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Sunday, April 27, 2014

Doctrine of Public Trust - Sale of property by public or private - Cachar Tea Farming and Industrial Cooperative Society-Ex- Officio liquidator issued a notice inviting tenders for the sale of Chincoorie Tea Estate owned by Cachar Tea Farming and Industrial Cooperative Society Ltd. The concerned tea estate measured 9951 bighas.- tender of the sale of the concerned land was floated without the prior approval of the government - Tender Notification was cancelled - challenged - High court allowed the writ and directed to execute a registered sale deed - Apex court held that in the light of the legal principle laid down by this Court with regard to Public Trust Doctrine in Mahesh Chandra’s case (supra) and the cases mentioned supra, we are inclined to observe that the liquidator did not act fairly and reasonably in the best interest of the public of the State whose interest he is required to uphold. As per the material evidence put on record, the liquidator and the concerned authority did not take any step to improve the condition of the land and sell it at reasonable andstandard price prevalent at the time of sale of the property in question. Hence, we hold that the tender process initiated by the appellants is not legal and is liable to be set aside. We direct the concerned authority to issue fresh notice of tender for selling the land. The notice shall be made available in government websites and other local and national newspapers so as to encourage and invite more bidders. In the meanwhile, the authority shall take all necessary steps to improve and restore the condition of the land so as to make the purchase of the land free from legal encumbrances.= STATE OF ASSAM & ORS. ………APPELLANTS VS. SUSRITA HOLDINGS PVT. LTD. ……RESPONDENT= 2014 ( April.Part ) judis.nic.in/supremecourt/filename=41462

  Doctrine of Public Trust - Sale of property by public or private - Cachar  Tea  Farming  and
Industrial Cooperative Society-Ex- Officio liquidator issued a notice inviting tenders for the sale  of  Chincoorie Tea Estate owned by Cachar Tea Farming and  Industrial  Cooperative  Society
Ltd. The concerned tea estate measured 9951 bighas.- tender of  the  sale  of  the  concerned
land was floated without the prior approval of the  government - Tender Notification was cancelled - challenged - High court allowed the writ and directed to execute a registered sale deed - Apex court held that in the light of the legal principle laid down by  this  Court with regard to Public Trust Doctrine in Mahesh Chandra’s  case  (supra)  and the cases mentioned supra, we are inclined to observe  that  the  liquidator did not act fairly and reasonably in the best interest of the public of  the State whose interest he is required to uphold. As per the material  evidence
put on record, the liquidator and the concerned authority did not  take  any step to improve the condition of the land and  sell  it  at  reasonable  andstandard price prevalent at the time of sale of the property in question. Hence, we hold that the tender process initiated by  the  appellants  is
not legal and is liable to be set aside. We direct the  concerned  authority to issue fresh notice of tender for selling the land. The  notice  shall  be made  available  in  government  websites  and  other  local  and   national newspapers so as to encourage and invite more  bidders.  In  the  meanwhile, the authority shall take all necessary steps  to  improve  and  restore  the condition of the land so as to make the  purchase  of  the  land  free  from legal encumbrances.=

whether the appellants lawfully cancelled the tender process in relation  to
the property in question in view of the discrepancies crept in  the  process
of transfer of the land in favour of the respondent.=

 It is an undisputed fact that in the present  times  consideration  of
Rs.1.11 crores for 9000 bighas of land does not reflect the  correct  market
value prevalent at the relevant point of time and  not  even  to  the  civil
valuer’s report without either factual or legal basis. 
As per the report  of
the Joint Registrar of Co-operative Societies dated 31.02.2006, the  updated
registered value of the concerned tea garden stands at  Rs.4,24,72,124/-  as
opined by Sri. M.P. Gindora, Tea  Consultant  and  Registered  Valuer.  This
report however, carried a qualifier along with  it.  I
t  is  stated  in  the
report on the assumption that it is hardly  expected  that  any  party  will
come forward to purchase an existing tea garden with huge  encroachment.  As
per the facts put on record,  the  total  area  of  the  estate  is  1247.29
Hectares out of which 70% is encroached. 
However, this  alone  cannot  be  a
ground for the Joint Registrar of Co-operative Societies to  opine  that  it
would not fetch the value of the property as indicated by the valuer in  the
report. 
Therefore, there was no justification for  the  appellants  to  sell
the property at an  extremely  low  price  without  any  effort  of  issuing
eviction notice to the alleged encroachers to evict them  by  following  the
due process of law. 
There will not be any impediment for the  appellants  to
evict trespassers from the land in question without  considering  the  above
relevant aspects of the case. 
The High Court granted the  relief  in  favour
of the respondent in its writ petition by quashing the order  of  cancelling
the tender process by the  officer  of  the  appellant  No.  1  and  further
directing the appellants to execute the sale deed  accepting  the  offer  of
the respondent.

30. Further, according to the material placed on record, the land  concerned
involves significant amount of public  money.  Therefore,  its  transfer  in
favour of the respondent attracts the greatest amount of responsibility  and
caution. The competent valuer had already determined  the  registered  value
of land at       Rs.4,24,72,124/-. Therefore, it was the  responsibility  of
the  concerned  authority  to  ensure  all  steps  which  should  have  been
undertaken to sell the land at a minimum cost of Rs.4,24,72,124/-  or  above
instead of its attempt to sell the same at  a  lower  price  merely  on  the
pretext that no one would come up to  purchase  the  land  at  the  valuer’s
price or that since the land is an  encroached  land,  the  lower  price  is
justified cannot be accepted.

              Therefore, in the light of the legal principle laid down by  this  Court
with regard to Public Trust Doctrine in Mahesh Chandra’s  case  (supra)  and
the cases mentioned supra, we are inclined to observe  that  the  liquidator
did not act fairly and reasonably in the best interest of the public of  the
State whose interest he is required to uphold. As per the material  evidence
put on record, the liquidator and the concerned authority did not  take  any
step to improve the condition of the land and  sell  it  at  reasonable  and
standard price prevalent at the time of sale of the property in question.

33. Hence, we hold that the tender process initiated by  the  appellants  is
not legal and is liable to be set aside. We direct the  concerned  authority
to issue fresh notice of tender for selling the land. The  notice  shall  be
made  available  in  government  websites  and  other  local  and   national
newspapers so as to encourage and invite more  bidders.  In  the  meanwhile,
the authority shall take all necessary steps  to  improve  and  restore  the
condition of the land so as to make the  purchase  of  the  land  free  from
legal encumbrances.

34. Since, the respondent had paid up the entire bid amount, it is  entitled
to refund of the entire amount. Further, since it is also  proved  that  the
amount paid by the  respondent  has  been  used  to  pay  the  arrears,  the
respondent is entitled to interest for the amount paid  @7%  p.a.  from  the
date of payment till the date of refund.

35. Accordingly, we set aside the order dated 2.2.2012 passed  by  the  High
Court of Guwahati in M.C. No.5 of 2012 in Writ Appeal Sl. No.168339 of  2011
after condoning the delay and consequently  we  allow  the  writ  appeal  by
allowing this Civil Appeal.
2014 ( April.Part ) judis.nic.in/supremecourt/filename=41462
GYAN SUDHA MISRA, V. GOPALA GOWDA

               NON-REPORTABLE




                        IN THE SUPREME COURT OF INDIA
                        CIVIL APPELLATE JURISDICTION


                        CIVIL APPEAL NO.4849 OF 2014
                    (ARISING OUT OF SLP(C) 14843 OF 2012)








STATE OF ASSAM & ORS.                        ………APPELLANTS

                                     VS.

SUSRITA HOLDINGS PVT. LTD.                      ……RESPONDENT




                               J U D G M E N T



V. GOPALA GOWDA, J.


     Leave granted.

2.  This appeal is filed by the appellants questioning  the  correctness  of
the impugned judgment and final Order dated  2.2.2012  passed  by  the  High
Court of Guwahati, Assam,  in  M.C.  No.  5  of  2012  in  Writ  Appeal  Sl.
No.168339  of  2011,  urging  various  facts  and   legal   contentions   in
justification of their claim.

3. Necessary relevant facts are stated hereunder to appreciate the  case  of
the appellants and also to find out whether the appellants are entitled  for
the relief as prayed in this appeal.

4. The Government of Assam issued instructions in respect of  alienation  of
tea garden land from time to time, particularly, letter  no.  RSS  573/94/25
dated 26.3.2001 of the Government of Assam, Revenue (Settlement)  Department
requiring prior approval of the Government.

5. On 30.10.2006, following  the  dissolution  of  Cachar  Tea  Farming  and
Industrial Cooperative Society, the Cachar  Ex- Officio  liquidator,  Cachar
Tea  Farming  and  Industrial  Cooperaive  Society  Ltd,   (in   short   the
‘Liquidator’), issued a notice inviting tenders for the sale  of  Chincoorie
Tea Estate owned by Cachar Tea Farming and  Industrial  Cooperative  Society
Ltd. The concerned tea estate measured 9951 bighas.

6. As on 5.1.2007, no tender had been cast in response to the tender  notice
issued. Therefore, a fresh tender notice dated 5.1.2007, was issued  by  the
liquidator with minor modifications made on the previous tender notice.  The
land mentioned in the modified notice admeasured 9000 bighas. The last  date
for submission of tenders was fixed at 29.1.2007 which was further  extended
to 26.2.2007 upto 2 p.m. by another modified tender notice dated  28.1.2007.


7. It is pertinent to note that the tender of  the  sale  of  the  concerned
land was floated without the prior approval of the  government  as  required
by instructions issued in respect of alienation  of  tea  garden  land  from
time to time, particularly, letter no. RSS 573/94/25 dated 26.3.2001 of  the
Government  of  Assam  Revenue  (Settlement)  Department.  The  other  codal
formalities for tender process were not followed either.

8. On 26.2.2007, two tender bids were received. The respondent  herein  made
a bid for Rs.1.11 crore. Another party, M/s Luxmi Township made  a  bid  for
Rs.1.05 crore. However,  since  the  respondent  had  submitted  his  tender
document by  hand  at  3:45  p.m.,  the  same  was  objected  by  the  other
contender. The respondent was still considered the only valid bidder.

9. The Liquidator subsequently, vide Order dated  21.4.2007,  cancelled  the
tender process by observing that the price quoted by  the  parties  for  the
9000 bighas of land is not at all justifiable. Further, M/s  Luxmi  Township
Pvt. Ltd. had intimated that the entire  stamp  duty  for  the  transfer  of
land, in case of  a  valid  sale,  has  to  be  borne  by  the  Ex-  Officio
Liquidator of CTFICS Ltd. The bid value is based  on  this  condition  which
the liquidator did not agree.

10. The respondent  thereafter,  filed  a  Writ  Petition  (C)No.  1928/2007
before the Guwahati High Court  after the tender process had been  cancelled
vide Order dated 21.4.2007. In the  Writ  Petition,  the  respondent  sought
directions for the Official respondents therein  to  issue  final  Order  of
award in favour of the respondent  herein.  The  respondent  further  sought
restrain order from cancelling the tender process and  initiation  of  fresh
tender process. The High Court, vide Order dated 27.4.2007,  restrained  the
Official respondents therein from initiating fresh process for the  disposal
of the land involved. The Order further clarified that it  shall  not  be  a
bar to issue Order in favour of the respondent herein.

11. The Liquidator, on 9.5.2007, issued notice in a local daily-  The  Assam
Tribune, declaring that the tender process had  been  cancelled  vide  Order
dated 21.4.2007. The respondent thereafter, filed another Writ Petition  (C)
No. 2416/2007 before the Guwahati High  Court  impugning  the  notice  dated
9.5.2007. The High Court, vide Order  dated  23.5.2007,  issued  notice  and
directed that the notice dated 9.5.2007 shall not be given effect  till  the
returnable date.

12. The Respondent next filed  a  Writ  Petition  (C)         No.  2971/2007
challenging the cancellation Order by the  liquidator  dated  21.4.2007.  In
the meantime, the Joint Registrar of the Co-operative Societies forwarded  a
report to the Registrar of the Co-operative Societies by issuing  letter  to
him.

13. The Deputy Registrar who had cancelled the sale of the  tea  garden  was
transferred by that time. His successor vide letter dated  2.7.2009,  sought
permission/approval of the  Registrar  of  the                  Co-operative
Societies to dispose of the land in question in  favour  of  the  respondent
herein in the light of the Order of the High Court dated 27.4.2007  in  W.P.
(c) No. 1928/ 2007.

14. Thereafter, vide  Order  dated  23.7.2009,  the  Registrar  of  the  Co-
operative Societies, permitted the Liquidator to  dispose  of  the  property
involved in favour of the respondent herein.

15. The  Deputy  Registrar  issued  an  award  letter  dated  27.8.2009  and
thereafter, signed the  agreement  for  sale  of  the  tea  garden  land  on
2.9.2009 and sent a draft copy of the Deed of Agreement for the sale of  the
land in question. The respondent was required to make an initial  deposition
of 25% of the total bid initially within a week of issuance thereof, as  per
the terms laid in Clause 3 of the Deed of Agreement. The  remaining  75%  of
the total consideration amount was required to be paid by the respondent  at
the time of execution of the sale deed, subject however, to  the  withdrawal
of W.P. (C) No. 1928/2007 by the respondent. The Writ  Petition  was  closed
subsequently since it was not pursued.

16.  The  sub-Registrar  (Registration),  Silchar  was  approached  by   the
liquidator on  9.12.2009  for  registration  of  the  sale  deed.  The  sub-
Registrar asked the  liquidator  to  produce  permission/approval  from  the
Revenue Department for registration of the  sale  deed.  The  liquidator  on
10.12.2009, wrote to the Registrar of  the  Co-operative  Societies  seeking
instruction on the same. The  Liquidator  however,  could  not  produce  the
government permission for execution of the sale deed in respect of the  land
in question. Therefore, the sale deed could not be  executed  in  favour  of
the respondent.

Therefore, vide  Communication  dated  20.1.2010  from  the  Secretary,  Co-
operation Department to the Deputy Commissioner, Cachar, he was directed  to
refrain from registering the  sale  deed  in  respect  of  the  property  in
question without the clearance from the Co-operation Department.

17. Aggrieved by the same, the respondent filed another  Writ  Petition  (C)
No. 4147/2010 before the High Court seeking a  direction  to  the  appellant
for execution of the  sale  deed  in  its  favour  and  also  to  quash  the
communication  dated  20.1.2010  of  the  Secretary  of   the   Co-operation
Department which gave direction  to  the  Deputy  Commissioner,  Cachar,  to
refrain him from  registering the sale deed without the clearance of the Co-
operation Department.

18. The High Court held that since the amount has already been paid  by  the
respondent to the  Department,  there  is  no  question  of  taking  further
approval from the government. Therefore, the High Court directed the  Deputy
Registrar of the Co-operative Societies to follow up the  execution  of  the
sale deed in respect of the property and its registration.

19. The said order was forwarded to the higher authority. However, the  sale
deed did not get registered subsequently which was followed  by  a  Contempt
Case No. 443/2010 initiated by the respondent.

20. The appellants filed a Review Petition No. 112/  2010  before  the  High
Court seeking review of its Order dated 6.8.2010  passed  in  W.P.  (c)  No.
4147/2010. In the meanwhile, the Deputy  Commissioner,  Cachar  vide  letter
dated 13.10.2010 to Secretary, Revenue, sought approval  of  the  government
for alienation of the garden land.  In  response  to  the  letter  mentioned
above, the Deputy Secretary, Revenue and Disaster Management wrote a  letter
dated 29.11.2010 to the Deputy  Secretary,          Co-operation  Department
to submit a report in order to accord approval for alienation of  the  land.
Another letter was issued to  the  Deputy  Commissioner,  Cachar  to  submit
proposal as per Government land policy  and  guidelines  for  alienation  of
garden land.

21. The Review Petition No. 112/2010 filed by the  appellant  was  dismissed
by the High Court on 2.2.2011.

      On 29.6.2011, the  letter  dated  24.5.2011  was  put  up  before  the
Principal  Secretary.  The  Principal  Secretary  in  turn,  forwarded   the
proposal to the Minister, Revenue and  Disaster  Management  Department  for
obtaining necessary approval from the Chief Minister of Assam State  on  the
condition that the land under transfer will be used only for the purpose  of
tea cultivation and no  bona  fide  worker  or  the  erstwhile  Co-operative
Society should be adversely affected by the transfer of ownership.

22. The Chief  Minister  of  the  State  observed  that  there  are  various
discrepancies in the proposal forwarded to him and therefore,  directed  the
Revenue  Department  to  examine  the  matter  and  to  consult  the   Legal
Remembrancer for further course of action in case discrepancies  are  found.
The Legal Remambrancer observed that since loss of  huge  amount  of  public
money to the  tune  of  several  crores  is  involved  in  the  matter,  the
government might prefer an appeal before the Division Bench in wider  public
interest along with petition  for  condonation  of  delay.  Accordingly,  an
appeal was filed by the appellants against the Order dated  6.8.2010  passed
by the High Court in W.P. (C) No. 4147/2010. The High  Court  however,  vide
Order dated 2.2.2012, rejected the  application  for  condonation  of  delay
being M.C. No. 5/ 2011 in WA Sl. No. 168339/2011.

23. The High Court opined that the time lag between 2.2.2011 and  22.11.2011
has not at all been convincingly explained by  the  appellants.  Though  the
State is in shackle by unavoidable official formalities  to  streamline  its
decision,  however,  the  explanation  offered  by  the  appellants  towards
justification of the delay in filing the appeal is insufficient and  it  has
dismissed the condonation of delay application  and  consequently  dismissed
the writ appeal.

24. The appellants have come in appeal  before  this  Court  mainly  on  two
grounds:

Firstly, the impugned Order  is  violative  of  the  principles  of  natural
justice. The appellants in the writ proceedings, have not been  afforded  an
opportunity to file their affidavits on merits.  Also,  the  Order  in  this
perspective is unsafe to be acted  upon  since  enormous  amount  of  public
revenue is involved in the matter.

Secondly, the appellants claim that the transaction sought to  be  completed
squarely within the realm of a contract.  Therefore,  no  direction  in  the
nature of mandamus could have been issued to the appellants as the  same  is
not permissible in law, and rendered the impugned decision void ab initio.

25. The impugned Order passed by the  High  Court  stated  that  the  appeal
brought before it by the appellants has been  dismissed  on  the  ground  of
delay. Though, submissions were made by  both  the  parties  explaining  the
cause for delay. However, instead of deciding this issue on merit which  was
required in this case as it involved substantial question of law and  public
interest, the Court dismissed the case on the ground of delay after  hearing
the submissions of the parties.

26. We are of the opinion that  the  High  Court  erred  in  dismissing  the
appeal of the appellants on the ground of delay since this  appeal  requires
to be heard on merit. There is no qualm on the fact that there  has  been  a
delay of 9 months in filing the Review Petition.  The  appellants  contended
that the delay was due to unavoidable government procedure involved.

27. It has been held by this Court in the case of G.  Ramegowda,  Major  and
Ors. v. Special Land Acquisition Officer, Bangalore[1] that:

        “15. In litigations to which Government is a  party  there  is  yet
        another aspect  which,  perhaps,  cannot  be  ignored.  If  appeals
        brought by Government are lost for  such  defaults,  no  person  is
        individually affected; but what, in the ultimate analysis,  suffers
        is public interest. The decisions of Government are collective  and
        institutional decisions and do not  share  the  characteristics  of
        decisions of private individuals.




          XXX                     XXX                   XXX




        17. Therefore, in assessing what, in a particular case, constitutes
        "sufficient cause" for purposes of Section 5, it might, perhaps, be
        somewhat unrealistic to exclude from  the  considerations  that  go
        into the judicial verdict, these factors which are peculiar to  and
        characteristic of the functioning of  the government.  Governmental
        decisions are proverbially slow  encumbered,  as  they  are,  by  a
        considerable degree of procedural red tape in the process of  their
        making.”




Therefore, regarding the matter of delay in this case, we  are  inclined  to
observe that the  malfunctioning  of  the  State  Government  regarding  the
unpardonable lackadaisical attitude towards pursuing matter in the court  of
law cannot be the reason for loss of public property, which involves  public
money and causes loss to the public exchequer. Therefore, we  feel  that  it
is a fit case to exercise our discretionary power to condone  the  delay  in
filing the writ appeal in the interest of public at large as the High  Court
has failed to do so. We therefore, condone the delay in  filing  the  Review
Petition by the appellants before the High Court in the larger  interest  of
public. However, this case should not set a precedent to justify  inordinate
delays on the part of the State Government to  file  appeals  or  any  other
legal proceedings required to be  filed  within  the  period  of  limitation
prescribed in law.

28. The only legal issue before  us  for  our  consideration  is  therefore,
whether the appellants lawfully cancelled the tender process in relation  to
the property in question in view of the discrepancies crept in  the  process
of transfer of the land in favour of the respondent.

29.   It is an undisputed fact that in the present  times  consideration  of
Rs.1.11 crores for 9000 bighas of land does not reflect the  correct  market
value prevalent at the relevant point of time and  not  even  to  the  civil
valuer’s report without either factual or legal basis. As per the report  of
the Joint Registrar of Co-operative Societies dated 31.02.2006, the  updated
registered value of the concerned tea garden stands at  Rs.4,24,72,124/-  as
opined by Sri. M.P. Gindora, Tea  Consultant  and  Registered  Valuer.  This
report however, carried a qualifier along with  it.  It  is  stated  in  the
report on the assumption that it is hardly  expected  that  any  party  will
come forward to purchase an existing tea garden with huge  encroachment.  As
per the facts put on record,  the  total  area  of  the  estate  is  1247.29
Hectares out of which 70% is encroached. However, this  alone  cannot  be  a
ground for the Joint Registrar of Co-operative Societies to  opine  that  it
would not fetch the value of the property as indicated by the valuer in  the
report. Therefore, there was no justification for  the  appellants  to  sell
the property at an  extremely  low  price  without  any  effort  of  issuing
eviction notice to the alleged encroachers to evict them  by  following  the
due process of law. There will not be any impediment for the  appellants  to
evict trespassers from the land in question without  considering  the  above
relevant aspects of the case. The High Court granted the  relief  in  favour
of the respondent in its writ petition by quashing the order  of  cancelling
the tender process by the  officer  of  the  appellant  No.  1  and  further
directing the appellants to execute the sale deed  accepting  the  offer  of
the respondent.

30. Further, according to the material placed on record, the land  concerned
involves significant amount of public  money.  Therefore,  its  transfer  in
favour of the respondent attracts the greatest amount of responsibility  and
caution. The competent valuer had already determined  the  registered  value
of land at       Rs.4,24,72,124/-. Therefore, it was the  responsibility  of
the  concerned  authority  to  ensure  all  steps  which  should  have  been
undertaken to sell the land at a minimum cost of Rs.4,24,72,124/-  or  above
instead of its attempt to sell the same at  a  lower  price  merely  on  the
pretext that no one would come up to  purchase  the  land  at  the  valuer’s
price or that since the land is an  encroached  land,  the  lower  price  is
justified cannot be accepted. The strong  reliance  placed  by  the  learned
senior counsel, Mr. Mehta on the  report  of  the  Joint  Registrar  of  Co-
operative Societies, is the basis for the High Court for grant of relief  in
favour of the respondent is wholly untenable in law and therefore, the  same
cannot be accepted by this Court. The High Court  should  have  noticed  the
above relevant aspects of the case  in  passing  the  impugned  order  which
would certainly affect the public interest.

31. With regard to the procedure to be followed while selling the  property,
this Court, in the case of Mahesh Chandra  v.  Regl.  Manager,  U.P.F.C.[2],
has held  :-

          “15. …..  Every wide power, the exercise of which has far reaching
          repercussion,  has  inherent  limitation  on  it.  It  should   be
          exercised to effectuate the purpose of the  Act.  In  legislations
          enacted for general benefit and common good the responsibility  is
          far graver.  It  demands  purposeful  approach.  The  exercise  of
          discretion should be objective. Test  of  reasonableness  is  more
          strict. The public functionaries should be duty  conscious  rather
          than power charged. Its actions  and  decisions  which  touch  the
          common man have to be tested on the  touchstone  of  fairness  and
          justice. That which is not fair  and  just  is  unreasonable.  And
          what is unreasonable is arbitrary. An arbitrary  action  is  ultra
          vires. It does not become bona  fide  and  in  good  faith  merely
          because no personal gain  or  benefit  to  the  person  exercising
          discretion should be established. An action is mala fide if it  is
          contrary to  the  purpose  for  which  it  was  authorised  to  be
          exercised. Dishonesty in discharge of  duty  vitiates  the  action
          without anything more. An action is  bad  even  without  proof  of
          motive of dishonesty, if the authority  is  found  to  have  acted
          contrary to reason.……..


          16. ……It saddles the Corporation or  the  officer  concerned  with
          inbuilt  duties,  responsibilities  and  obligations  towards  the
          debtor in dealing with the property and entails him to  act  as  a
          prudent and reasonable man standing in the  shoes  of  the  owner.
          According to Prof. Issac, a noted author  on  Trusts,  trusteeship
          has become a  readily  available  tool  for  everyday  purpose  of
          organisation financing, risk shifting, credit operations, settling
          disputes and liquidation of business affairs. Maitland, the  other
          renowned writer on Equity, observed that one of  the  exploits  of
          equity; the largest and the most important, is the innovation  and
          development of the trust.  Thus,  trust  has  been  and  is  being
          applied for all purposes mentioned by Prof. Issac and many  others
          as device to accomplish  different  purposes.  Trusteeship  is  an
          institution of elasticity and generality. The broad  base  of  the
          concept of property or its management vested  in  one  person  and
          obligation imposed for its enjoyment  by  others  is  accepted  in
          Hindu jurisprudence. Therefore, when the property  of  the  debtor
          stands transferred to the Corporation for management or possession
          thereof which includes right to sell or further mortgage etc., the
          Corporation or its officers or employees stands in  the  shoes  of
          the debtor as trustee and the property  caste  que  trust.  In  N.
          Swyanarayan Iyer's Indian Trust Act, Third Edition, 1987  at  page
          275 in  Section 37 it  is  stated  that,  "Where  the  trustee  is
          empowered to  sell  any  trust  property...by  public  auction  or
          private contract and either at one time or  at  several  times..."
          the duty of trustee is  to  obtain  the  best  price.  He  should,
          therefore, use reasonable diligence  in  inviting  competition  to
          that end. Where a contract of sale has been entered into bona fide
          by a trustee the court will  not  allow  it  to  be  rescinded  or
          invalidated because another purchaser conies forward with a higher
          price. It would, however, be improper for the trustee to  contract
          in circumstances of haste and improvidence. Where in a  trust  for
          sale and payment of creditors the trustee sold at  a  gross  under
          valuation showing a preference to one of  the  creditors,  he  was
          held guilty, of breach of trust. If the purchaser is privy of  the
          fraud the property itself can be recovered from him."


          17. The sale may be either by public auction or private  contract.
          In either case the trustee has to keep in mind that he must obtain
          the most advantageous price. Kerr on Receivers  17th  Edition,  at
          page 208 stated that "a receiver, however,  is  not  expected  any
          more than a trustee or an executor to  take  more  care  of  their
          property entrusted




          to him  than  he  would  have  as  a  reasonably  prudent  man  of
          business". In Halsbury's Law of England, 4th Edition, Vol. 39,  at
          para 919 it is stated that the "receiver will be compelled to show
          that he has acted with perfect regularity and has used such degree
          of prudence as would be expected  from  a  private  individual  in
          relation to his own  affairs".  The  trustee  or  a  receiver  is,
          therefore, duty bound to protect and preserve the property in  his
          possession and the standard of conduct expected of him, in dealing
          with the property or sale thereof, is as  a  prudent  owner  would
          exercise in dealing with his own property or estate. The degree of
          care expected of him in handling property taken possession  of  is
          measured by the degree of care expected  of  a  person  acting  as
          trustee, executors or assignees. The object and  endeavour  should
          also be to secure maximum advantage or price  in  a  sale  of  the
          property in lots or as whole, as exigencies warrant.”





Though, this case was subsequently overruled by this Court by a three  judge
bench decision in the case of Haryana  Financial  Corporation  and  Anr.  v.
Jagdamba Oil Mills and Anr.[3] on the point of guiding principles laid


down  to sell mortgaged property by the Financial Corporation under  Section
29 of the State Financial Corporations Act,  1951  (in   short  ‘SFC  Act’).
However, keeping in view the facts and circumstances of  that  case  and  as
per Section 29 of the SFC Act, the guidelines  laid  down  in  the  case  of
Mahesh Chandra were found fault with to sell  the  property  mortgaged  with
Financial Corporations.  However, the principle  of  Public  Trust  Doctrine
referred to in Mahesh Chandra’s  case  (supra)  shall  be  applied  to  fact
situation at hand as the public interest  has  adversely  affected  in  this
case. Notwithstanding the aforesaid decision in Jagdamba  Oil  Mills’s  case
(supra) in overruling guidelines laid down in Mahesh Chandra’s case  keeping
in view the reasonableness and fairness in action shall be  adhered  by  the
state and its instrumentalities is the ratio laid  down  by  this  court  to
pass the test of Article 14 reiterated after referring to three Judge  Bench
decisions in case of Ramana Dayaram Shetty v.


International Airport Authority of India & Ors.[4] M/s  Kasturi Lal  Lakshmi
Reddy & Ors. v. State of Jammu and Kashmir & Anr.[5]  and  other  catena  of
cases which were mentioned in the case of Akhil Bhartiya  Upbhokta  Congress
v. State of Madhya Pradesh &  Ors.[6]  are  aptly  applicable  to  the  fact
situation of the case on hand.

32. Therefore, in the light of the legal principle laid down by  this  Court
with regard to Public Trust Doctrine in Mahesh Chandra’s  case  (supra)  and
the cases mentioned supra, we are inclined to observe  that  the  liquidator
did not act fairly and reasonably in the best interest of the public of  the
State whose interest he is required to uphold. As per the material  evidence
put on record, the liquidator and the concerned authority did not  take  any
step to improve the condition of the land and  sell  it  at  reasonable  and
standard price prevalent at the time of sale of the property in question.

33. Hence, we hold that the tender process initiated by  the  appellants  is
not legal and is liable to be set aside. We direct the  concerned  authority
to issue fresh notice of tender for selling the land. The  notice  shall  be
made  available  in  government  websites  and  other  local  and   national
newspapers so as to encourage and invite more  bidders.  In  the  meanwhile,
the authority shall take all necessary steps  to  improve  and  restore  the
condition of the land so as to make the  purchase  of  the  land  free  from
legal encumbrances.

34. Since, the respondent had paid up the entire bid amount, it is  entitled
to refund of the entire amount. Further, since it is also  proved  that  the
amount paid by the  respondent  has  been  used  to  pay  the  arrears,  the
respondent is entitled to interest for the amount paid  @7%  p.a.  from  the
date of payment till the date of refund.

35. Accordingly, we set aside the order dated 2.2.2012 passed  by  the  High
Court of Guwahati in M.C. No.5 of 2012 in Writ Appeal Sl. No.168339 of  2011
after condoning the delay and consequently  we  allow  the  writ  appeal  by
allowing this Civil Appeal.


                                  ………………………………………………………………………J.
                                 [GYAN SUDHA MISRA]





                                  ………………………………………………………………………J.
                           [V. GOPALA GOWDA]


New Delhi,
April 23, 2014.


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[1]    (1988) 2 SCC 142

[2]    (1993) 2 SCC 279

[3]    (2002) 3 SCC 496

[4]    (1979) 3 SCC 489
[5]    (1980) 4 SCC 1
[6]    (2011) 5 SCC 29


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