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Manminder Singh v. M/S. Chandra Cold Storage And Others
Structured Summary of the Opinion
Factual and Procedural Background
This appeal challenges a judgment and order dated 12.2.1999 in Civil Misc. Writ Petition No. 5350 of 1999 in Re: Chandra Cold Storage v. State of U. P. and others, and an order dated 23.2.1999 disposing of a clarification/modification application in that writ petition.
Respondent M/s. Chandra Cold Storage had taken a repayable-in-instalments loan from Bank of India, Fatehgarh Branch, Farrukhabad. On default, a writ of demand and citation issued and was challenged in Writ Petition No. 30427 of 1998; that petition was disposed of on 18.9.1998 by directing the petitioner to pay the loan in four tri-monthly instalments, the first due on or before 31.12.1998, with a stay of recovery proceedings until that date and conditional removal of seal on deposit.
The respondent deposited Rs. 3,00,000 but failed to pay the full outstanding dues. Consequently, the respondent's cold storage was put to auction on 31.1.1999 pursuant to an advertisement dated 21.11.1999. The appellant was the highest bidder at Rs. 5,240,000 (fifty-two lakh forty thousand). On the fall of the hammer, the appellant paid Rs. 1,00,000 in cash and Rs. 12,10,000 by bankers cheque dated 30.1.1999; the remaining Rs. 39,30,000 was said to have been deposited on 10.2.1999 by another bankers cheque.
The respondent filed a writ petition challenging the auction sale. The learned single Judge directed the respondent to deposit 3/4th of the outstanding loan by March 15, 1999 and the remaining 1/4th by April 30, 1999, providing that failure to deposit 3/4th would cause confirmation of the sale after March 15. A clarification application led to the order dated 23.2.1999 clarifying that the respondent should deposit 3/4th of the amount due by the date fixed by the 12.2.1999 order. Those two orders were the subject of this Special Appeal.
Legal Issues Presented
- Whether the writ petition challenging the auction was maintainable where a prior writ petition in respect of the same loan instalments had been disposed of by fixing instalments (i.e., whether the second writ petition was barred by the earlier proceedings or raised the same cause of action).
- Whether the existence of an alternative remedy under the U.P. Zamindari Abolition and Land Reforms Act, 1950 (and rules) barred the writ petition.
- Whether the learned single Judge, in exercise of powers under Article 226 of the Constitution, could direct extension of time to deposit amounts required by Rule 285H/285-I (and thereby affect the appellant's right to seek confirmation of the auction sale after expiry of 30 days).
- Whether the appellant had any vested right to have the auction sale confirmed (i.e., whether a highest bidder acquires title/interest before confirmation), including the consequences of alleged procedural defects in the auction (absence of 30 days clear notice and failure to deposit 25% "immediately").
Arguments of the Parties
Appellant's Arguments
- The writ petition was not maintainable because an earlier writ petition challenging recovery proceedings had been disposed of by fixing instalments; the second writ petition challenging the auction was based on the same cause of action.
- The petitioner had an alternative statutory remedy under the provisions of the U.P. Zamindari Abolition and Land Reforms Act, 1950 and rules, and that remedy barred the writ.
- The learned single Judge should not have exercised powers under Article 226 to issue directions that deprived the appellant of the right to get the auction sale confirmed after the expiry of 30 days from the auction date.
Respondent's Arguments
- The writ petition was based on a different cause of action than the earlier petition and thus was maintainable.
- The statutory alternative remedy was not an absolute bar to invoking writ jurisdiction under Article 226 of the Constitution.
- The appellant had no vested right to get the auction sale confirmed, particularly where procedural defects (such as inadequate notice or improper deposit) were present.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Raghunath Prasad v. Board of Revenue, 1987 RD 380 | Principle that the highest bidder acquires right, title or interest only after confirmation of the sale; till confirmation, mere deposit of the highest bid does not confer interest; Collector can accept or reject highest bid and has power regarding confirmation under Rule 285J. | The Court agreed with this precedent and held that the appellant acquired no right in the property merely because he had deposited the bid amount at the auction; this supported setting aside the auction sale. |
| Mahmood Ahmad Khan (dead) through L.Rs. v. Ranbir Singh and others, 1995 AWC 896 | Authority for the proposition that a deposit by cheque is not a valid immediate deposit for the purposes of statutory auction requirements. | The Court relied on this authority to conclude that the appellant's deposit by cheque did not satisfy the "immediately" requirement of depositing 25% of the purchase money under the Rules, thereby rendering the auction defective. |
| Marti Lal Mohan Lal v. Syed Ahmad, AIR 1954 SC 349 | Principle that where statutory conditions for sale are not complied with, the purported auction may be deemed to be no sale at all. | The Court treated the auction as no sale on the basis of procedural infirmities (lack of 30 days clear notice and invalidity of cheque deposit), and cited this case to support that legal consequence. |
| Gulab Chandra v. Bahuria. Ram Murat Koer, 1911 Ind Cos 268 : 13 Cal LJ 432 | Holds that a court has power to enlarge time fixed for payment (here cited in relation to Section 11 of Court Fees Act); the enlargement may be made either before or after expiry, when reasonable and necessary. | The Court invoked this principle to hold that the High Court (under Article 226) could extend time for depositing amounts required under Rule 285H, and that the learned single Judge was justified in granting extended time to avoid confirmation of sale. |
Court's Reasoning and Analysis
The Court proceeded by addressing the main contentions sequentially and referencing the statutory rules and precedents cited in the record.
1. Maintainability and alternative remedy: The Court observed that the existence of a statutory alternative remedy under the U.P. Zamindari Abolition and Land Reforms Act, 1950 and the Rules was not an absolute bar to writ relief. Given that the respondent, in compliance with the single Judge's orders, deposited the entire outstanding amount (which could have been acted upon by the Collector under Rule 285H to set aside the sale) and that the appellant had already withdrawn that deposit, the Court was not disposed to dismiss the writ on the ground of alternative remedy.
2. Whether appellant acquired a vested right: The Court examined Rule 285H of the Rules, which permits an application within thirty days from sale to have the sale set aside on specified deposits (5% to purchaser, arrear amount as per proclamation less amounts paid, and costs). The Court noted the agreed-at-Bar fact that the respondent had deposited the required amount (later withdrawn by appellant) and that the auction sale had not been confirmed.
3. Effect of statutory requirements and precedents: The Court relied on Raghunath Prasad to emphasize that a highest bidder gains no title before confirmation of sale by the Collector and that the Collector has both the power to confirm/reject as per Rule 285J and an inherent power to refuse acceptance if the bid is inadequate. The Court accepted that view and held the appellant had no proprietary interest merely by depositing the bid amount.
4. Specific procedural infirmities in the auction: The Court identified two principal defects: (a) the absence of 30 days clear notice before confirmation, and (b) failure to deposit 25% of the purchase money "immediately" as required by Rule 285D; specifically, deposit by cheque was held not to satisfy the immediacy requirement based on the Apex Court decision in Mahmood Ahmad Khan. For these reasons, and citing Marti Lal Mohan Lal, the Court concluded the auction was effectively "no sale" in law.
5. Whether the single Judge's orders defeated statutory time-limits: Counsel for the appellant contended that the single Judge's order, which extended time up to 30.4.1999 to deposit the entire amount, defeated the statutory scheme giving 30 days to apply to set aside a sale. The Court rejected this contention. It concluded that the High Court's power under Article 226 to issue appropriate orders in the interests of justice included the power to extend or fashion relief affecting time for deposits; it relied on Gulab Chandra to show courts can enlarge prescribed times where justice demands. Consequently, the learned single Judge was justified in granting the time extensions to permit the respondent to make deposits and avoid confirmation of the sale.
6. Overall conclusion of analysis: Because of the statutory framework, the factual admissions (deposit made and withdrawn), and the procedural defects in the auction, the Court found no grounds to interfere with the single Judge's orders. The appellant suffered no loss because he had not acquired any vested right pending confirmation and because the sale suffered from serious infirmities.
Holding and Implications
Holding: The appeal is dismissed.
Direct consequences for the parties:
- The orders of the learned single Judge dated 12.2.1999 and 23.2.1999 are upheld; the respondent was justified in being given time to deposit the sums directed by the single Judge to avoid confirmation of the auction sale.
- The appellant did not acquire any vested right, title, or interest in the property merely by being the highest bidder and depositing amounts at the auction; the sale had not been confirmed and was tainted by procedural infirmities (lack of 30 days clear notice and invalidity of cheque deposit for the immediate 25% requirement).
- The auction sale was liable to be set aside on those grounds; the appeal is dismissed without any order as to costs (i.e., no costs awarded).
Broader precedent implications: The opinion does not purport to lay down a new legal principle beyond its application of existing authorities (as reflected in the Court's adherence to the cited precedents). No broader novel precedent was announced in this decision beyond the application of the authorities and statutory rules to the facts at hand.
1. This appeal is directed against the judgment and order dated 12.2.1999 passed in Civil Misc. Writ Petition No. 5350 of 1999 in Re : Chandra Cold Storage v. State of U. P. and others, as well as against the order dated 23.2.1999 passed on the Modification Application moved in the writ petition aforestated.
2. Respondent M/s. Chandra Cold Storage had taken certain loan from the Bank of India. Fatehgarh Branch, Farrukhabad which was repayable in instalments. It appears that on default being made in payment of the instalments, a writ of demand and citation was issued which was challenged in Civil Misc. Writ Petition No. 30427 of 1998. The writ petition came to be disposed of vide judgment and order dated 18.9.1998 thereby directing that the petitioner therein would deposit the entire amount of loan in tri-monthly four instalments. It was provided that the first instalment would be payable on or before 31.12.1998 up to which date the proceeding for recovery would remain stayed and upon deposit of the first instalment, seal and lock put on the petitioner's cold storage would be removed by the District Magistrate and the recovery proceeding would remain stayed so long as the petitioner went on depositing the instalments. In the event of failure to deposit any of the instalments, it was provided that the stay order would cease to be operative. It appears that the respondent deposited a sum of Rs. 3.00,000 but failed to deposit the entire outstanding dues whereupon the cold storage of the respondent was put to auction on 31.1-1999 pursuant to an advertisement in that regard published in Amar UJala and Dainik Jagran on 21.11.1999. The appellant herein was the highest bidder having offered Rs. 52,40.000 for the purchase of the properties belonging to M/s. Chandra Cold Storage. He deposited a sum of Rs. 1 ,00,000 in cash and Rs. 12,10,000 in the shape of bankers cheque No. E.M.G./C. No. 968833 dated 30.1.1999 on the fall of the hammer in his favour. The rest of the 3/4th amount, i.e., Rs. 39,30.000 is said to have been deposited on 10.2.1999 vide another bankers cheque.
3. The writ petition giving rise to this Special Appeal came to be filed by the respondent cold storage challenging the aforestated auction sale. The learned single Judge after hearing the counsel for the parties directed that 3/4th of the outstanding amount of loan might be deposited by March 15, 1999 and the remaining l/4th outstanding amount of loan by April 30, 1999. This direction contained on stipulation that in the event of default to deposit 3/4th of the outstanding amount of loan, the sale already held would be confirmed after March 15, 1999. A clarification application was filed on the premises that it was not clear as to what amount was to be deposited under the orders of the Court. The said application came to be disposed of by the order dated 23.2.1999 with the direction that the petitioner, (respondent herein) would deposit 3/4th of the amount which was due to be paid by it with the respondent bank by the date fixed by order dated 12.2.1999. The two orders dated 12.2.1999 and 23.2.1999 are under challenge in this Special Appeal.
4. We have had heard Sri Y. K. Saxena for the appellant and Sri R. N. Singh, senior advocate for the respondent cold storage.
5. The submissions made by Sri Y. K. Saxena, learned counsel for the appellant is three-fold. Firstly, that the writ petition giving rise to this special appeal was not maintainable in view of the fact that earlier the respondent cold storage had filed a writ petition challenging the recovery proceeding which had been disposed of by fixing certain instalments and the second writ petition challenging the auction proceeding was being based on the same cause of action was not maintainable : secondly, that the petitioner had an alternative remedy under the provisions of the U. P. Zamindari Abolition and Land Reforms Act. 1950 and Rules made thereunder : and thirdly, that the learned single Judge ought not to have issued direction in exercise of power under Article 226 of the Constitution which had the effect of depriving the appellant of his right to get the auction sale confirmed after expiry of 30 days from the date of auction. Sri R. N. Singh, senior advocate appearing for the respondent cold storage has submitted that the writ petition giving rise to this special appeal was based on a different cause of action ; that the alternative remedy stipulated under the U. P, Zamindari Abolition and Land Reforms Act. 1950 (hereinafter referred to as the Act of 1950) was not an absolute bar : and that the appellant had no vested right to get the auction sale confirmed which was not held after giving thirty days clear notice.
6. In so far the maintainability of the writ petition is concerned, suffice it to say that the alternative remedy being not an absolute bar, we are not inclined to dismiss the writ petition on the plea of alternative remedy particularly in view of the fact that in compliance of the order dated 12.2.1999 and 23.2.1999 of the learned single Judge, the respondent cold storage deposited the entire outstanding amount, on the deposit of which the auction sale could have been set aside by the Collector in exercise of power under Rule 285H of U. P. Zamindari Abolition and Land Reforms Act, 1952 (hereinafter referred to as the Rules) and the appellant herein has already withdrawn the amount so deposited.
7. Coming to the question whether the appellant has any vested right to the sale being confirmed, we may refer to the related provisions. Rule 285H of Rules provides that any person whose holding or other immovable property has been sold under the Act may, at any time within thirty days from the date of sale, apply to have the sale set aside on his depositing in the Collector's office:
"(a) for payment to the purchaser, a sum equal to 5 per cent of the purchase money ; and
(b) for payment on account of the arrear, the amount specified in the proclamation in Z. A. Form 74 as that for the recovery of which the sale was ordered, less any amount which may, since the date of such proclamation of sale, have been paid on that account : and
(c) the costs of the sale."
8. It is further provided therein that on the making of such deposit, the Collector shall pass an order setting aside the same. It may be observed that though earlier there was some dispute at the Bar as to whether the entire amount stipulated in rule 285h of rules of 1952 had been deposited by the respondent cold storage but on 7.2.2000 when the matter came up for hearing, it was agreed at the Bar that the respondent cold storage had deposited the entire amount which has already been withdrawn by the appellant herein. The auction sale has not been confirmed till date. True, on the expiration of the 30 days from the date of sale, the Collector was enjoined to pass an order confirming the sale after satisfying himself that the purchase of the land in question by the bidder would not contravene the provisions of Section 154 of Act of 1950 provided that no application as mentioned in rules 285h and 285-i of the rules of 1952 had been made for cancellation of the auction sale or if made had been rejected by the Collector. A learned single Judge of this Court has held in Raghunath Prasad v. Board of Revenue, 1987 RD 380, that the highest bidder would acquire right, title or interest in the property only after the confirmation of the sale and till then he would not acquire any interest in the property merely on his depositing the amount of highest bid offered at the auction sale and further that the Collector, apart from having a power regarding making of confirmation of sale or its refusal as envisaged under Rule 285J of the Rules has also an inherent power either to accept or reject the highest bid on the ground that the bid offered was inadequate. We agree with the view taken in Raghunath Prasad (supra) and accordingly held that the appellant herein acquired no right in the property merely because he had deposited the entire amount offered by him at the auction sale. On merit also, the auction sale was liable to be set aside firstly due to the reason that 30 days clear notice was not given and secondly, because 25% of the amount of the bid was not deposited "immediately" as stipulated by rule 285d of the rules of 1952 inasmuch as the deposit by cheque was not a valid deposit as per law laid down by the Apex Court in Mahmood Ahmad Khan (dead) through L.Rs. v. Ranbir Singh and others, 1995 AWC 896. We are of the view that the auction sale was no sale at all in the eye of law and 25% of the purchase money had not been deposited "immediately" on the appellant being declared as the highest bidder. In the circumstances, it would be deemed that no sale had taken at all as held by the Apex Court in Marti Lal Mohan Lal v. Syed Ahmad, AIR 1954 SC 349.
9. In so far" as the question whether the order passed by the learned single Judge has the effect of defeating the provisions of rules 285h and 285-i of the rules of 1952 is concerned. It has been submitted by Shri Y. K. Saxena, learned counsel for the appellant that the statute provides 30 days time to deposit the amount or move an application before the Commissioner within the same period for setting aside the sale to get an order of cancellation on the ground that there had been material irregularity to avoid confirmation thereof stands defeated by the order passed by the learned single Judge who gave time up to 30.4.1999 to deposit the entire amount. In our opinion, the submission made by the learned counsel is misconceived. As stated (supra), the appellant acquired no vested right to get the auction sale confirmed automatically and that apart the power of this Court to extend the period of depositing the amount stipulated in rule 285h of the rules of 1952 is not in any manner fettered by Rule 285J of the Rules. In Gulab Chandra v. Bahuria. Ram Murat Koer, 1911 Ind Cos 268 : 13 Cal LJ 432, a question arose as to whether the Court had the power under Section 11 of the Court Fees Act to enlarge the time fixed for payment of court fees even when the application to enlarge the time was made after the expiry of the time within which the court fees were ordered to be paid. It has been held by Calcutta High Court in that case that. "It is not reasonable construction of Section 11 of the Court Fees Act to hold that the Court, has no power to enlarge the time originally fixed for the payment of court fees" and further 'that "the application to the Court to enlarge the time for giving security might be made either before or after the expiration of the time within which the security had been ordered to be furnished, and the Court might thereupon enlarge the time according to any necessity which might arise, where it was proper that they should do so. The High Court under Article 226 of the Constitution has the power not only to issue prerogative writs but it can also issue such orders or directions as may be deemed fit and proper in the ends of Justice for the enforcement of the rights conferred by Part ill and "for any other purpose." In the fact situation of the case discussed above, the learned single Judge, in our opinion, was justified in giving time to the respondent cold storage to make necessary deposits and avoid confirmation of the auction sale. The appellant suffered no loss since he had acquired no vested right to get the auction sale confirmed. The auction sale suffered from serious infirmities and irregularities in conduct thereof. We are, therefore, not inclined to interfere with the order passed by the learned single Judge.
10. The appeal fails and is dismissed without there being any order as to costs.
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