2020 (2) TMI 1301 - SC - Indian Laws

Auction highest bidder denied possession entitled to full refund with 6% interest from first refund request

POPATRAO VYANKATRAO PATIL Versus THE STATE OF MAHARASHTRA & ORS.

SC allowed the appeal, set aside the HC order and held the writ was maintainable despite factual disputes because the respondents' conduct was arbitrary. ... Maintainability of petition - the High Court refused to entertain the petition on the ground that it involves question of facts - refund of excess amount paid - HELD THAT:- No doubt that, normally, when a petition involves disputed questions of fact and law, the High Court would be slow in entertaining the petition under Article 226 of the Constitution of India. However, it is a rule of selfrestraint and not a hard and fast rule. This Court in ABL International Ltd. & Anr. vs. Export Credit Guarantee Corpn. of India Ltd. & Ors. [2003 (12) TMI 584 - SUPREME COURT] has held that a writ petition as against a State or an instrumentality of a State arising out of a contractual obligation is maintainable. Merely because some disputed questions of fact arise for consideration, same cannot be a ground to refuse to entertain a writ petition in all cases as a matter of rule. It could thus be seen, that even if there are disputed questions of fact which fall for consideration but if they do not require elaborate evidence to be adduced, the High Court is not precluded from entertaining a petition under Article 226 of the Constitution. However, such a plenary power has to be exercised by the High Court in exceptional circumstances. The High Court would be justified in exercising such a power to the exclusion of other available remedies only when it finds that the action of the State or its instrumentality is arbitrary and unreasonable and, as such, violative of Article 14 of the Constitution of India. Refund of excess amount paid - HELD THAT:- The action of the respondents, in denying the refund of the amount of the appellant, when the respondents themselves had failed to give possession of the sand block and as a result of which the appellant could not excavate the sand, would smack of arbitrariness. In this premise, we find that the High Court was not justified in relegating the appellant to file a suit - in spite of the appellant being the highest bidder and in spite of him depositing the entire amount of auction, since the possession of the sand block was not given to him for reasons not attributable to him and he could not excavate the sand, he will be entitled to get refund of the amount deposited by him. The impugned order of the High Court dated 6.8.2018 is set aside. The respondents are directed to refund the entire amount received from the appellant along with interest at the rate of 6% per annum from the date on which the appellant made the first request for refund till the date of realisation - appeal allowed - decided in favor of appellant. Issues:1. Entertaining a petition involving disputed questions of fact under Article 226 of the Constitution.2. Refund of auction amount due to non-possession of sand block.3. State's obligation as a model litigant in legal proceedings.Analysis:Issue 1: Entertaining a petition involving disputed questions of fact under Article 226 of the ConstitutionThe Supreme Court emphasized that while disputed questions of fact and law may deter the High Court from entertaining a petition under Article 226, it is not a strict rule but a matter of self-restraint. Citing precedent, the court clarified that in certain cases, even if disputed facts arise, a writ petition can be entertained if it does not require extensive evidence. The court highlighted that the High Court's plenary power must be exercised in exceptional circumstances, especially if the state's actions are found to be arbitrary and unreasonable, violating constitutional mandates.Issue 2: Refund of auction amount due to non-possession of sand blockThe case involved the appellant, who was the highest bidder for a sand block but was denied possession despite depositing the full auction amount. Various authorities confirmed that neither possession nor excavation of sand occurred. The court noted the authorities' acknowledgment of the appellant's situation and the processing of a refund, which was later hindered by the loss of the file in transit. The court deemed the denial of refund to be unreasonable and arbitrary, emphasizing the state's obligation to act fairly and justly towards citizens. Consequently, the court directed the respondents to refund the entire amount with interest to the appellant.Issue 3: State's obligation as a model litigant in legal proceedingsCiting previous judgments, the court reiterated that the state should act as a model litigant, avoiding frivolous and unjust contentions to obstruct justice. The court emphasized the state's duty to meet honest claims, vindicate defenses, and not resort to technicalities to defeat legitimate claims. In this context, the court held that the appellant, having fulfilled his obligations as a bidder, was entitled to a refund due to non-possession of the sand block, emphasizing the state's duty to act fairly and justly towards citizens in legal matters.In conclusion, the Supreme Court allowed the appeal, set aside the High Court's order, and directed the respondents to refund the entire amount to the appellant with interest, highlighting the state's obligation to act as a model litigant and ensure justice for its citizens.