2015 (10) TMI 2532 - SC - Indian Laws

Supreme Court Protects Farmers' Rights: Auction Sale Reversed, Property Returned

B.S. SHESHAGIRI SETTY & ORS. Versus STATE OF KARNATAKA & ORS.

The Supreme Court held that the Revision Petition filed before the Minister for Cooperation was not barred by time under Section 108 of the Karnataka ... Revision Petition filed before the Minister for Co-Operation - whether petition is barred by time in light of the provisions of Section 108 of the Karnataka Cooperative Societies Act, 1959? - Held that:- In the instant case, the fact of repayment of the principal loan amount to the Bank before the confirmation of the auction sale, shows that confirmation of the auction of the immoveable property was grossly illegal. The said sale was in contravention of the notification issued by the State Government of Karnataka in respect of the borrowers of the Bank, which sought to waive off the interest on the principal amount if the same was paid by 30.06.1983. The said notification was issued on the basis of a government order, traceable to Article 162 of the Constitution of India. Therefore, we have recorded the finding that the sale of the property and the confirmation of the auction sale is contrary to the notification referred to supra and law and has resulted in a gross miscarriage of justice. The action of the sale officer has resulted in the deprivation of the right to livelihood of the appellants who are small landowners, guaranteed to them under Article 21 of the Constitution of India. Further, Section 108 of the KCS Act confers the power of revision on the state government suo moto at any time, or on application by an applicant within 6 months of the passing of an order. The KCS Act is a special legislation. Thus, by virtue of Section 29(2) of the Limitation Act, 1963, the power to condone delay is available with the state government. The contention of the auction purchaser that no such application for condonation of delay of the belated revision petition has been filed by the appellants is a hyper technical one and cannot be sustained. Where the state government has exercised its statutory power under Section 108 of the KCS Act after satisfying itself that the sale of the mortgaged immoveable property of the appellants in the public auction is illegal, it is not open for the respondents to contest the same by urging technical grounds, especially in light of the fact that the power conferred upon the state government under Section 108 of the KCS Act is ‘suo moto’ and the same can be exercised ‘at any time’. Therefore, having regard to the facts of the case, in the absence of an application for condonation of delay, we hold that the exercise of the power by the Minister for Co-operation, State Government of Karnataka must be taken as a suo moto exercise of power by him. Whether the interest of the auction purchaser is protected on grounds that he is a bona fide third party? - Held that:- The confirmation of the sale happened only on 10.12.1985, which was after the principal loan amount had been repaid by the appellants in compliance of the notification issued by the Bank. In light of the facts of the present case, the rights of the auction purchaser cannot be protected as he cannot be said to be a bona fide purchaser. In view of the reasons mentioned supra, we are of the view that the confirmation of auction sale of the immoveable property in question was illegal. The learned High Court erred in setting aside the order dated 9.2.2004 of the Minister for Cooperation, State Government of Karnataka, passed in the Revision Petition. The same is erroneous and liable to be set aside. Accordingly, we pass the following order: The Civil Appeals are allowed and set aside the impugned judgments and orders passed in the Writ Petitions and the Writ Appeals and restore the order dated 09.02.2004 passed by the Minister in the Revision Petition No. CMW 33 CAP 98 and further direct that respondent no.6-the auction purchaser shall re-deliver the possession of the immoveable property to the appellants sold in auction by the sale officer pursuant to the execution of an award dated 31.05.1975 passed against the appellants and get back the sale consideration amount of ₹ 40050/- from the respondent Bank within six weeks from the date of receipt of this order, failing which the respondent Nos.1 to 5 shall take coercive steps against the auction purchaser or any person claiming through him, with police help if required, and re-deliver the possession of the immoveable property to the appellants and submit compliance report before this Court. Issues Involved:1. Whether the Revision Petition filed before the Minister for Co-Operation is barred by time in light of the provisions of Section 108 of the Karnataka Cooperative Societies Act, 1959Rs.2. Whether the interest of the auction purchaser is protected on grounds that he is a bona fide third partyRs.3. What orderRs.Issue-wise Detailed Analysis:1. Barred by Time:The primary issue concerns whether the Revision Petition filed before the Minister for Co-Operation was barred by time under Section 108 of the Karnataka Cooperative Societies Act, 1959 (KCS Act). The appellants, small farmers, had their property auctioned due to loan default. The Minister for Cooperation allowed the Revision Petition and set aside the confirmation of sale, but this order was quashed by the High Court on the ground of limitation. Section 108 of the KCS Act allows the State Government to revise orders suo motu at any time or on an application within six months. The Court emphasized that the appellants were poor farmers who had repaid the principal loan amount within the stipulated time, and the auction sale confirmation was illegal. The Court held that the exercise of the power by the Minister must be taken as a suo motu exercise of power, thus not barred by limitation.2. Bona Fide Auction Purchaser:The second issue was whether the auction purchaser's interest should be protected as a bona fide third party. The Court found that the auction purchaser was not a bona fide purchaser. The sale was conducted without proper notice and opportunity for the appellants to file objections. The appellants had repaid the principal loan amount before the confirmation of the auction sale. The Court held that the auction purchaser should have assessed the circumstances of the auction and that the confirmation of the sale after the repayment of the loan was illegal.3. Order:The Supreme Court set aside the judgments and orders of the High Court and restored the order of the Minister for Cooperation. The Court directed the auction purchaser to re-deliver the possession of the immovable property to the appellants and get back the sale consideration amount from the respondent Bank within six weeks. The Court emphasized that the appellants' right to livelihood, guaranteed under Article 21 of the Constitution, was violated due to the illegal auction sale.Conclusion:The Supreme Court allowed the Civil Appeals, set aside the High Court's judgments, and restored the Minister's order. The auction purchaser was directed to return the property to the appellants and retrieve the sale consideration from the Bank. The Court highlighted the importance of substantial justice over technicalities, especially in cases involving the livelihood of poor farmers.