SCA/5481/2008 1/19 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No. 5481 of 2008 With CIVIL APPLICATION No. 5620 of 2008 For Approval and Signature: HONOURABLE MR.JUSTICE JAYANT PATEL ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= RANMALBHAI LAKHUBHAI MADAM (AHIR) - Petitioner(s) Versus STATE OF GUJARAT & 5 - Respondent(s) ========================================================= Appearance : MR BS PATEL for Petitioner(s) : 1 - 2.MRS RANJAN B PATEL for Petitioner(s) : 1 - 2. MR KB TRIVEDI, ADVOCATE GENERAL WITH MS. SANGEETA VISHEN, AGP for Respondent(s) : 1 - 3. MR PRAKASH K JANI for Respondent(s) : 4, ========================================================= CORAM : HONOURABLE MR.JUSTICE JAYANT PATEL Date : 14/05/2008 ORAL JUDGMENT SCA/5481/2008 2/19 JUDGMENT 1. Rule. Ms. Sangeeta Vishen, learned AGP appears for respondents Nos. 1,2 & 3 and Mr.Jani appears for respondent No.4 and waive service of Rule. The matter is finally heard. The learned counsel for the applicant of Civil Application No. 5620 of 2008 Mr.B.T. Rao is also heard simultaneously while hearing the main Special Civil Application. 2. The short facts of the case appears to be that Jamnagar Regional Teli Biya Utpadak Sahakari Sangh Ltd.(hereinafter referred to as the “Society/Sangh/Society in liquidation” for the sake of convenience) is under liquidation and the liquidator of the Sangh is holding the charge of the affairs of the Society. It is holding the land bearing Survey No.1522 admeasuring 4,03,337 sq.ft. and another land bearing Survey No.221 admeasuring 1,01,037 sq.ft. It appears that as per the petitioners, the respondent No.3 liquidator by private negotiation, without holding the public auction of the property, accepted the offer of respondent No.4 at the rate of Rs.340/- per sq.ft. for the land bearing Survey No.1522 and for the land bearing Survey No.221 at the rate of Rs.325 per sq. ft. It appears from the order (Annexure-A) which is impugned in the petition that after passing the order, the liquidator entrusted the work for completing the procedure to the Manager SCA/5481/2008 3/19 JUDGMENT Shri Kanani for execution of the Sale Deed for acceptance of the money and for handing over of the possession. The aforesaid order came to be passed on 28.01.2008. 3. It is the further case of the petitioners that had the land sold by public auction, it would have materialized more price and the petitioners is one of the person who is interested to submit his offer for purchasing the land in question @ Rs.400/- per sq. ft. Under these circumstances, the petitioners have approached to this Court by the present petition. There are subsequent developments in the matter which shall be dealt with hereinafter. 4. Heard Mr.B.S. Patel for the petitioners, Mr.Kamal B. Trivedi, learned Advocate General with Ms. Sangeeta Vishen, learned AGP for respondents Nos. 1,2 & 3, Mr.PK Jani for respondent No.4 and also Mr.Rao for the applicant of Civil Application No.5620/08. 5. This Court on 01.04.2008, with a view to test the genuineness of the offer on the part of the petitioner had passed the following order: “1. Mr. B.S. Patel learned Counsel for the petitioners states that as declared in the petition, the petitioners are ready to offer Rs. 400/- per sq. ft. as against the offer of Rs. 340/- per sq. ft, and Rs. 325/- per sq. ft. and the SCA/5481/2008 4/19 JUDGMENT total consideration comes to Rs.16,13,34,800/-. He further declares before the Court that to show genuineness of the offer, as against the deposit made by the proposed buyer of Rs.51 lacs, the petitioners are ready to deposit the amount of Rs. 1 Crore within one week. He further submitted that the petitioners are also in a position to pay the full consideration within three months. He submitted that undertaking to that effect shall be filed by the petitioners within three days. 2. In view of the above, Notice returnable on 15.4.2008. By ad-interim order status-quo qua further action pursuant to the impugned order dated 28.1.2008 (Annexure A), shall be maintained, on condition that the petitioners deposits the amount of Rs.1 Crore with this Court on or before 8.4.2008.“ 6. Thereafter, the petitioners have deposited the amount of Rs.1 Crore with this Court as well as have filed an undertaking showing willingness to pay the remaining amount of Rs.15.34 Crores within three months. Therefore, the petitioners have stood by the offer. One another offer coming on record is of the applicant of Civil Application No.5620/08 for Rs.410/- per sq.ft. declaring that the applicant therein is desirous to purchase the land by offering the said price. It is true that the applicant of Civil Application No.5620/08 has not deposited any amount. However, the statement was made by SCA/5481/2008 5/19 JUDGMENT the learned counsel for the applicant Mr.Rao in presence of his client that the applicant is desirous to tender a cheque of Rs.1 Crore, if it is so ordered, for depositing with this Court, or in alternative, the applicant is also desirous to deposit the amount of Rs.1 Crore before the liquidator, if it is so ordered by this Court so as to enable him to maintain his offer which may be considered at the later stage. 7. It was submitted by the learned Advocate General that as per the information of the State Authorities, the land could not have been sold except by way of a public auction and further, the valuation of the land was also required to be made. It was further submitted that as per the State Government, the valuation has been made by GITCO, which is an expert body and as per GITCO, valuation of the land is Rs.724/- per sq.ft. of both the lands in question as against the acceptance of the offer by the liquidator at Rs.340/- per sq.mtr. 8. It was submitted by the learned Advocate General that since there was huge difference in the offer accepted by the impugned order and the requisite norms for disposal of the property was not followed by the liquidator, the Additional Registrar (Appeals), SCA/5481/2008 6/19 JUDGMENT Cooperative Societies, has exercised the suo motu powers and the decision of the liquidator is stayed. However, he also submitted that against the decision of the Registrar (Appeals), revision has been preferred by the respondent No.4 which is pending before the State Government. He also declared before the Court that because of such illegalities committed, the liquidator has been suspended and the departmental action is in contemplation against the liquidator. 9. It was submitted on behalf of the respondent No.4 that after passing of the impugned order, the registered Agreement to Sell has been executed in favour of respondent No.4 on 29.02.2008 and not only that, but another supplementary agreement is also executed in favour of respondent No.4 on the same day, i.e. 29.02.2008, whereby the possession of the land has been entrusted to the respondent No.4. It was also submitted that the respondent No.4 has filed Special Civil Suit No.21/08 in the Court of the Senior Civil Judge at Jamnagar for specific performance of the contract and in the said suit, the application for temporary injunction is pending. It was at the initial stage submitted on behalf of the respondent No.4 by the learned counsel Mr.Jani that in view of the concluded contract having entered into SCA/5481/2008 7/19 JUDGMENT between the respondent No.3 and respondent No.4, this Court may not interfere with the impugned decision of the liquidator and may not direct for holding of the public auction. 10. In view of the above, and considering the record of the present petition, following aspects are apparent: 1) A huge chunk of land admeasuring of 504374 sq.ft is the property of the Sangh which is agreed to be sold away by the then liquidator without holding public auction of the property in question. 2) The advertisement was given in newspaper Nobat having no circulation even in Gujarat State. 3) The mode and manner in which the offer is accepted by way of a private negotiation cannot be countenanced for disposal of such a huge property. 4) It is well settled norms for disposal of the public property that the opportunity should be given to the interested persons to purchase the property and if required, in a given case, negotiation amongst inter se offerors may also be held so as to make an attempt to procure the highest price of the property. SCA/5481/2008 8/19 JUDGMENT 5) The publicity of the invitation to submit the offer must be clear and must be given in a newspaper having vide circulation so that the public at large may have the equal opportunity to submit their offer, if they are so interested. 6) If the valuation of the property, as stated by the State Government, is considered, the price would be of about Rs.36.51 Crores. If the offer of the petitioner is considered, it comes to about Rs.20.77 Crores and if the offer of the applicant of Civil Application No.5620 of 2008 is considered, it comes to about 20.67 crores. As against the same, the offer accepted by the impugned order by the liquidator is for the amount of Rs.16.99 Crores (roughly Rs.17 Crores). Therefore, if the offer accepted by the impugned order is allowed to operate, it would result into huge monetary loss to the public money of about Rs.20 Crore if the valuation made by GITCO and accepted by the Government is considered or in alternative, in any case, would cause loss of about Rs.3 Crores and more if the private offers are considered. 11. The transaction for acceptance of the offer prima face appears to have been done in a surreptitious manner not only to cause huge loss to the public money, but the mode and SCA/5481/2008 9/19 JUDGMENT manner in which the transaction is entered into is absolutely in arbitrary manner with a view to favour respondent No.4 to enable him to crystalise his right pursuant to the sale transaction and thereby, adversely affecting the interest over the property of the Sangh inasmuch as, against the offer of Rs.17 Crore, not even 10% of the amount is accepted as the Earnest Money and on a meager amount of Rs.51,00,000/-, the Agreement to Sell is executed. Further, on the same day, an unregistered supplementary agreement is executed for handing over of the possession by Shri Kanani claiming the authority under the decision of the liquidator for handing over of the possession without receiving any additional consideration whatsoever. In normal circumstances, unless the consideration is received in full, there is no question of keeping of the possession. Such would be a normal conduct of the owner of the property, but in the present case, the liquidator holds the public duty and is supposed to act as trustee of the public property who owes more responsibility to pursue the transaction in a manner which may not frustrate the rights of the public body. 12. Having expressed the aforesaid view, this Court had prima facie observed that the Government could consider the matter for SCA/5481/2008 10/19 JUDGMENT initiating criminal prosecution against the persons concerned, more particularly against the then liquidator and/or manager of the respondent No.4, who is the beneficiary of the transaction, unless the respondent No.4 is ready to abandon all rights pursuant to the impugned order and to withdraw the litigation and to stand as one of the offeror in the event the Court directs for auction of the property by settled norms for disposal of the public property. 13. At that stage, Mr.Jani, learned counsel appearing for respondent No.3 under the instruction of his client, declared before the Court that with a view to see that the Court may not heavily bounce upon by ordering criminal prosecution, the respondent No.4 is agreeable for declaring that he shall not claim any right whatsoever based on the impugned order and the action taken pursuant to the impugned order as that of Agreement to Sell and the supplementary agreement and the respondent No.4 shall also withdraw the litigation pending before the appropriate forum for asserting the rights pursuant to the impugned order and the action taken thereafter. However, Mr.Jani further declared on behalf of the respondent No.4 that if the offer of the respondent No.4 is not be accepted, such may be considered as his offer SCA/5481/2008 11/19 JUDGMENT at the time when the next public auction is held and in the event his offer is not accepted thereafter, the Court may pass an order for returning of the amount of Rs.51 Lakhs and with the reasonable Bank rate interest @8% p.a. 14. It appears to the Court that in view of the peculiar circumstances that the impugned order is already acted upon and the rights are created pursuant to the Agreement to Sell, and further created pursuant to the supplementary agreement, it would be just and proper to consider the said declaration and consequently to avoid further legal complications based on the alleged civil rights and with the purpose to save the huge public property of a huge value of Rs.36.50 Crores. If the declaration of respondent No.4 is not accepted, it may create further complications in future of getting back the possession of the land, cancellation of the agreement to Sell, huge long litigation, etc., which consequently may result into putting the public property as well as the public money in jeopardy for a long period and the money may not be available of the real price of the land for distribution in the liquidation proceedings. Therefore, I find that keeping in view the peculiar facts and circumstances, the declaration of the petitioner can be accepted and the same would SCA/5481/2008 12/19 JUDGMENT be in the larger interest of such properties of the Sangh and also in the larger interest of the public money of the public property. It is only if the respondent No.4 backs out from the declaration made or creates any hurdles by frustrating the declaration made, the Government may be required to take stern action including that of lodging criminal prosecution, but as the respondent No.4 has now abandoned the rights, it may not require the State Authorities to initiate action against him. Of course, the lapse on the part of the then liquidator may be the subject matter of the departmental inquiry in future, where the matter can be examined in accordance with law for suitable action. 15. It was also submitted on behalf of the State Authorities that the Government is desirous to sell the property by public action and the attempt shall be made to realize maximum price of the property by giving wide publicity and at that stage, the offer of the respondent No.4, of the petitioner, as well as of the newly added applicant, if so ordered by this Court, can be considered together with the other offerers, but the Government should be at the liberty to decide as to whether the offer should be accepted or not. 16. It was also submitted on behalf of the State SCA/5481/2008 13/19 JUDGMENT Authorities that if the offer fetches requisite price, or more price, the State Government would have no objection in accepting the offer, but the action shall be taken in a positive manner for maximum realization of the money and no compromise shall be made in following the settled norms for disposal of the public property and to realize maximum price of the public property. 17. It appears that there cannot be any second opinion on the aspects that the Government or the liquidator, as the case may be, has to make sincere effort to see that the maximum price of the property is realized and the money is made available to the fullest extent for distribution. As the property is declared as having value of Rs.36.51 crores, ultimately, it will be for the State Authorities to undertake the procedure by giving wide publicity for inviting offers and then to finalise the offer keeping in view the valuation made and also additional amount if any available by disposal of the property. At the same time, if the offers are not received of the amount of the upset price or if the authority finds that the offers received are at very lower price, it may decide not to accept any offer and to make a fresh attempt for disposal of the property. As such contingencies are yet to arise, I find it SCA/5481/2008 14/19 JUDGMENT proper to leave the matter at that stage without concluding on the said aspects. 18. Concerning to the impugned order, in view of the aforesaid fact situation and more particularly that the decision of the liquidator is in ex facie breach of the settled norms for disposal of the public property, and it is satisfactorily demonstrated before this Court that the same is to result into huge loss to the public money of about Rs.20 Crores, the same cannot be sustained in the eye of law. It is coupled with the circumstance that the Additional Registrar (Appeal) has exercised the suo motu powers and in appellate jurisdiction the decision is stayed. The most important aspect is that the beneficiary of the order, respondent No.4 herein, as recorded hereinabove, has also declared for abandonment his rights pursuant to the said order except for the refund of the amount already paid with the reasonable interest. Therefore, the impugned order of the liquidator in any case deserves to be quashed and suitable directions deserves to be issued with a view to see that the property may be made available for the Sangh for realization of the maximum amount after following the settled norms for disposal of the public property. SCA/5481/2008 15/19 JUDGMENT 19. Hence, the following orders: A) The impugned order (Annexure-A) passed by the respondent No.3 is quashed and set aside. B) The declaration of the respondent No.4 for abandoning all rights, if any, pursuant to the impugned order after passing of the impugned order on account of the registered Agreement to Sell and Supplementary Agreement is accepted. It is clarified that as a consequence thereof, the Agreement to Sale and Supplementary Agreement shall stand cancelled and the land shall remain in title and possession of the Sangh only. C) The respondent No.4 in furtherance to the said declaration shall also withdraw the proceedings before the State Government of Revision No.43/08 and shall also withdraw the Civil Suit No. 21/08 within one week from today. In the event, there is failure on the part of the respondent No.4, for withdrawal, it would also be open to the State Authorities including the liquidator to place the copy of this order in the proceedings of the revision and of the Suit for disposal of such proceedings. D) The respondent No.3 shall undertake the fresh procedure for disposal of the property in question by giving public advertisement SCA/5481/2008 16/19 JUDGMENT in the newspaper having wide circulation for inviting offer of the interested parties. The upset price of the property shall be fixed at Rs.36.51 Crore at the rate of Rs.720/- per sq. mtr. E) The offer of the respondent No.4 shall be considered at Rs.340/- per ft. for Rs.16.99 Crore and it would also be open to the respondent No.4 to submit a fresh offer by by revising the earlier offer. At that time, the requisite amount of EMD will be required to be deposited by the respondent No.4 minus the amount of Rs.51 Lakhs already lying with the respondent No.3. F) The offer of the petitioner shall also be considered at Rs.400/- per sq.ft., total Rs.20.17 Crore. It would also be open to the petitioners to revise the offer, but at that stage, the petitioner will be required to deposit the requisite amount of Earnest Money Deposit (EMD) minus (-) the amount of Rs.1 Crore which is already deposited by him pending the petition. G) The amount of Rs.1 Crore which is deposited by the petitioners, shall be transmitted by the office of this Court respondent No.3 for consideration of the offer of the petitioner as per the earlier direction within two weeks from the receipt of the order. SCA/5481/2008 17/19 JUDGMENT H) The applicant of Civil Application No.5620/08 shall be at the liberty to deposit the amount of Rs.1 Crore with the respondent No.3 on or before 21.05.2008 by registering his offer at Rs.410/- per sq.ft. It would also be open to such applicant to revise the offer as and when the public advertisement is issued, at that stage, he will be required to deposit requisite EMD minus the amount of Rs.1 Crore already deposited. I) The respondent No.3 shall undertake the exercise for disposal of the property in association with the officer not below the rank of Joint Registrar, who may be deputed by respondent No.3 for such purpose and without prior approval of the Registrar, Cooperative Societies, the offer of any party shall not be accepted by respondent No.3. J) It will also be open to respondent No.3 in association with the officer who may be deputed by respondent No.2 to have the inter se bid amongst the highest offerers of the land in question and the sincere attempt shall be made to realise maximum amount of the property. K) The aforesaid process shall be completed as SCA/5481/2008 18/19 JUDGMENT early as possible preferably within a period of three months from the receipt of the order. L) In the event the offer of the respondent No.4 is not accepted, the amount of Rs.51 Lakhs shall be returned to the petitioner together with interest at the rate 8% p.a. from 29.02.2008 till 14.05.2008 and such amount shall be returned within two weeks from the finalisation of the offer received. M) In the event the offer of the petitioner or the applicant of Civil Application No.5620 of 2008 is also not accepted, the respondent No.3 shall return the amount of Rs.1 Crore deposited by the petitioners and by the applicant of Civil Application No.5620 of 2008 is so deposited, within two weeks from the finalisation of the offer. 20. The petition is allowed to the aforesaid extent. Rule made absolute accordingly. No orders as to costs. 21. In view of the order passed in the Special Civil Application, the rights of the applicant of Civil Application No.5620/08 shall also stand governed accordingly. (JAYANT PATEL, J.) SCA/5481/2008 19/19 JUDGMENT *bjoy