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Thursday, August 27, 2015

no sustainable justification and rationalization was recorded in writing at the relevant time for ordering the re-auction of only the two subject properties. However, we should not be understood to have opined that the Government is bound in every case to accept the highest bid above the reserve price. Needless to say, the presence of cartelization or “pooling” could be a reason for the cancellation of an auction process. In addition, a challenge on the ground that the property has fetched too low a bid when compared to the prevailing market price, would also be valid and permissible provided this approach has been uniformly adhered to. In the case at hand, however, while the latter was ostensibly the reason behind the decision for conducting a fresh auction, no evidence has been placed on the record to support this contention. The highest bids, marginally above the reserve price, have been accepted in the self-same auction. The factual scenario before us is clearly within the mischief which was frowned upon in Mohinder Singh Gill. We therefore uphold the impugned Judgment for all the reasons contained therein. The assailed action of the Appellant is not substantiated in the noting, which ought at least to have been conveyed to the Respondents. Since the Respondents have succeeded in the High Court as well as before us, they should not be deprived of the fruits of the litigation and suffer the disadvantage of losing the land for which they have successfully paid the earnest money and deposited more than twenty five per cent of the sale consideration and have tendered the entire remainder. Learned counsel appearing for the Appellant conceded that, in the facts of the present case, if the Respondents are directed to pay the circle rates, as existing today, the ends of justice would be met. Accordingly, in the circumstances of the present case, we hold that if the Respondents tender the price of the land equivalent to the prevailing Circle Rate minus the sums already paid by them to the Appellant within ninety days from today, the Appellant shall take all necessary steps to convey the land to the Respondents within sixty days thereafter.

                                                                  REPORTABLE



                        IN THE SUPREME COURT OF INDIA

                        CIVIL APPELLATE JURISDICTION

                        CIVIL APPEAL No. 629 OF 2006



STATE OF PUNJAB                                               ...APPELLANT

                                   VERSUS

 M/S. BANDEEP SINGH & ORS.                                  …RESPONDENTS

                                    WITH

                            C.A. No. 630 of 2006

PUNJAB STATE LEATHER DEVELOPMENT
CORPORATION & ORS.                           ...APELLANTS


                                   VERSUS

BANDEEP SINGH & ORS.                         ...RESPONDENTS



                           J  U  D  G  M  E  N  T



VIKRAMAJIT SEN, J.

1     These Appeals assail the Judgment  dated  20.9.2005  of  the  Division
Bench of the Punjab and Haryana High Court in CWP No.  9621  of  2004.   The
factual matrix is that pursuant to an Auction Notice dated  1.5.2004  issued
by the Managing  Director,  Punjab  State  Leather  Development  Corporation
Ltd., several properties, of which we are only concerned with two,  were  to
be put to a public auction.  The salient terms as contained in  the  auction
Notice  required  the  interested  persons   to   deposit   an   amount   of
[pic]2,00,000/- as Earnest  Money;  the  successful  bidder  would  have  to
deposit twenty five per cent of the auction amount at the conclusion of  the
bidding, and the remaining amount within thirty days of the approval of  the
bid by the Government.  It is not disputed  that  the  two  Respondents/Writ
Petitioners had deposited the Earnest Money together with  twenty  five  per
cent of the auction bids which, admittedly, were only marginally  above  the
reserve price fixed by the Competent Authority.   In  respect  of  the  Hide
Flaying and Carcass  Utilization  Centre,  Jhabal  Road,  Village  Fathepur,
Amritsar the reserve price was [pic]45.50 lakhs and  the  highest  (subject)
bid  was  [pic]46  lakhs;  and  for  Tanning  Centre  Jhabal  Road,  Village
Fathepur, Amritsar the reserve price was [pic]37.25 lakhs  and  the  highest
(subject) bid was [pic]38.10 lakhs.

2     However, the notings disclose that a certain person,  referred  to  as
Mr. Walia had orally complained that the successful bidders had promised  to
associate him in their venture as their partner, but had thereafter  resiled
from this commitment.  Shri Walia was obviously  a  disgruntled  party,  and
any official with a modicum of  experience  would  not  require  superlative
sagacity to discount or  ignore  his  complaint.    This  is  especially  so
since, admittedly, Shri Walia had been called upon to file his complaint  in
writing, but which he declined to do.

3     Without conveying to the Respondents the  reasons  for  not  accepting
their bids, being the highest offer received in the course  of  the  auction
process, a decision was taken by the Appellant to re-auction  the  said  two
properties.  This  was  despite  the  fact  that  the  Chairman-cum-Managing
Director of the  Punjab  State  Leather  Development  Corporation  Ltd.  had
recorded, on 15.6.2004, that the bids of the Respondents were not  only  the
highest, but were also higher than the reserve price.  The  notings  of  the
Chairman-cum-Managing Director in fact do  not  recommend  that  the  offers
should  be  rejected;  instead  it  solicits  acceptance/approval   of   the
Government through its Director, Industries and Commerce. However, when  the
case was submitted to the Director, Industries and Commerce, he opined  that
a re-auction  should  be  conducted  as  the  two  subject  bids  were  only
marginally higher than the reserve price.  Indubitably, the  Impugned  Order
mentions instances where bids were  not  accepted  because  they  were  only
marginally higher than the reserve price; but failing to give due  weightage
and consideration to those instances where similar bids  had  in  fact  been
accepted.

4     There can be no gainsaying that every decision  of  an  administrative
or executive nature must be a composite and self sustaining one, in that  it
should contain all the reasons which prevailed on the  official  taking  the
decision to arrive at his conclusion. It is beyond cavil that any  Authority
cannot be permitted to travel beyond the stand adopted and expressed  by  it
in the impugned action. If precedent is required  for  this  proposition  it
can be found in the  celebrated  decision  titled Mohinder Singh Gill v. The
Chief Election Commissioner, New Delhi  [1978]  2  SCR  272,  of  which  the
following paragraph deserves extraction:
“8. The second equally relevant matter is that when a statutory  functionary
makes an order based on certain grounds, its validity must be judged by  the
reasons so mentioned and cannot be supplemented  by  fresh  reasons  in  the
shape of affidavit or otherwise. Otherwise, an order bad  in  the  beginning
may, by the time it comes to court on account of a challenge, get  validated
by additional grounds later brought out. We may here draw attention  to  the
observations of Bose J. in Gordhandas Bhanji [1952] 1 SCR 135:
Public orders publicly made, in exercise of a statutory authority cannot  be
construed in the light of Explanations subsequently  given  by  the  officer
making the order of what he meant, or of what was in his mind,  or  what  he
intended to do. Public orders made by public authorities are meant  to  have
public effect and are intended to affect the acting and conduct of those  to
whom they are addressed and must be construed objectively with reference  to
the language used in the order itself.
Orders are not like old wine becoming better as they grow older”.

 We must reproduce the noting dated 18.6.2004 of  the  Director,  Industries
and Commerce since there is an endeavour by the  Appellant  to  add  grounds
and reasons thereto.  It reads as follows:
“Above office note may kindly be perused.  In my opinion  the  highest  bids
offered are marginally higher than  the  reserved  price  and  it  would  be
appropriate not to confirm those bids and go for re-auction.”

This noting will palpably clarify  that  the  element  of  cartelization  or
grouping was not one of the reasons for taking the  decision  to  re-auction
the two properties, which contention has been strenuously  canvassed  before
us.

5     As we have already mentioned, the auction notice  itself  stated  that
it is the Government and  not  any  other  person,  including  the  Managing
Director of the Punjab State Leather  Development  Corporation  Ltd.,  which
was to approve the bid.  Any challenge  to  the  position  that  it  is  the
Government on whom is reposed the final decision, is  devoid  of  substance.
It is  pertinent  to  note  the  judgement  of  this  Court  in  Anil  Kumar
Srivastava Vs. State of U.P. (2004) 8 SSC 671, wherein it was held that  the
reserve price merely limits the power of the Auctioneer by preventing a  bid
below this price from being accepted. This Court approved the view taken  in
B.  Susila  Vs.  Saraswathi  Ammal  AIR  1970  Mad  257,  which  held   that
“notwithstanding the fixation of upset price and  notwithstanding  the  fact
that a bidder has offered an amount higher  than  the  reserve/upset  price,
the sale is still open to challenge on the ground that the property has  not
fetched the proper price and  that  the  sale  be  set  aside.”    The  same
principle was upheld more recently in Ram Kishun Vs. State  of  U.P.  (2012)
11 SCC 511.  However, we must hasten to clarify  that  the  Government  does
not have a carte blanche to take any decision it chooses to; it cannot  take
a capricious, arbitrary  or  prejudiced  decision.   Its  decision  must  be
informed and impregnated with  reasons.  This  has  already  been  discussed
threadbare in  several  decisions  of  this  Court,  including  in  Sterling
Computers Ltd. v. M & N Publications Ltd. (1993) 1 SCC  445,  Tata  Cellular
v. Union of India (1994) 6 SCC 651, Air India Ltd. v.  Cochin  International
Airport Ltd. (2000) 2 SCC 617,  B.S.N.  Joshi  &  Sons  Ltd.  v.  Nair  Coal
Services Ltd. (2006) 11 SCC 548, Jagdish Mandal v. State  of  Orissa  (2007)
14 SCC 517.

6     In the impugned Judgment, the High Court has  rightly  concluded  that
no sustainable justification and rationalization was recorded in writing  at
the relevant time for ordering  the  re-auction  of  only  the  two  subject
properties.  However, we should not be understood to have  opined  that  the
Government is bound in every case  to  accept  the  highest  bid  above  the
reserve  price.    Needless  to  say,  the  presence  of  cartelization   or
“pooling” could be a reason for the cancellation of an auction process.   In
addition, a challenge on the ground that the property has fetched too low  a
bid when compared to the prevailing market price, would also  be  valid  and
permissible provided this approach has been uniformly  adhered  to.  In  the
case at hand, however, while the latter was  ostensibly  the  reason  behind
the decision for conducting a fresh auction, no evidence has been placed  on
the record to support this contention.  The highest bids,  marginally  above
the reserve price,  have  been  accepted  in  the  self-same  auction.   The
factual scenario before us is clearly within the mischief which was  frowned
upon in Mohinder Singh Gill.  We therefore uphold the impugned Judgment  for
all the reasons contained therein.  The assailed action of the Appellant  is
not substantiated in the noting, which ought at least to have been  conveyed
to the Respondents.

7     The bid of the Respondents is already over a decade old, which is  the
period the present Appeal has been awaiting its  turn  in  this  Court.   We
must, therefore, balance  the  equities  and  interest  of  the  adversaries
before us.  It has been submitted by the  learned  Senior  Counsel  for  the
Respondents that although the  Appellant  had  addressed  a  letter  to  the
Respondents purporting to return the sums received  from  them,  the  cheque
for this amount was not enclosed with the letter.   The  fact  remains  that
these sums continue to be in the coffers  of  the  Appellant.   It  is  also
submitted by the learned Senior Counsel that the balance sale  consideration
had been tendered by the Respondents  to  the  Appellant,  who  declined  to
accept it on the premise that  their  Appeal  was  pending  in  this  Court.
Learned Senior Counsel suggested that in the endeavour to do justice to  all
the parties before this Court, we may direct  the  Respondents  to  pay  the
price of the land at the  prevailing  Circle  Rates,  which  suggestion  has
readily been  accepted  by  the  learned  Counsel  for  the  Appellant  with
alacrity. Since the Respondents have succeeded in the High Court as well  as
before us, they should not be deprived of the fruits of the  litigation  and
suffer the disadvantage of losing the land for which they have  successfully
paid the earnest money and deposited more than twenty five per cent  of  the
sale consideration and have tendered the entire remainder.  Learned  counsel
appearing for the Appellant conceded that,  in  the  facts  of  the  present
case, if the Respondents are directed to pay the circle rates,  as  existing
today,  the  ends  of  justice  would  be   met.     Accordingly,   in   the
circumstances of the present case, we hold that if  the  Respondents  tender
the price of the land equivalent to the prevailing  Circle  Rate  minus  the
sums already paid by them to the Appellant within ninety  days  from  today,
the Appellant shall take all necessary steps  to  convey  the  land  to  the
Respondents within sixty days thereafter.

8     The Appeals are disposed of in  these  terms,  with  no  order  as  to
costs.  Stay granted by this Court on 16.1.2006 is vacated.

…………………………………J.
[VIKRAMAJIT SEN]



…………………………………J.
[SHIVA KIRTI SINGH]

New Delhi,
August 25, 2015.
















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