the internecine quarrel between the Corporation and the revenue authorities can not be considered. The appellant cannot be faulted with in the entire episode and needs to be compensated adequately for what became a dead investment by him. The cancellation of the auction sale was not at the behest of the Corporation but was a unilateral act of the State Authorities. The bid amount was never transferred to the Corporation and remained with the revenue authorities. Therefore, the liability for compensating the appellant will as also rest with the revenue authorities alone. -
The auction was held as far as back on 12.06.2006, the deposit was made by the appellant in due time, the act of cancellation was not attributable to the appellant in any manner. The Corporation had approved the sale. In the peculiar facts and circumstances of the case, we do not consider that it will be adequate compensation for the appellant to grant him 5% interest on his dues under the Rules. If the Rules have not been complied with by the State Authorities themselves, we see no reason that in the special facts and circumstances of the case, we should not award an interest of 10% on the amount deposited by the appellant.
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.2068 OF 2020
(Arising out of SLP(Civil) No.20082 of 2017)
ASHOK KUMAR APPELLANT(S)
VERSUS
STATE OF U.P & ORS. RESPONDENT(S)
WITH
CIVIL APPEAL NO.2069 OF 2020
(Arising out of SLP(Civil) No.16053 of 2017)
O R D E R
Leave granted.
The appellant is aggrieved by the orders of the
High Court declining to interfere with the decision of
the respondent corporation to withdraw the recovery
certificate under Section 32G of the State Financial
Corporation Act, 1951 (hereinafter referred to as "the
SFC Act") against respondent no.8, after the appellant had
been declared the highest bidder at the auction.
The unit of respondent no.8 was put to auction as
it defaulted in repayment of loan to the respondent
Corporation. It issued a notice under Section 29 of SFC
Act on 06.11.1997. The recovery certificate, consequent
1
to the requisition, was then issued on 11.12.2000. The
appellant was the highest bidder in the auction sale on
12.06.2006 for a sum of Rs.20,20,000/-. Subsequently, on
26.06.2006 the auction sale was approved by the
respondent Corporation. On 04.07.2006, one Karnaveer
Singh Sirohi stepped in to offer 24 lakhs for the
property. The state authorities then decided to cancel
the auction on 11.07.2006 to hold fresh auction.
Civil Miscellaneous Writ Petition No.39537/2006
filed by the appellant, challenging the cancellation of
auction sale was dismissed in default on 17.01.2013. On
13.03.2013, the Corporation, in view of the delay being
caused in the recovery proceedings, decided to proceed
under Section 29 of the SFC Act. On 14.03.2013, the writ
petition was restored. On 13.08.2013, the recovery
certificate was returned.
The appellant also challenged the decision of the
respondent Corporation resorting to Section 29 of the SFC
Act in Civil Miscellaneous Writ Petition No.65313 of
2013. The High Court, in the former writ petition
directed refund of the deposit made by the appellant by
the Revenue Authorities/Corporation within four weeks.
The latter writ petition was also dismissed on
29.11.2013.
We have heard counsel for the parties at length.
Limited notice was issued by us on 24.07.2017 confined to
the issue for grant of interest on the refund directed by
2
the High Court.
Learned counsel for the appellant submits that he
has been kept deprived of the benefits of the auction for
no fault of his. The bid amount became a dead investment
with no returns and therefore he needs to be compensated
adequately by grant of 18% interest.
Learned counsel for the Corporation submits that
the auction price having been approved by it, they are
not at fault in any manner and should not be saddled with
any interest. Moreover, the amount deposited by the
appellant with the revenue authorities was never
forwarded to the Corporation.
Learned counsel for the State sought to persuade us
that the decision to cancel the auction sale was bona
fide in view of the higher offer made.
In the limited nature of the order to be passed by
us, we are not concerned with the internecine quarrel
between the Corporation and the revenue authorities. The
appellant cannot be faulted with in the entire episode
and needs to be compensated adequately for what became a
dead investment by him.
The cancellation of the auction sale was not at the
behest of the Corporation but was a unilateral act of the
State Authorities. The bid amount was never transferred
to the Corporation and remained with the revenue
authorities. Therefore, the liability for compensating
the appellant will as also rest with the revenue
3
authorities alone.
Learned counsel for the State has invited our
attention to Rule 285-L of the U.P. Zamindari Abolition
and Land Reforms Rules, 1952 governing the procedure of
the certificate proceedings and submits that the
appellant is entitled at best to an interest of 5% on the
amount deposited by him.
The auction was held as far as back on 12.06.2006,
the deposit was made by the appellant in due time, the
act of cancellation was not attributable to the appellant
in any manner. The Corporation had approved the sale. In
the peculiar facts and circumstances of the case, we do
not consider that it will be adequate compensation for
the appellant to grant him 5% interest on his dues under
the Rules. If the Rules have not been complied with by
the State Authorities themselves, we see no reason that
in the special facts and circumstances of the case, we
should not award an interest of 10% on the amount
deposited by the appellant.
It is, therefore, directed that the appellant shall
be refunded the sum of Rs.20,20,000/- (Rupees Twenty
Lakhs Twenty Thousand Only) by the State Revenue
Authorities with interest at the rate of 10% p.a. from
the date of deposit till the date of actual refund which
we direct to be complied with within a period of six
weeks from today.
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The appeals are allowed.
...................J.
(NAVIN SINAH)
...................J.
(KRISHNA MURARI)
New Delhi;
March 06, 2020
5
ITEM NO.44 COURT NO.14 SECTION XI
S U P R E M E C O U R T O F I N D I A
RECORD OF PROCEEDINGS
Petition(s) for Special Leave to Appeal (C) No(s).20082/2017
(Arising out of impugned final judgment and order dated 29-11-2013
in WC No.65313/2013 passed by the High Court Of Judicature At
Allahabad)
ASHOK KUMAR Petitioner(s)
VERSUS
STATE OF U.P & ORS. Respondent(s)
(IA No. 46116/2017 - PERMISSION TO FILE ADDITIONAL
DOCUMENTS/FACTS/ANNEXURES)
WITH
SLP(C) No. 16053/2017 (XI)
Date : 06-03-2020 These matters were called on for hearing today.
CORAM : HON'BLE MR. JUSTICE NAVIN SINHA
HON'BLE MR. JUSTICE KRISHNA MURARI
For Petitioner(s) Mr. Ali Chaudhary, Adv.
Mr. Ranjay Dubey, Adv.
Mr. Krishna Kumar Singh, AOR
For Respondent(s) Mr. Tanmaya Agarwal, AOR
R-1 to 5 Mr. Chandra Shekhar Suman, Adv.
Mr. Wrick Chatterjee, Adv.
R-6 Mr. Shrish Kumar Misra, AOR
Ms. Deepika Mishra, Adv.
Mr. Ajay Kumar, Adv.
Mr. Bimlesh Pandey, Adv.
UPON hearing the counsel the Court made the following
O R D E R
Leave granted.
The appeals are allowed in terms of the signed order. Pending
application, if any, stands disposed of.
(ARJUN BISHT) (DIPTI KHURANA)
COURT MASTER (SH) COURT MASTER (NSH)
[Signed order is placed on the file]
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