Property Law / Leasehold Land – Mortgage without Consent – Lease deed stipulated that mortgage/charge over the leasehold plot could be created only with prior written consent of the Lieutenant Governor – No such consent obtained – Mortgage in favour of Bank held illegal and void – Bank, despite knowledge of leasehold nature of land, proceeded to advance loan – DDA entitled to enforce statutory dues. Debt Recovery / Auction Sale – Validity – Auction conducted by Recovery Officer under Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (now Recovery of Debts and Bankruptcy Act, 1993) – Section 29 makes applicable Second & Third Schedules of the Income Tax Act, 1961 and Rules, 1962 – Rule 53 requires proclamation of sale to disclose all material facts affecting value, including encumbrances – DDA’s statutory claim of unearned increase not disclosed – Auction proclamation defective – Auction held in violation of statutory rules and terms of lease – Auction sale, confirmation of sale and sale certificate quashed. Writ Jurisdiction / Res Judicata – Earlier writ petition (2012) withdrawn by DDA in view of Bank’s undertaking that auction would comply with lease conditions – Later writ (2014) challenged auction conducted in violation of lease terms – Earlier writ not decided on merits – Doctrine of Res Judicata / principles analogous to Section 11 CPC not attracted – DDA had fresh cause of action. Restitution / Auction Purchaser’s Rights – Auction purchaser bona fide bidder, not at fault – Equity demands protection against consequences of illegal auction – Restitution is a moral imperative – Bank, having advanced loan on illegal mortgage and auctioned property unlawfully, directed to refund full sale consideration with interest @ 9% p.a. to auction purchaser.

Property Law / Leasehold Land – Mortgage without Consent – Lease deed stipulated that mortgage/charge over the leasehold plot could be created only with prior written consent of the Lieutenant Governor – No such consent obtained – Mortgage in favour of Bank held illegal and void – Bank, despite knowledge of leasehold nature of land, proceeded to advance loan – DDA entitled to enforce statutory dues.

Debt Recovery / Auction Sale – Validity – Auction conducted by Recovery Officer under Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (now Recovery of Debts and Bankruptcy Act, 1993) – Section 29 makes applicable Second & Third Schedules of the Income Tax Act, 1961 and Rules, 1962 – Rule 53 requires proclamation of sale to disclose all material facts affecting value, including encumbrances – DDA’s statutory claim of unearned increase not disclosed – Auction proclamation defective – Auction held in violation of statutory rules and terms of lease – Auction sale, confirmation of sale and sale certificate quashed.

Writ Jurisdiction / Res Judicata – Earlier writ petition (2012) withdrawn by DDA in view of Bank’s undertaking that auction would comply with lease conditions – Later writ (2014) challenged auction conducted in violation of lease terms – Earlier writ not decided on merits – Doctrine of Res Judicata / principles analogous to Section 11 CPC not attracted – DDA had fresh cause of action.

Restitution / Auction Purchaser’s Rights – Auction purchaser bona fide bidder, not at fault – Equity demands protection against consequences of illegal auction – Restitution is a moral imperative – Bank, having advanced loan on illegal mortgage and auctioned property unlawfully, directed to refund full sale consideration with interest @ 9% p.a. to auction purchaser.

---

FINAL ORDER

• High Court order (11.08.2014) dismissed.

• E-auction notice (27.09.2012), auction sale (09.11.2012), confirmation of sale (08.07.2013) and sale certificate (12.07.2013) quashed.

• Bank directed to refund entire amount deposited by Auction Purchaser with 9% interest from date of deposit till repayment.

• Appeal allowed.

  2025 INSC 1161
  1
  REPORTABLE
  IN THE SUPREME COURT OF INDIA
  CIVIL APPELLATE JURISDICTION
  CIVIL APPEAL NO. 11269 OF 2016
   DELHI DEVELOPMENT AUTHORITY … APPELLANT
   Versus
   CORPORATION BANK & ORS. … RESPONDENTS
  J U D G M E N T
   ALOK ARADHE, J.
  1. This appeal emanates from an order dated 11.08.2014
  passed in Writ Petition (C) No. 5005 of 2014 by which High
  Court of Delhi has dismissed the writ petition preferred by
  the appellant.
  The present appeal brings before this Court a contest
  not merely of rights but of duties - the duty of the lessee to
  honour the covenants of the lease, the duty of a bank to
  exercise due diligence before advancing public money and
  the duty of an instrumentality of the state, as trustee of
  public property, to guard against encroachment upon its
  title. It also brings before us the plight of an Auction 
  2
  Purchaser who entered the field in good faith only to find
  the ground beneath its feet unstable.
  2. The relevant facts leading to filing of this appeal are as
  under:-
  (i) FACTS: -
  3. The Delhi Development Authority-the Appellant
  (hereinafter referred to as “DDA”) on 01.10.2001 allotted
  Plot No. 25, Facility Centre-33 Kalindi Kunj Road, Jasola,
  New Delhi admeasuring 877.50 square metres (hereinafter
  referred to as “subject plot”) to Respondent No. 2 namely,
  Sarita Vihar Club (hereinafter referred to as “the club”) on
  leasehold basis. The subject plot was allotted to the club on
  a premium of Rs.62,96,664/- for construction of a
  recreational and sports club. The club was required to pay
  a provisional premium, in respect of subject plot, at the rate
  of Rs.2,90,40,000/- per acre with annual ground rent at
  the rate of Rs. 2.5 % per annum of the total premium. As
  per the letter of allotment dated 01.10.2001, the club, with
  previous consent in writing of the Lieutenant Governor of
  Delhi, could mortgage or charge the subject plot to such 
  3
  person as may be approved by the Lieutenant Governor in
  his absolute discretion.
  4. The club on 28.11.2001 deposited a sum of Rs.29,50,000/-
  to the DDA. It appears that the club applied for sanction of
  loan for a sum of Rs.35,00,000/- to Respondent No. 1
  namely, the Corporation Bank (hereinafter referred to as
  the “Bank”). The Bank thereafter by a communication dated
  07.02.2002 informed the club that the proposal of sanction
  of loan is being forwarded to the higher authorities for
  consideration and requested the club to seek a permission
  for mortgaging the subject plot from the DDA. The club vide
  communication dated 11.02.2002, sought the permission
  of the DDA for mortgaging the subject plot for arranging the
  balance payment. The DDA, by a communication dated
  22.02.2002, granted NOC to the club for applying loan to
  the Bank for making payment to the DDA, on account of
  the premium of the plot subject to the condition that
  permission for mortgage of the plot shall be issued only
  after execution/registration of the lease deed. The Bank
  thereafter by a communication dated 22.03.2002 sought
  the permission of the DDA for mortgage of the subject plot 
  4
  and to note lien of the Bank on the subject plot. The club
  on 12.04.2002 deposited an additional amount of
  Rs.2,05,000/- to the DDA which included the interest on
  the delayed payment as well. Thereupon DDA on
  29.04.2002 issued a modified letter of allotment in favour
  of the club and the amount of initial premium of
  Rs.64,53,107/- was modified to Rs.64,54,126/-.
  5. A perpetual lease deed in respect of subject plot was
  executed on 28.01.2005 between the DDA and the club.
  Clause 5(b) of the lease deed provided that previous consent
  in writing of Lieutenant Governor of Delhi for mortgage or
  charge of the subject plot was necessary. Clause (6) deals
  with DDA’s right to recover an unearned increase and preemptive right to purchase the subject plot. The club was
  under an obligation to complete the construction within a
  period of two years.
  6. It appears that the subject plot was mortgaged with the
  Bank and original registered perpetual lease deed was
  deposited with the Bank. The Bank thereupon by a
  communication dated 09.03.2005 informed the DDA that
  the club has mortgaged the subject plot with it and the DDA 
  5
  was requested to take a note of mortgage of the subject plot
  with the Bank.
  7. The club defaulted in payment of the loan taken by it from
  the Bank. Thereupon the Bank filed an original application
  under Section 19 of Recovery of Debts Due to Banks and
  Financial Institutions Act, 1993 [now known as Recovery of
  Debts and Bankruptcy Act, 1993 (for short “1993 Act”]
  before the Debts Recovery Tribunal-I, Delhi (hereinafter
  referred to as “DRT”) for recovery of sum of
  Rs.86,46,790.37. The aforesaid application was allowed on
  27.08.2010 by the DRT. The Recovery Officer, DRT on
  02.02.2011 issued a notice, for drawing up the
  proclamation of sale and settling the terms thereof and
  informed the Bank to bring to its notice the encumbrances,
  charges, and claims of liabilities attached to the subject plot
  or any portion thereof. The DDA by a communication dated
  24.02.2011 informed the Recovery Officer, DRT that the
  club has not sought the permission of the DDA to create a
  mortgage in favour of the Bank and therefore the mortgage
  of the subject plot in favour of the Bank is illegal and void.
  The DDA in the aforesaid communication stated that the 
  6
  sale of the property be set aside and the proceeding to draw
  the proclamation of sale and settling the terms thereof be
  immediately stopped.
  8. The DDA thereafter on 30.06.2011 filed an affidavit before
  the Recovery Officer, DRT objecting to the sale of the
  subject plot on the ground that the permission to mortgage
  the subject plot was never granted by the DDA and
  therefore the mortgage in favour of the Bank is illegal. The
  Bank thereupon by a communication dated 22.07.2011
  requested the DDA to inform about the amount of unearned
  increase which is due and payable to it after the sale of the
  subject plot is effected.
  9. The DDA thereupon again filed an affidavit before the
  Recovery Officer, DRT objecting to the sale inter alia on the
  grounds that under the lease deed it has the right to recover
  the unearned increase and has the pre-emptive right to
  purchase the subject plot. The Recovery Officer by an order
  dated 27.02.2012 rejected the objections raised by the DDA
  as contained in the affidavits dated 16.02.2012 and
  30.06.2011.
  7
  10. The DDA filed an appeal before the DRT against the order
  of the Recovery Officer dated 27.02.2012. The aforesaid
  appeal was dismissed by an order dated 25.06.2012, by the
  DRT. The Recovery Officer of DRT by an order dated
  21.09.2012 held that the subject plot shall be sold by an eauction sale on 09.11.2012. Thereafter on 27.09.2012 eauction sale notice and proclamation of sale published by
  DRT which recorded the terms and conditions of the eauction notice.
  11. The DDA sometime in October, 2012 filed an appeal under
  Section 18 of the Securitisation and Reconstruction of
  Financial Assets and Enforcement of Security Interest Act,
  2002 against orders dated 27.02.2012 and 25.06.2012
  passed by DRT.
  12. The DDA on 03.11.2012 filed a Writ Petition (C) No. 6972
  of 2012 before Delhi High Court seeking to quash and set
  aside the order dated 25.06.2012 passed by the DRT and
  to quash and set aside e-auction notice dated 27.09.2012
  issued by Recovery Officer, DRT. In the said Writ Petition,
  the counsel for Bank on 05.11.2012 made a statement that
  auction will be subject to terms and conditions of the lease. 
  8
  In view of the aforesaid statement made by the Bank, which
  was also recorded by the High Court in its order, the
  counsel for the DDA did not press the writ petition. The
  High Court thereupon by an order dated 05.11.2012
  dismissed the writ petition as withdrawn. The DDA by a
  communication dated 06.11.2012 informed the Manager of
  the Bank and the Recovery Officer, DRT about the
  undertaking by the Bank recorded by the High Court in its
  order dated 05.11.2012.
  13. The auction of the subject plot was held on 09.11.2012
  wherein Respondent No. 6 -M/s Jay Bharat Commercial
  Enterprises Pvt. Ltd. (hereinafter referred to as “Auction
  Purchaser”) was declared the highest bidder in respect of
  subject plot. The bid price of the Auction Purchaser of
  Rs.13.15 crores as against the reserve price Rs.8.85 crores
  was accepted. The Auction Purchaser deposited sale
  proceeds through various demand drafts in favour of
  Recovery Officer, DRT. The Recovery Officer, DRT by an
  order dated 08.07.2013 confirmed the sale in favour of the
  Auction Purchaser. A sale certificate dated 12.07.2013 was
  issued in favour of the Auction Purchaser, and on 
  9
  17.07.2013, the possession of the subject plot was handed
  over to auction purchaser.
  14. The auction purchaser on 29.07.2013 filed an application
  before the Recovery Officer DRT for exonerating itself from
  paying the liabilities and claims over the subject plot which
  was sold in a public auction. The notice of the said
  application was issued to the DDA to disclose the amount
  of unearned increase. The DDA however, sought an
  adjournment in the aforesaid proceedings. The Recovery
  Officer, DRT, on 18.09.2013 directed the DDA to file an
  affidavit, in respect of rules of calculation of unearned
  increase as well as details of institutional
  land/sold/allotted/leases in recent time by the DDA so as
  to enable it to know the present rates for institutional lease
  hold property.
  15. The DDA filed a Special Leave Petition against the order
  dated 05.11.2012 passed by the High Court. The aforesaid
  Special Leave Petition was dismissed on 25.10.2013 on the
  ground of delay. The DDA on 07.11.2013 informed the
  Recovery Officer of DRT about the dismissal of SLP
  preferred by it and therefore sought time for compliance 
  10
  with the directions issued by DRT. The DDA on 10.12.2013
  filed an affidavit of compliance before the Recovery Officer
  with regard to calculation of the amount of unearned
  increase. The Recovery Officer vide order dated 22.01.2014
  recorded that DDA is not ready to redeem the property at
  the cost of Rs.27.73 crores which was being demanded
  approximately. The DDA filed an application under Section
  22 of the 1993 Act before the Recovery Officer stating that
  even if the sale is considered to be valid, the Auction
  Purchaser would only have the status of a lessee.
  16. The DDA filed another writ petition namely, Writ Petition
  (C) No. 5005 of 2014 before the High Court seeking to set
  aside the e-auction conducted by the Recovery Officer on
  09.11.2012 in pursuance of e-auction notice dated
  27.09.2012 and to set aside the acts and omissions of the
  Bank and the club with respect to the subject plot. The High
  Court by an order dated 11.08.2014 held that it is open to
  the DDA to challenge the order dated 12.03.2014 passed by
  the DRAT in accordance with law. The High Court further
  inter alia held that issues raised in the instant petition by
  the DDA and in the Writ Petition (C) No. 6972 of 2012,
  11
  which was dismissed as withdrawn on 05.11.2012 and the
  subsequent writ petition are same. It was further held that
  aforesaid order dated 05.11.2012 in Writ Petition (C) No.
  6972 of 2012 has attained finality and the same issues
  cannot be raised once again. It was further held that
  principles analogous to Section 11 of the Code of Civil
  Procedure, 1908 would apply. Accordingly, the petition was
  dismissed. In the aforesaid background this appeal arises
  for consideration.
  17. During the pendency of this appeal the DRT on an
  application filed by the Auction Purchaser, by an order
  dated 01.12.2014, has released the amount of
  Rs.12,26,42,478/- in favour of the Auction Purchaser inter
  alia on the ground that at this stage the sale cannot be set
  aside/cancelled and at the most amount lying in FDRs can
  be returned to the Auction Purchaser till the Special Leave
  Petition preferred by DDA pending before this Court is
  decided.
  (ii) SUBMISSIONS BY DDA: -
  18. Learned Senior counsel for the DDA submitted that the
  terms of the lease deed, specifically stipulated that a 
  12
  mortgage or charge has to be created in respect of subject
  plot only with prior consent in writing, of the Lieutenant
  Governor. It is further submitted that no consent in writing
  of the Lieutenant Governor before creation of mortgage in
  favour of the Bank was taken and the DDA is entitled for
  its statutory dues. It is pointed out that DDA by a
  communication dated 22.07.2011 informed the Bank about
  the amount of unearned increase, which was to be
  deposited. It is further pointed out that the DDA had filed
  a detailed affidavit before the Recovery Officer regarding its
  statutory claims including the ground rent due and the
  amount due and payable to it on account of unearned
  increase. It is contended that the subject plot was sold in
  contravention of the statement made before the High Court
  in Writ Petition (C) No. 6972 of 2012, which was recorded
  in the order dated 05.11.2012 passed by the High Court.
  19. It is argued that the Bank has committed multiple
  illegalities, from the stage of application for grant of loan till
  sale of land. It is urged that the Bank has disbursed the
  loan to the club without intimating the DDA and ought to
  have appreciated that DDA had granted, no objection only,
  13
  to apply for a loan to the extent of 35 lakhs only. However,
  the bank sanctioned a loan of Rs.60 lakhs. It is contended
  that the Bank had the knowledge that the property was not
  a freehold property and DDA is entitled for statutory dues.
  It is further contended that the sale is therefore liable to be
  set aside and the subject plot be restored to the DDA
  permitting it to claim its statutory dues from the Bank.
  (iii) SUBMISSIONS BY BANK: -
  20. Learned counsel for the Bank submitted that the Bank
  vide communication dated 09.03.2005 had informed the
  DDA that the club had mortgaged, the subject plot with the
  Bank and had deposited perpetual lease deed dated
  28.01.2005, however, the DDA maintained a stoic silence
  till 25.02.2011 i.e. the first appearance before the Recovery
  Officer, DRT. It is contended that by an auction notice dated
  27.09.2012, the subject plot was sold on “as is where is
  basis” and therefore the DDA could have exercised its preemptive right to purchase the subject plot through auction
  and recover its dues. It is further contended that for the
  reasons, best known to the DDA, the said option to 
  14
  purchase the subject plot, was not exercised. It is urged
  that, in principle, NOC was granted by the DDA vide letter
  dated 22.02.2002 and DDA was aware of the lien of the
  bank on the subject plot. It is submitted that this appeal
  amounts to an abuse of process of law. It is further
  submitted that principle of estoppel applies to facts of the
  case and appeal is liable to be dismissed.
  (iv) SUBMISSIONS OF AUCTION PURCHASER: -
  21. Learned Senior counsel for Auction Purchaser submits
  that Section 29 of the 1993 Act makes the provision of
  Second and Third Schedule to the Income Tax Act, 1961
  (hereinafter referred to as “1961 Act”) and Income Tax
  (Certificate Proceedings) Rules, 1962 (hereinafter referred
  to as “the Rules, 1962”) applicable to sales of immovable
  property under the 1993 Act. It is further submitted that
  under Rule 16 of the Rules, 1962, it was incumbent on the
  Recovery Officer as well as parties before the DRT to have
  determined and conclude all issues that materially affect,
  the value of the property or fixation of the reserve price
  under Rule 18, prior to issue of proclamation of sale. It is
  contended that the sale has been held in violation of Second 
  15
  and Third Schedule to the 1961 Act and, therefore, the
  auction sale is liable to be set aside. It is further contended
  that neither the sale proclamation disclosed any quantified
  claim of the DDA nor the reserve price reflected the market
  value, that DDA claims. It is submitted that DDA cannot
  foist its right to claim an amount of unearned increase over
  and above the auction price on the Auction Purchaser. It is
  therefore submitted that e-auction conducted on
  09.11.2012 by the Recovery Officer, DRT be set aside and
  the Bank be directed to refund the Auction Purchaser an
  amount of Rs.1,68,28,488/- retained by it along with
  interest at the rate of 15% being the rate charged by it
  which is evident from the sale proclamation.
  (v) CONSIDERATION : -
  22. We have considered the rival submissions made on both
  sides and have perused the records, as well as the written
  submissions filed on behalf of DDA, Bank and the Auction
  Purchaser. Before proceeding further, it is apposite to take
  note of relevant statutory provisions.
  23. Section 29 of the 1993 Act deals with application of certain
  provisions of Income-tax Act. It provides that provisions of 
  16
  Second and Third Schedules to the Income Tax Act, 1961
  and the Income Tax (Certificate Proceedings) Rules, 1962,
  as in force from time to time, shall as far as possible, apply
  with necessary modifications as if the said provisions and
  the Rules referred to the amount of debt due under this
  Act instead of to the Income-tax. The Second Schedule
  provides for procedure of recovery of tax, whereas the
  Third Schedule deals with procedure for distraint by
  Assessing Officer or Tax Recovery Officer. Rule 53 of
  Second Schedule to 1961 Act deals with contents of
  proclamation. It provides that a proclamation of sale of
  immovable property shall be drawn up after notice to the
  defaulter, and shall state the time and place of sale, and
  shall specify, as fairly and accurately as possible: -
   “(a)The property to be sold;
  (b)The revenue, if any, assessed upon
  the property or any part thereof;
  (c)The amount for the recovery of
  which the sale is ordered
  (d)Any other thing which the Tax
  Recovery Officer considers it material
  for a purchaser to know, in order to
  judge the nature and value of the
  property.”
  17
  24. Thus, Rule 53 mandates the Recovery Officer to mention
  in the proclamation of sale any other thing which he
  considers material for purchaser to know in order to judge
  the nature and value of the property.
  25. In exercise of powers under Section 295(1) of the 1961 Act
  and Rules 91 and 92 of the Second Schedule of the 1961
  Act, the Central Board of Revenue has made the Rules
  namely, the Income Tax (Certificate Proceedings), Rules
  1962. Rule 16 of the Rules empowers the Recovery Officer
  to summon any person whom he thinks necessary to
  summon and may examine him in respect of any matters
  relevant to the proclamation and require him to produce
  any document in his possession or power relating thereto.
  26. In the backdrop of aforesaid relevant statutory provisions,
  we advert to the facts of the case in hand. Sometimes in
  the year 2008, the Bank filed an application under Section
  19 of 1993 Act for recovery of the dues against the club. It
  is pertinent to note that under Clause 5(a) and 5(b) of the
  lease deed, executed between the lessee and the Club, the
  DDA had the right of pre-emption. The fact that the
  subject plot had been allotted on lease to the Club by the 
  18
  DDA was within the knowledge of the Bank. However, DDA
  was not impleaded as a party in the said proceedings
  under Section 19 of the 1993 Act. In pursuance of
  Recovery Certificate dated 27.08.2010 issued by DRT, for
  recovery of sum of Rs.86,46,790.37, the Recovery Officer
  on 02.02.2011 issued notice for drawing up the
  proclamation of sale and settling the terms thereof and
  informed, the Bank to bring to its notice, the
  encumbrances, charges, claims of liabilities attached to
  the said property. The DDA filed an objection before the
  Recovery Officer on the ground that no permission was
  granted by it to mortgage subject plot to the Bank.
  However, the aforesaid objection was rejected on
  27.02.2012 by the Recovery Officer. The Recovery Officer
  without directing the DDA to quantify its claim on account
  of unearned increase in relation to the subject plot and
  without ascertaining the same, directed, that sale
  proclamation be issued.
  27. An e-auction notice was issued on 27.09.2012. In the said
  e-auction notice, sale price was fixed at Rs.8.85 crores.
  However, the fact that DDA has an encumbrance i.e. the 
  19
  claim for an amount of unearned increase in respect of
  subject plot was not disclosed in the e-auction. The Bank
  also failed to disclose the terms and conditions of the lease
  executed between the DDA and the Club, to the Recovery
  Officer which, it was under an obligation to do so in view
  of the statement made by it before the High Court, as
  recorded in the order dated 05.11.2012 pass in W.P. (C)
  No. 6972 of 2012. Thus, it is evident that e-auction notice
  was issued in violation of Rule 53 of the Second Schedule
  to the 1961 Act as well as Rule 16 of the Rules, 1962.
  Therefore, no sanctity can be attached to the e-auction
  sale notice and proclamation of sale dated 27.09.2012 as
  well as confirmation of sale and sale certificate dated
  08.07.2013 and 12.07.2013 respectively issued in favour
  of the Auction Purchaser.
  28. A Constitution Bench of this Court in Daryao & Ors. v.
  State of U.P. and Ors.1 dealt with the question of
  applicability of principle of Res Judicata in writ
  proceedings, and has summarised its conclusion in para
  26 of its judgement. The aforesaid paragraph was
  1 1961 SCC OnLine SC 21 : (1962) 1 SCR 574 : AIR 1961 SC 1457
  20
  extracted by another Constitution Bench of this Court in
  Gulabchand Chhotalal Parikh v. State of Gujarat2
  in
  para 53 as follows :-
  “53. In Daryao Case this Court had again
  dealt with the question of the applicability
  of the principle of res judicata in writ
  proceedings. The matter was going through
  very exhaustively and the final conclusions
  are to be found at p. 592. We may
  summarise them thus :
  1. If a petition under Article
  226 is considered on the merits
  as a contested matter and is
  dismissed, the decision would
  continue to bind the parties
  unless it is otherwise modified or
  reversed by appeal or other
  appropriate proceedings
  permissible under the
  Constitution.
  2. It would not be open to a party
  to ignore the said judgment and
  move this Court under Article
  32 by an original petition made
  on the same facts and for
  obtaining the same or similar
  orders or writs.
  3. If the petition under Article
  226 in a High Court is dismissed
  not on the merits but because of
  the laches of the party applying
  for the writ or because it is held
  that the party had an alternative
  2
   1964 SCC OnLineSC 99 : (1965) 2 SCR 547 : AIR 1965 SC 1153
  21
  remedy available to it, the
  dismissal of the writ petition
  would not constitute a bar to a
  subsequent petition under Article
  32.
  4. Such a dismissal may however
  constitute a bar to a subsequent
  application under Article
  32 where and if the facts thus
  found by the High Court be
  themselves relevant even
  under Article 32.”
  29. Thus, the doctrine of Res Judicata, salutary as it is, rests
  upon foundation that a matter once heard and finally
  decided between the parties cannot be reopened. In light
  of the aforesaid well settled legal propositions, the facts of
  the case in hand may be noticed. The earlier writ petition
  i.e. Writ Petition (C) No. 6972 of 2012 filed by the DDA was
  withdrawn in view of the undertaking furnished by the
  bank that the auction shall take place in accordance with
  terms and conditions of the lease. The earlier writ petition
  was not decided on merits. In view of undertaking
  furnished by the bank, as recorded by that High Court in
  its order dated 05.11.2012, the DDA had a right to insist
  that auction is held in accordance with terms and
  conditions of the lease. The auction was held in violation 
  22
  of terms of the lease on 09.11.2012. Therefore, the DDA
  had a fresh cause of action to approach the Court. Thus,
  principles analogous to Section 11 of Civil Procedure Code,
  1908 did not apply to obtaining factual matrix of the case.
  The High Court without adverting to the validity of the
  auction which was per se illegal as the same was
  conducted in violation of the terms and conditions of the
  lease deed and the provisions of the 1961 Act and 1962
  Rules, erred in dismissing the Writ Petition on the ground
  that the same was barred by the principles analogous to
  Section 11 of the CPC.
  30. We now address the position of the Auction Purchaser. In
  Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe
  Barbour Ltd.3
  , it was held that any civilized system of law
  is bound to provide remedies for cases of what has been
  called unjust enrichment or unjust benefit, that is, to
  prevent a man from retaining the money of or some benefit
  derived from another which it is against conscience that
  he should keep. Such remedies in English law are
  generally different from remedies in contract or in tort, and
  3 1943 AC 32 : (1942) 2 All ER 122 (HL)
  23
  are now recognized to fall within a third category of the
  common law which has been called quasi-contract or
  restitution. The aforesaid legal proposition was referred to
  with approval by a Two Judge Bench of this Court in
  Nagpur Golden Transport Company v. Nath Traders &
  Ors.4 The restitution therefore becomes not merely a legal
  device but a moral imperative. The principle of restitution
  flows from the very heart of justice that no one shall
  unjustly enrich himself at the instance of another and that
  those who suffered without fault should, so far as money
  can achieve, be restored to the position they once
  occupied. The jurisdiction to make restitution is inherent
  in every court and will be exercised wherever the justice of
  the case demands.
  31. In the facts of the present case, the Auction Purchaser
  has been caught in the undertow of circumstances, not of
  its making. Among all the actors in this legal drama, it
  alone stands innocent. The Auction Purchaser entered the
  auction in good faith, placed its bid and deposited its hardearned money in the belief that the law clothed the auction
  4
  (2012) 1 SCC 555
  24
  with legitimacy. The Auction Purchaser neither breached
  the covenant nor failed in diligence and did not seek to
  profit from the illegality. The restitution therefore becomes
  not merely a legal device but a moral imperative. It is this
  principle which in the facts of the case must guide the
  relief to the Auction Purchaser. The Bank having advanced
  the money of an illegal mortgage and having chosen to
  auction what it never lawfully possessed, bears the
  responsibility for the consequences.
  (vi) CONCLUSION: -
  32. In the result, impugned order dated 11.08.2014 passed
  by the High Court in Writ Petition (C) No. 5005 of 2014,
  the e-auction notice dated 27.09.2012 as well as the eauction conducted by the Recovery Officer, DRT on
  09.11.2012, the confirmation of sale and sale certificate
  dated 08.07.2013 and12.07.2013 respectively issued in
  favour of the Auction Purchaser are quashed and set
  aside. We direct the bank to refund the entire amount lying
  in deposit to the Auction Purchaser. The Auction
  Purchaser has been deprived of the use of its money for a
  considerable time, the money which would have earned 
  25
  value elsewhere. Therefore, the Auction Purchaser is
  entitled to interest on the balance amount which is lying
  in the deposit of the Bank. We, therefore, direct that the
  balance amount deposited by the Auction Purchaser
  which is with the bank be returned to the Auction
  Purchaser with an interest at the rate of 9% per annum
  within a month to be reckoned from the date of deposit till
  repayment.
  33. The appeal is accordingly allowed in the aforesaid terms.
  ……………….……………J.
   [SANJAY KUMAR]
  ..………………………….J.
   [ALOK ARADHE]
  NEW DELHI,
  SEPTEMBER 25, 2025.