2022 (2) TMI 1388 - SC - Indian Laws

Supreme Court Upholds Single Judge, Stresses Auction Integrity

K. Kumara Gupta Versus Sri Markendaya and Sri Omkareswara Swamy Temple and Ors.

The Supreme Court quashed the Division Bench's order for re-auction and upheld the judgment of the learned Single Judge. It emphasized the importance of ... Re-auction of the entire properties by fixing the upset price higher than what has been fixed earlier - Sale in favour of highest bidder set aside - representations made by third parties, who did not even participate in the auction proceedings - HELD THAT:- Once the Appellant was found to be the highest bidder in a public auction in which 45 persons had participated and thereafter when the sale was confirmed in his favour and even the sale deed was executed, unless and until it was found that there was any material irregularity and/or illegality in holding the public auction and/or auction/sale was vitiated by any fraud or collusion, it is not open to set aside the auction or sale in favour of a highest bidder on the basis of some representations made by third parties, who did not even participate in the auction proceedings and did not make any offer. Reliance placed in the case of JASBHAI MOTIBHAI DESAI VERSUS ROSHAN KUMAR HAJI BASHIR AHMED [1975 (12) TMI 167 - SUPREME COURT] where it was held that despite adequate opportunity, if a person has not lodged any objection at an appropriate stage and time, he could not be said to have been in fact, grieved - It is also required to be noted that the sale was confirmed in favour of the Appellant by the Commissioner, Endowments Department after obtaining the report of the Assistant Commissioner. Therefore, in the aforesaid facts and circumstances of the case, the High Court ought not to have ordered re-auction of the land in question after a period of 23 years of confirmation of the sale and execution of the sale deed in favour of the auction purchaser by observing that the value of the property might have been much more, otherwise, the object and purpose of holding the public auction and the sanctity of the public auction will be frustrated. Unless there is concrete material and it is established that there was any fraud and/or collusion or the land in question was sold at a throw away price, the sale pursuant to the public auction cannot be set aside at the instance of strangers to the auction proceeding. n the present case, though Shri Jagat Kumar immediately after finalising the auction stated that he is ready and willing to pay a higher price, however, subsequently, he backed out. If the auction/sale pursuant to the public auction is set aside on the basis of the such frivolous and irresponsible representations made by such persons then the sanctity of a public auction would be frustrated and the rights of a genuine bidder would be adversely affected. The impugned judgment and order passed by the Division Bench of the High Court is unsustainable and deserves to be quashed and set aside and is accordingly quashed and set aside - Appeal allowed. Issues Involved:1. Legality of the auction process.2. Locus standi of the objectors.3. Adequacy of the sale price.4. Validity of subsequent objections and representations.5. Rights of the auction purchaser.6. Role and interest of the Temple Trust/Devasthanam.7. Judicial discretion in ordering re-auction.8. Public Interest Litigation (PIL) considerations.Detailed Analysis:1. Legality of the Auction Process:The auction was conducted on 24.06.1998 by the Executive Officer of the Temple Trust, following due procedure under the Endowments Act, 1987. Forty-five people participated, and the appellant was declared the highest bidder at Rs. 13,01,000/- per acre. The sale was confirmed by the Commissioner, Endowments Department, and a sale deed was executed on 31.12.1998. The Division Bench of the High Court did not find any irregularity or illegality in the auction process.2. Locus Standi of the Objectors:Shri L. Kantha Rao, who did not participate in the auction, filed a writ petition challenging the auction. The Supreme Court emphasized that a person who did not participate in the auction has no locus standi to challenge the auction. The Court cited the case of *Jasbhai Motibhai Desai v. Roshan Kumar* to highlight that only those with a personal or individual right in the subject matter have standing to invoke extraordinary jurisdiction under Article 226.3. Adequacy of the Sale Price:The base price was Rs. 4,00,000/- per acre, and the highest bid was Rs. 13,01,000/- per acre. The Division Bench ordered a re-auction based on subsequent offers by third parties, which the Supreme Court found inappropriate. The Court noted that the value of the property must be considered at the time of the auction, not years later, and there was no concrete material to prove that the auction price was inadequate at that time.4. Validity of Subsequent Objections and Representations:The objections raised by Shri Jagat Kumar and Shri L. Kantha Rao after the auction were found to lack bona fides. Neither participated in the auction, and their subsequent offers were seen as attempts to frustrate the auction process. The Court held that objections should not be entertained from those who did not participate in the auction, especially when no fraud or collusion was established.5. Rights of the Auction Purchaser:The appellant, as the highest bidder, had his bid confirmed, paid the full consideration, and had a sale deed executed in his favor. The Supreme Court held that the rights of a genuine bidder should not be adversely affected by subsequent frivolous representations. The sanctity of the public auction must be maintained unless there is concrete evidence of fraud or collusion.6. Role and Interest of the Temple Trust/Devasthanam:The Temple Trust did not object to the auction at any stage until the judgment by the learned Single Judge. The Supreme Court noted that the Temple Trust, having conducted the auction and executed the sale deed, could not later challenge the adequacy of the sale price. The Trust's appeal was seen as collusive and not in the interest of the temple.7. Judicial Discretion in Ordering Re-auction:The Division Bench ordered a re-auction based on the elapsed time and the rise in property value. The Supreme Court found this inappropriate, emphasizing that the auction's fairness must be judged based on the conditions at the time of the auction. The Court reinstated the judgment of the learned Single Judge, which had quashed the re-auction order.8. Public Interest Litigation (PIL) Considerations:The Court observed that the proceedings initiated by Shri L. Kantha Rao were in the nature of a PIL but were actually driven by private interest. The Court cited *State of Uttaranchal v. Balwant Singh Chaufal* to caution against PILs filed for extraneous considerations. The Court emphasized the need to verify the bona fides of the petitioner in PILs and discourage those filed for personal gain.Conclusion:The Supreme Court quashed the Division Bench's order for re-auction and restored the judgment of the learned Single Judge, emphasizing the need to maintain the sanctity of public auctions and the rights of genuine bidders. The appellant was directed to pay an additional sum to the Temple Trust, considering the time elapsed and the interest of the temple.