Indian Penal Code as  well as under Gangster Act. Although the present case arises  from an auction sale, we want to know from the State of U.P. as  to on what basis people with such credentials  are allowed to  take part in the auction and why is the State not responding to  the Petition…………..”  

Again on July 14, 2009, this court passed the order:

“……..It has been alleged and prima facie we are satisfied that  over the years lands owned by State of U.P. are being alienated  in the name of auction at an undervalued rate. It is also alleged  that  some  of  the  alienations  have  taken  place  at  gun  point.  These are very serious allegations. FIRs have been filed in this  connection. We want the State of U.P., through its counsel, to  submit  a  status report  of  cases  filed against  the  Goel  family  allegedly involved in the aforesaid practices………..”

34. In compliance with the order,  an affidavit  sworn by one Shri  R.N.  

Upadhyaya,  Special  Secretary,  Department  of  Revenue,  Government  of  

Uttar Pradesh was filed on July 25, 2009. In this affidavit, it is stated that  

Moti Lal Goel, Rakesh Kumar Goel and their family members were accused  

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in sixteen (16) criminal cases in district Gautam Budh Nagar. Out of the  

sixteen (16) cases, three (3) were at the stage of investigation and one (1)  

was referred for inquiry to the CBI. In rest of the twelve (12) cases charge  

sheets were filed before the competent court in year 2005 and onwards. In  

the  district  of  Ghaziabad,  Moti  Lal  Goel,  Rakesh  Kumar  Goel  and their  

family members were accused in ten (10) criminal cases. Out of the ten (10)  

cases, two (2) were at the stage of investigation and two (2) were referred to  

the  CBI.  In  rest  of  the six (6)  cases  charge sheets  were  filed before the  

competent court in year 2005 onwards. In the affidavit a long list was given  

of the cases against Moti Lal Goel and Rakesh Kumar Goel and their other  

family members pending in the two districts. From the list of cases it appears  

that almost all the cases were under sections 420, 467, 468, 469 and 472 of  

the Penal Code and the different provisions of the Prevention of Corruption  

Act. In the affidavit it was further stated that according to the report of the  

District Magistrate, Ghaziabad, Moti Lal Goel and his family members had  

got  their  name falsely  and fraudulently  entered  in  the  revenue  record  in  

respect of land measuring about 129 hectares, the market value of which, in  

the year 2005, was approximately Rs.1100 crores. Similarly, from the report  

of the District Magistrate, Gautam Budh Nagar, it appeared that Moti Lal  

Goel and his family members had got their name fraudulently entered in the  

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revenue records in respect of land measuring 252 hectares, the market value  

of which in the year 2005 was about Rs.400 crores. The affidavit also gave  

the  list  of  the  lands  in  regard  to  which  Moti  Lal  Goel  and  his  family  

members had got their names allegedly fraudulently recorded in the revenue  

records.

35. These,  in  short,  are  the  credentials  of  the  two  appellants  and  the  

manner  in  which  the  two  plots  in  question  were  put  to  auction  sale  

purportedly for recovery of the government dues.        

36. Against  the  auction  sale  of  the  plots  in  question  both  the  private  

respondents and the UPSIDC, the owner of the plots, filed their respective  

objections before the Commissioner, Meerut Division, but their objections  

were  rejected  by  the  order  dated  November  5,  1998  passed  by  the  

Commissioner in objection letter Nos.19 and 25 of 1991-1992. The UPSIDC  

filed review petition before the Commissioner which too was dismissed on  

May 3,  1999 on the ground that the objection petition was dismissed on  

merits by a speaking order. Against the order passed by the Commissioner,  

both the private respondent and the UPSIDC filed revisions before the Board  

of Revenue, Lucknow. Even while the revision of the private respondent was  

pending, the revision filed by the UPSIDC was dismissed by order dated  

October 11, 1999 passed by the Board of Revenue in Revision No.10(LR) of  

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1998-1999. We feel sorry that such a gross case could not be corrected even  

at the highest level of the State Administration.

37. Whatever little redemption the State Government was able to attain in  

this case was through Mr. Ashok Desai, senior advocate, who appeared on  

its behalf at the stage of the final hearing of the case. Mr. Desai, with great  

fairness, did not try to support the auction sale of the plots in question even  

for a moment. On the contrary, he submitted that the auction proceedings  

broke  all  canons  and  principles  laid  down by  this  Court  for  the  sale  of  

government  land by public  auction.  Mr.  Desai  invited  our  attention  to  a  

number of decisions of this Court where it is said that the disposal of public  

property partakes the character of trust  and the government or the public  

authorities  are  obliged  to  make  all  attempts  to  obtain  the  best  available  

market price while disposing of public properties. [Ram and Shyam Co. vs.   

State  of  Haryana,  (1985)  3  SCC  267  (paragraphs  5,  6  12  &  15);  V.  

Purushotham Rao vs. Union of India, (2001) 10 SCC 305 (paragraph 26);  

Aggarwal and Modi Enterprises (P.) Ltd. vs. New Delhi Municipal Council  

(2007)  8  SCC  75  (paragraph  23);  Meerut  Development  Authority  vs.   

Association of Management Studies, (2009) 6 SCC 171]. He also submitted  

that it was not open to the government or the public authority to dispose of  

public  property below the reserve price.  In support  of  the  submission he  

26

invited our attention to a decision of this court in Anil Kumar Srivastava vs.   

State of UP, (2004) 8 SCC 671.

38. He also took us through the relevant provisions of the UPZALR Act  

and the UPZALR Rules as referred to above in this judgment. We appreciate  

the assistance rendered by him to the Court.  

39. In the facts and circumstances of the case, we are satisfied that the so  

called  auction  sale  of  the  two  plots  in  favour  of  the  appellants  was  

thoroughly illegal. Though the High Court set aside the auction sale of the  

two  plots  on  the  technical  ground  of  violation  of  Rule  285-D,  on  a  

consideration of the overall facts and circumstances, we are satisfied that the  

auction sale was bad and malafide and was a blatant attempt to grab the  

public land. We, thus, find no merit in the appeal.  

40. At one stage we considered asking the CBI to investigate the present  

case as also other cases of auction sale and alienation of land by the Revenue  

Department  of  the  State  Government  in  the  District  of  Ghaziabad.  We,  

however,  refrain from doing so for two reasons.  One, the CBI is already  

overburdened and secondly, the matter is about 20 years old. The officers  

posted at Ghaziabad would no longer be there, some of them might even  

have retired.  

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41. But this case certainly calls for exemplary costs to the appellants. We  

wish  to  make  it  absolutely  clear  that  this  Court  is  not  for  manipulators,  

speculators and land grabbers. The litigation in this Court is not like buying  

a lottery ticket that,  if luck favours, might bring a windfall  (even though  

illegitimate) but would cost no more than the expenses of litigation. That is  

not the way of this Court. We, accordingly, impose cost of Rs.2 lakhs on  

each of the two appellants. The amount of cost must be paid to the Supreme  

Court Legal Aid Committee within 12 weeks from today. In case receipts  

showing payment of the cost is  not filed within the time as directed,  the  

amounts  of  cost  shall  be  realised  from the  appellants  as  fine  under  the  

provisions of the Code of Criminal Procedure.  

42. Before parting with the records we feel obliged to say that the existing  

provisions of the UPZALR Act and the UPZALR Rules are out of date by  

three quarters of a century. Those were designed to deal with agriculture  

holdings in a rural area. Even for that purpose the provisions appear to be far  

from  satisfactory.  But  they  have  become  woefully  inadequate  and  

completely deficient  for dealing with land holdings and other immovable  

properties in highly urbanised and industrialised regions of the State. There  

is, therefore, an urgent need to update the law either by framing fresh Act  

and Rules or by thoroughly amending the existing ones.

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43. In the result the appeal is dismissed with costs as indicated above. The  

dismissal  of  the  appeal  shall  not  stand  in  the  way  of  the  authorities  to  

recover  from  the  private  respondents  Government  dues,  if  any,  in  

accordance with law. We are also not  expressing any opinion as to who  

would get possession over the two plots as the result of the setting aside of  

their auction sale. If the private respondents claim possession over the two  

plots the UPSIDC will take a decision on their claim, in accordance with  

law.      

……..……………………….CJI.

………………………………..J. (AFTAB ALAM)

New Delhi,

July 8, 2010

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