TaxTMI 
TaxTMI 
2007 (1) TMI 253
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....to the questions as also the fact involved in each of these matters, we may at the outset notice that one Harshad Mehta was a person notified under the Act. The private respondents herein being his relatives were also notified (hereinafter referred to as 'the notified parties'). Apart from late Harshad S. Mehta, the Custodian had notified 29 entities in terms of section 3 of the said Act, inter alia, comprising three of his younger brothers, his wife, wives of two of his younger brothers. 3. In the proceedings initiated before the Special Court various applications were filed. Properties belonging to the said late Harshad S. Mehta or other notified entities were put on auction. The auctioned properties comprised of commercial as also the residential ones. The residential properties, inter alia, were situate at Madhuli. Order of this Court 4. Notified parties questioned the validity and/or legality of the said auction sales. They ultimately came to this Court. Whereas auction sales in respect of the commercial properties were allowed to be completed by orders passed by this Court from time-to-time, the auction sale in respect of the residential properties was the subject-ma....
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....the Custodian and the notified parties, a fresh auction sale was directed to be held. Terms and Conditions of Sales 6. In the aforementioned backdrop of events, we may notice the relevant terms and conditions of sale : "3.The offers should be submitted in a sealed envelope superscribed with the words "Bid for sale in respect of Residential Flats/Office Premises (mention the name of the property)". There shall be only one consolidated bid in respect of each of the following properties (a) Maduli; (b) Khar; ( c) Guru Krupa. In respect of other properties, single bid for a particular flat/property or combined bid for more than one flat/property is permitted; however, in such cases, the earnest money for consolidated bid would be 2 per cent of the bid amount otherwise, the earnest money to be deposited for each property shall be as mentioned against respective property in the schedule. Separate tender form and agreement will have to be submitted for each bid property. 4.The offers should reach at the office of the Custodian at 10th floor, Nariman Bhawan, 227, Vinay K. Shah Marg, Nariman Point, Mumbai-400 021 by 2.00 p.m. on the dates specified for each property described in....
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....g Purchaser as and by way of liquidated damages while any excess on such resale shall not be available to such defaulting purchaser. This condition shall be without prejudice to Custodian's right and remedies, which the Custodian shall otherwise have in law and/or under these conditions. 13.The Purchaser shall not be liable to pay outgoings if any, in respect of the said property for the period prior to the date of confirmation of sale and all such outgoings shall be paid by the Custodian till such confirmation. 16.Upon payment of the purchase price in full and all costs, charges and expenses mentioned above, Custodian's authorized representa- tive shall sign such papers and documents as may be necessary for transfer of the said property in the name of the Purchaser. Such documents of transfer shall be prepared and executed by and at the cost, charges and expenses of the Purchaser. 20.In case of sale of the said property is not sanctioned by the Special Court in favour of the highest bidder or is set-aside, the initial deposit made in terms of para 4 above shall be refunded to such bidder without interest, other costs, charges and expenses expended by him/her for the prope....
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....rected : "The learned counsel for the Custodian brings on record the result of the bids and the order of the Special Court dated 17-12-2003 and 20-1-2004. The learned counsel for the Appellants proposes to offer his comments on the bids and the two orders of the Special Court. Let it be done within two weeks. The process of finalizing the bids according to law may be proceeded ahead by the Special Court. However, the finalization shall be subject to the result of these appeals." 9. It is, however, stated that the learned Judge, Special Court did not take any further step to finalize the bids pursuant thereto or in furtherance thereof. As indicated hereinbefore, there being no serious dispute in regard to auction sale of the commercial properties, this Court by an order dated 5-5-2004 directed that the interim order dated 31-1-2004 would not apply to the sale of commercial properties. Pursuant to the directions and/or observations made by the learned Judge, Special Court, an application was filed for impleadment by the appellant. An application was also filed for deposit of the amount in an interest bearing account of a Nationalized Bank. The said applications were allowed.....
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....matter of the main application filed by the custodian. Therefore, the Applicant has no right to intervene. As I find that the Applicant was liable to deposit the balance amount of consideration as per the terms of the bid, the custodian is directed to consider whether the amount of earnest money deposited by the Applicant is to be forfeited or not and submit a report to the Court seeking appropriate orders. Application disposed of." 11. Pursuant to the said order, the Custodian submitted its report on 21-7-2006, recommending forfeiture of earnest money deposited by the appellant, whereupon the learned Judge, Special Court by reason of the impugned order dated 31-7-2006 directed : "3.Both submissions made on behalf of the bidder Yogesh Mehta have no substance. So far as bidders in relation to commercial properties are concerned, though they did not deposit the amount immediately because there was stay order from the Supreme Court operating, they deposited the amount immediately after the Supreme Court vacated the stay on sale of commercial properties. Therefore, it was open to the bidder Mr. Yogesh Mehta to deposit the amount at least immediately after the Supreme Court decide....
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.... of the Nominees nominated by the joint occupants/highest bidders. The custodian is accordingly so directed. In the Order dated 5-1-2004 passed in Civil Application No. D. No. 255575/03, D. No. 25620/03, D. No. 25644/03 and D. No. 25815/03, the Supreme Court has directed this Court to open the bid and place the result thereof before the Hon'ble Supreme Court. Therefore, the highest bid given by the highest bidder is tentatively accepted subject to final order to be passed by the Hon'ble Supreme Court in the abovesaid proceedings." [Emphasis supplied] 13. Appellants herein in that case also filed applications for intervention before the Court. 14. The impugned order was passed ex parte. Appellants were not given any notice. The fact that the building had already been put on sale by way of auction and the bids had tentatively been accepted by the learned Judge, Special Court by an order dated 28-1-2004 was not brought to its notice. Question 15. The short question which, therefore, arises for consideration is as to what would be the interpretation of the said terms and conditions of sale. Findings 16. The auction was to be held at two stages : (i) submission of t....
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....icer appointed by him. When the full purchase price is paid a certificate issues in Form No. XXII and is sent to the Sub-Registrar for registration. If the balance of the price is not paid, the amount of advance in deposit is forfeited and the auction purchaser has no claim to the property. 9. The passing of title thus presupposes the payment of price in full and the question is at what stage this takes place. Obviously, there are several distinct stages in the sale of property. These are: (a) the fall of the hammer and the declaration of the highest bid; (b) the approval of the highest bid by the Settlement Commissioner or officer appointed by him; (c) payment of the full price after approval of the highest bid; (d) grant of certificate; and (e) registration of the certificate." (p. 1997) 21. Yet again in State of Uttar Pradesh v. Kishori Lal Minocha [1980] 3 SCC 8, this Court held : "The question that remains to be answered is, even if there was no statutory provisions, whether there was a concluded contract between the appellant and the respondent under which the respondent was liable to pay 20,100 which represents the difference between the highest bid at the first sal....
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....er to comply with the conditions, but what escaped the notice of the learned Judge was that sanction could not have been granted on a provisional basis. If there could be only one order of sanction, the same would mean the final one and not the provisional one. That is how the parties including the Custodian understood the same. In his report the Custodian stated : "The Supreme Court has further directed at page 50 that 'the learned Special Court shall proceed to pass appropriate orders as regard confirmation of the auction sales in respect of commercial properties'. The Custodian states that commercial properties arc reflected at Serial Nos. 1 to 13 of Exhibit 'A'. In respect of these properties, where sale had been sanctioned by this Hon'ble Court subject to the orders of the Hon'ble Supreme Court, full payments have been received and possession of the properties has also been handed over to the purchasers. The Custodian therefore prays that this Hon'ble Court may be pleased to confirm the sale of commercial properties as listed at Sl. Nos. 1 to 13 in the table annexed hereto as Exhibit 'A'. The Custodian also states that this Hon'ble Court had also confirmed sale of the....
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.... while adjusting the amount paid by him towards earnest money deposit. In this case the acceptance of the tender was after the validity of the period. Therefore, this is not a case which could authorise the Government to recover the loss from the respondent. But it is a case of withdrawal of tender and the effect of it is to be considered. Since the tender is valid for a period of 45 days and withdrawal is before expiry of the period the earnest money is to be forfeited. The stand of the respondent that because of delay in declaration of the final sale results there was no bar on withdrawal of the tender is clearly untenable. Once the tender is withdrawn the result is that the tenderer who withdraws the tender cannot take the stand that since the final sale result has not been declared there is no bar on the withdrawal." (p. 213) 28. The said decision cannot be said to have any application whatsoever to the fact of the present case. The acceptance of the bid herein was subject to order of this Court which, in our opinion, thus, by reason of the order of the Special Court or otherwise did not result in a concluded contract. The deposit was to be made within sixty days from the da....