IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 19 .12.2007 CORAM THE HONOURABLE MR. JUSTICE P.K. MISRA AND THE HONOURABLE MR. JUSTICE K.K. SASIDHARAN WRIT Appeal No.135 of 2004 & W.P.No.39213 of 2003 1. S. Sharravvanan 2. S. Sasikala ..Appellants/petitioners in both W.A & W.P. (Petitioner in W.P.6870/96 Vs. 1. The State of Tamil Nadu rep.by its Secretary to Government Food and Consumer Protection Department Fort St.George Chennai-600 009. 2. The Registrar of Co-operative Societies Chennai-600 010. 3. The Joint Registrar/President-cum- Managing Director andConvenor P.M.T. District Central Co-operative Bank Limited Sivagangai. .. Respondents in both W.A.& W.P. (Respondents in do) Writ appeal under clause 15 of the Letters patent against the order dated 30.10.2003 in W.P.No.6870 of 1996 under Article 226 of the Constitution of India to issue a writ of Certiorarified Mandamus to call for the records of the third respondent in R.C.No.4992/95/PA to MD dated 5.6.96 and quash the same and direct the respondents to communicate the acceptance of the tender in respect of writ Appeal No.935 /95 dated 21.11.1995 of the learned Single Judge. https://hcservices.ecourts.gov.in/hcservices/ W.P.No.39213 of 2003 filed under Article 226 of the Constitution of India praying to issue of a writ of Certiorarified Mandamus calling for the records on the files of the second respondent pertaining to his order bearing No.Re.42335/93 ACS3 dated 14.11.2003 and quash the same and consequently direct the respondents to sell the vacant site and building of the erstwhile Ramanathapuram District Central Co-operative Bank bearing T.S.No.746 and 758/3 situated at No.41 and 42, Krishna Rao Tank Street, Madurai in favour of the petitioner at the rate of market value prevailing at the time of confirmation of sale in favour of the petitioner. For Appellants/Petitioners : Mr.G.Rajagopalan,SC Mr.M.S.Ramesh For Respondent : Ms.D.Geetha, AGP for RR1 & 2 Mr.Vijay Narayan, SC for Mr.P.Srinivas for R3 J U D G E M E N T K.K.SASIDHARAN, J This writ appeal has been preferred by the petitioners in W.P.No.6870 of 1996 having aggrieved by the order of the learned Single Judge dated 30.10.2003 whereby the learned Judge though quashed the order dated 5.6.1996 of the third respondent based on the decision of the Government not to sell the property of the erstwhile Ramanathapuram District Central Co-operative Bank, rejected the prayer made by the petitioners to communicate the acceptance of the tender in their favour. 2. W.P.No.39213 of 2003 is preferred against the order dated 14.11.2003 on the file of the Registrar of Co-operative Societies, Chennai whereby the Registrar refused sanction for sale of vacant site and building of the erstwhile Ramanathapuram District Central Co-operative Bank at Madurai in favour of the petitioners. 3. Since the writ petition is connected with the issue to be decided in the writ appeal, both the matters are taken up together for disposal. https://hcservices.ecourts.gov.in/hcservices/ 4. The relevant facts for deciding the writ appeal and the writ petition are as follows:- The erstwhile Ramanathapuram District Central Co-operative Bank Limited was functioning from their Head Quarters at Madurai upto 1.9.1993. On the trifurcation of the Ramanathapuram District into three separate Revenue Districts, the said bank was also trifurcated into three banks viz., (1) Ramanathapuram District Central Co- operative Bank Limited with head quarters at Ramanathapuram (2) Pasumpon Muthuramalinga Thevar District Central Co-operative Bank Limited with head quarters at Sivaganga (3) Kamarajar District Central Co-operative Bank Limited with head quarters at Virudhunagar. All the three banks started functioning in their respective headquarters with effect from 2.9.1993. The Head Office building of the erstwhile composite bank situated at Madurai became vacant and proposals were initiated to sell the building with vacant land. All the three Banks by resolution No.28 dated 18.9.1993 unanimously resolved to sell the building and the vacant land. 5. In accordance with the resolution dated 18.9.1993 steps were taken and the Government accorded their permission on 3.5.1994 to dispose the property. The Registrar of Co-operative Societies the second respondent herein also granted permission to dispose the property as per proceedings dated 17.5.1994. Subsequently second respondent constituted a joint Committee of all the three Central Co-operative Banks and the said Committee resolved to conduct tender cum public auction for disposal of the property. Though offer was given for a sum of Rs.1,53,00,000/- by one Sharravanan, the Government as per proceedings dated 20.12.1994 granted permission for the sale of the property only on payment of a sum of Rs.1,77,12,000/-. In view of the Government order, the bid amount was raised and permission for sale was granted by the second respondent on 27.1.1995. 6. The order dated 27.1.1995 of the second respondent accepting the bid for a sum of Rs.1,77,12,000/- was challenged in W.P.Nos.4735, 5092 and 6941 of 1995 by Mr.S.Marimuthu, Mr.R.K.Thandiappan and Mr.Subha Thangavelan respectively. Initially interim stay of all further proceedings pursuant to the acceptance of bid was granted in all the three writ petitions. As against the interim orders, writ appeals were preferred by the highest bidder in Writ Appeal Nos.939 to 941 of 1995. Those writ appeals along with writ appeal Nos.982 to 984 of 1995 preferred by the Joint Registrar- cum-Managing Director of the Pasompon Muthuramalinga Thevar District Central Co-operative Bank Limited were taken up for hearing and all the six writ appeals were disposed by the Division Bench and a common judgment was delivered on 21.11.1995. In the judgment dated 21.11.1995, the Division Bench directed fresh tender process and also gave specific direction as to how the matter should be https://hcservices.ecourts.gov.in/hcservices/ proceeded with and the relevant directions as contained in para 30 of the judgment is reproduced below:- "(i) To conduct a public auction on a date to be specified and notified after due and sufficient publication of the proposed auction with particulars relating to the property to be sold and the upset price which shall be the value fixed viz., Rs.1,77,12,000/-. (ii) Simultaneously, publish a notification inviting sealed tenders also to be opened at the time of and immediately after the public auction only and accept as hereinafter provided the best of the two offers - made at the time of public auction and received in the form of sealed tenders, if considered to represent real market value of the property in question. (iii) The auction shall commence at the time, date and place specified in the notice of auction. No bid or tender below the upset price shall be entertained or considered. Immediately after the close of the bidding the Sale Officer shall record the maximum bid amount and thereafter the tenders, if any, received shall be taken and opened by the Sale officer. If the tender is found to be in order, it shall be taken as part of the sales records and the amount offered in the tender also shall be considered. If the amount quoted in the highest tender is higher than the maximum bid amount recorded in open auction, the sale officer shall continue the auction allowing the participation of only the highest bidder and the tenderers who have quoted the above of the highest bid. If there are no tenders or after continuing the auction between the highest bidder and the highest tenderer, the sale officer shall then provisionally accept the highest of the bid subject to the approval of the General Body of the three District Central Banks and the Registrar of Co-operative societies, Tamil Nadu state. On such approval only, the acceptances of the offer the bid made and provisionally accepted shall become final and operative and binding between parties https://hcservices.ecourts.gov.in/hcservices/ iv) Immediately after conclusion of the auction as above, the authority shall cause the same to be placed before the General Body of the three District Central Banks, through their special officer's / Managing Directors/ Secretaries concerned within four weeks and there upon place the same, with the approval, if any, accorded to the Registrar who shall pass orders either way within four weeks from the date of receipt of the relevant papers by him. v) If the approval has been accorded as above, thereafter, the sale can be effected, as required in law." 7. Subsequently tender-cum-public auction was conducted to sell the property and in the public auction ultimately one M.Janakiraman offered a sum of Rs.3,75,00,000/- and since he withdrew his offer before confirmation, the second appellant and seventeen others offered a sum of Rs.3,75,00,000/- and the offer was placed before the general body of three Central Co-operative Banks during the month of February, 1996. The general body of the three banks approved the tender and subsequently as per the direction contained in the judgment of the Division Bench, the same was forwarded to the Registrar of Co-operative Societies for his approval in terms of Rule 78(3) of the Tamil Nadu Co-operative Societies Rules, 1998. Since the second respondent has not passed orders within four weeks as per the direction contained in the judgment of the Division Bench, the appellants issued lawyer's notice dated 22.4.1996 to the second respondent and the said notice was duly replied stating that the Registrar has already passed an order on 26.2.1996. However as the bid has to be confirmed by the Government in terms of G.O.Ms.No.325 dated 15.4.1993, the matter was stated to have placed before the Government for appropriate orders. 8. Subsequently the third respondent passed an order in terms of Rule 78(3) on 5.6.1996 whereby the second appellant was informed that the Government had taken a decision not to dispose of the vacant site and building of the erstwhile Ramanathapuram District Central Co-operative Bank Limited situated at Madurai and decided to close the case. Along with the said proceedings, the earnest money deposit made by the first appellant was also returned. Challenging the said order, the first appellant has preferred W.P.No.6870 of 1996. 9. In the affidavit filed in support of W.P.No.6870 of 1996 the first appellant herein contended that in view of the judgment of the Division Bench dated 21.11.1995 in W.A.Nos.939 to 941 of 1995 the https://hcservices.ecourts.gov.in/hcservices/ Registrar has no other option than to approve the proposal, as according to the appellants, the Registrar and the Government had already exercised their powers under Rule 78(3) of the Tamil Nadu Co-operative Societies Rules and as such by passing the impugned order the Registrar as well as the Government virtually flouted the judgment of the Division Bench. According to the appellants, the whole issue is covered by the decision in W.A.No.939 to 941 of 1995 and in view of the approval of the general body for the proposed sale coupled with the direction of the Division Bench, the second respondent and the Government had no role to play in the matter and as such the first appellant prayed for setting aside the impugned order and to direct the respondent to communicate the acceptance of the tender. 10. In the said writ petition respondents 1 and 3 filed counter affidavit and opposed the prayer. According to the first respondent, the Government after careful consideration of the matter, decided that there is no necessity to sell the vacant site and building of the erstwhile Ramanathapuram District Central Co- operative Bank at Madurai and passed an order in G.O.Ms.No.115 dated 30.5.1996, which is perfectly in order and does not call for interference. The third respondent in their counter contended that the Registrar of Co-operative Societies considered the proposal forwarded by the General Body of the Society and since the authority to approve the contract and tender above the value of Rs.1 crore is the Government, in turn, forwarded the same to the Government for approval, which ultimately culminated in rejecting the proposal by the Government. It is their further contention that till the bid is finally accepted no right would accrue to the appellants herein. It is also stated that along with the impugned order dated 5.6.1996, the earnest money was returned and the same was encashed without any demur and only as an after thought the writ petition has been preferred. 11. The learned Single Judge considered the entire aspect in the light of the earlier judgment of the Division Bench dated 21.11.1995 in W.A.No.931 to 941 of 1995 and quashed the impugned order dated 5.6.1996 on the file of the third respondent. However the learned Judge felt that the consequential relief of direction to the respondents for communicating the acceptance of the tender cannot be ordered, as according to the learned Judge it is for the second respondent to take a dcision either to grant sanction or to refuse the same. As such, the learned Single Judge directed the second respondent to consider the recommendation of the committee and the approval of the general body of the bank for sale of the building and vacant land in question, in the light of the observation made in the order and more particularly with reference to Rule 78(3) of the Tamil Nadu Co-operative Societies Rules and pass appropriate orders and communicate the same to the second https://hcservices.ecourts.gov.in/hcservices/ petitioner/second appellant on or before 21.11.2003. It is the said order of the learned Single Judge which is challenged in the present writ appeal. 12. Thiru G. Rajagopal, learned Senior Counsel for the appellants contended that having found that the order of the third respondent dated 5.6.1996 issued in pursuance of the decision of the Government not to sell the building and vacant land as arbitrary and illegal, the learned Judge should have granted the further prayer, as according to the learned Senior Counsel, the whole matter is covered by the judgment of the Division Bench dated 21.11.1995 in W.A.Nos.939 to 941 of 2005. According to the learned Senior Counsel, the Government as well as the second respondent are bound by the judgment of the Division Bench and as such the learned counsel prayed for setting aside the order of the learned Single Judge and prayed for a direction for sale of the property to the appellants. 13. Per contra, Thiru Vijay Narayan, learned Senior Counsel appearing for the third respondent submitted that the decision of the Government as well as the Registrar is perfectly in order, inasmuch as in the judgment dated 21.11.1995 in W.A.Nos.939 to 941 of 1995, the Division Bench had given liberty to the Registrar to pass orders in either way and as such the Registrar and the Government in exercise of their powers took a decision not to sell the property. It is the further contention of the learned Senior Counsel that the value of the property has increased considerably and as such due to change in circumstance, it is not in public interest to order sale of the property in favour of the appellants. 14. We have heard the learned senior counsels appearing on either side at length and we have also perused the judgment of the Division Bench dated 21.11.1995 and the order impugned in the writ appeal. A perusal of the judgment of the Division Bench in W.A.No.939 to 941 of 1995 shows that the Division Bench had not directed the second respondent to exercise the power in a particular manner. The direction of the Division Bench is with regard to the approval of the auction by the second respondent as contained in Sl.No.4 of the direction, which is extracted in the earlier part. This clearly shows that the Division Bench permitted the second respondent to pass orders in either way in respect of the auction sale of the property and in case the Registrar gives approval, the sale could be effected. Therefore we do not subscribe to the interpretation of the judgment as given by the learned Senior Counsel for the appellants to the effect that on account of the earlier permission granted by the Registrar under Rule 78(3) of the Tamil Nadu Co-operative Societies Rules, further approval of the Registrar is unnecessary. While giving direction to the Registrar to pass orders in the matter of confirmation of auction in either https://hcservices.ecourts.gov.in/hcservices/ way, the Division Bench was fully conscious of the earlier grant of approval under Rule 78(3) of the Tamil Nadu Co-operative Societies Rules by the second respondent. Therefore it can be safely concluded that even though there was an earlier approval by the Registrar, the Division Bench felt it necessary to have a fresh consideration in view of the the changed circumstances. 15. The next contention of the learned Senior Counsel for the appellant pertains to the so called order of the second respondent which is found mentioned in the communication dated 3.5.1996 addressed to the learned counsel for the appellants in reply to the contempt notice. The said letter is extracted below:- "Rc.No.42335/93/CII dated 3.5.96 To Thiru G.Baskaran, B.Sc., B.L., Advocate Goronel Manor No.9, Dr.Rangachari Rioad Mylapore, Madras 600 004 Sir, Sub: Disposal of vacant site and building of the Composite Ramanathapuram District Central Cooperative Bank situated at Madurai. Ref: Your notice dated 22.4.96. ----- With reference to the above notice, I would like to say that I am the Registrar of Cooperative Societies. In accordance with the direction of the Hon’ble High Court in Writ Appeals No.939 of 1995 batch that immediately after conclusion of the auction, the authority shall cause the same to be placed before the General Body of the three District Central Cooperative Banks, through their Special Officers etc., concerned, and within 4 weeks thereupon, place the same, with the approval, if any, accorded to the Registrar who shall pass orders either way within 4 weeks from the date of receipt of the relevant papers. The relevant papers were received by the Registrar of Cooperative Societies on 19.2.96 and in obedience to the direction of the Hon’ble High Court, the Registrar of Cooperative Societies has passed his final https://hcservices.ecourts.gov.in/hcservices/ orders on 26.2.96. However, this matter does not relate to the permission under rule 78(3) of the Tamil Nadu Cooperative Societies Rules, 1988, but relates mainly to the confirmation of the sale. As per the Government’s Order G.O.Ms.No.325, Cooperation, Food and Consumer Protection Department dated 15.4.93, all tenders and purchases the value of which exceeds Rs.1 crore should be sent to the Government for approval. Since the sale is attracted by the G.O.Ms.No.325 dated 15.4.93, the confirmation of the sale has to be given only by the Government. Besides the Hon’ble High Court in the above Writ Appeal, hence directed the respondents 1 to 3 to proceed in the matter afresh in the manner directed by the Hon’ble High Court and since the Government is the respondent No.1, it is necessary on the part of the Registrar of Cooperative Societies to remit the matter to the Government for their orders. I would also like to say that Rule 78(3) relates to the permission for the disposal of any immovable property by the Society. In this case, the Government have already given permission to the Societies in May’94 to dispose of the above property in Public Auction and pursuance to this, the Registrar of Cooperative Societies in his proceedings Rc.No.216947/93/CBPI dated 17.5.94 had already issued a permission under Rule 78(3) permitting the Bank to dispose of the vacant site and building. The process of sale has been conducted in accordance with the direction of the Hon’ble High Court. The issue to be decided in this case is only the confirmation of the sale. As mentioned above, as per the G.O., the Government is the competent Authority to confirm any tender above Rs.1 crore. Hence the matter has been referred to the Government as it is outside the competence of the Registrar of Cooperative Societies. The Hon’ble High Court had directed the Registrar to pass orders within 4 weeks. The Registrar has already passed orders as https://hcservices.ecourts.gov.in/hcservices/ directed by the High Court within 4 weeks and there is no further action due from the Registrar. The Registrar of Cooperative Societies have complied with the orders of the Hon’ble Court in all respects. The only issue remaining is the confirmation of the sale by the Government which is the competent authority. I hope the above reply would clarify the matter. Yours faithfully, Sd/- (JOR SINGH SYIEM)" 16. The above referred letter of the Registrar cannot be construed to be a communication with regard to the disposal of the matter as required under Rule 78(3) of the Tamil Nadu Co-operative Societies Rules in either way as directed by the Division Bench. The circumstances which compelled the Registrar to send such a communication is also to be seen. When the contempt notice was issued by the learned counsel for the appellants, the Registrar appears to have sent a status report to the counsel informing him that the steps to be taken by the Registrar in the matter has already been taken and as such the Registrar has complied with the orders of the Honourable High Court in all respects. It is further stated in the said communication that the issue remaining is the confirmation of sale by the Government which is the competent authority. This communication though refers to the orders passed by the Registrar cannot be interpreted to mean that the Registrar has exercised his powers under Rule 78(3) of the Tamil Nadu Co- operative Societies Rules in a particular manner. The Registrar had only communicated that he has done his part and the matter is sent to the Government for taking appropriate decision. Therefore we are not inclined to accept the submission made by the learned Senior Counsel to the effect that there was an approval by the Registrar which was communicated to the appellants through their counsel as per letter dated 3.5.1996. 17. Since the learned Single Judge in Writ Petition No.6870 of 1996 had quashed the order dated 5.6.1996 and as the respondents have not challenged the said order in appeal, we are not called upon to decide the merits of the said part of the order. The issue in this writ appeal is only in respect of the consequential prayer for a positive order of sale in favour of the appellants. 18. The learned Senior Counsel relied on the judgment of the Apex Court reported in 2007(11) SCALE 49 (RELIANCE ENERGY LIMITED v. MAHARASHTRA S.R. DEV.CORPORATION) and contended that even in contractual matters judicial review is permissible in case the decision is arbitrary and unreasonable. https://hcservices.ecourts.gov.in/hcservices/ 19. The learned Senior Counsel appearing for the third respondent supported the finding of the learned Single Judge and contended that the third respondent cannot be compelled to part with their valuable property and the Court is only concerned with the decision making process and in that process the Court cannot substitute its decision how so ever erroneous it may be. In support of his contention he relied on the judgment of the Apex Court reported in 2007(1) S.C.C. 477 (RAJASTHAN HOUSING BOARD v. G.S.INVESTMENTS). In the said case the Supreme Court was concerned with sale of the plots belonging to Rajasthan Housing Board in pursuance of the auction notice dated 3.2.2002 for auction of 50 commercial plots followed by another auction notice dated 19.2.2002. The auction was conduced on 20.2.2002 in which the highest bid at the rate of 5750 per sq.ft. was accepted. Subsequently a news item was published in the newspaper that large scale bungling had been done in the auction due to which the price fetched for the plots in question was much below the market rate. The State Government taking note of the news item issued a direction whereby the records of the auction was summoned and the Government also stayed all further proceedings relating to the auction of the plots. Ultimately the State Government passed an order disapproving the auction and directing fresh auction. Accordingly, the Rajasthan Housing Board called upon the earlier auction purchaser to take back his earnest money deposit by producing the original receipt. The said communication was challenged by the auction purchaser before the High Court and ultimately the learned Single Judge disposed the writ petition directing the Housing Board to consider the matter and the said order was challenged by the Housing Board before the Division Bench and the Division Bench dismissed the appeal and aggrieved by the said order, the