IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.K.ABDUL REHIM WEDNESDAY, THE 21ST DECEMBER 2011 / 30TH AGRAHAYANA 1933 WP(C).No. 3253 of 2010(F) ---------------------------------- TA.1111/1997 of DEBT RECOVERY TRIBUNAL, ERNAKULAM ............................................................................................ PETITIONER: ------------------ - C.M.BOSE, CHEMPAKATHINAL HOUSE, KIZHATHADIYOOR P.O., KOTTAYAM DISTRICT. BY ADVS. SRI.O.V.RADHAKRISHNAN, SENIOR ADVOCATE SRI.BINU PAUL SRI.T.V.VINU SRI.SHAJI THOMAS PORKKATTIL RESPONDENTS: --------------------- 1. THE RECOVERY OFFICER, IN DRC NO.638/FB (SMT.SHOBA GEORGE), DEBT RECOVERY TRIBUNAL, ERNAKULAM. 2. VIJAYKUMARAN PILLAI, RECOVERY OFFICER, D.R.T. ERNAKULAM. 3. THE FEDERAL BANK LTD. REPRESENTED BY ITS MANAGER, ASSET RECOVERY BRANCH, FEDERAL TOWERS, MARINE DRIVE, ERNAKULAM. * ADDL.R4 IMPLEADED *ADDL.R4 M.J.GEORGE, S/O LATE JOSEPH MANIYANICAL HOUSE, KANJIKUZHI, KOTTAYAM DIST. ADDL R4 IS IMPLEADED AS PER ORDER DT. 11.2..2010 IN IA 1776/10 R3 BY ADV. SRI.V.J.JOSEPH SMT.M.V.LIGI SRI.K.K.CHANDRAN PILLAI, SENIOR ADVOCATE R1 BY ADV.SRI.A.S.SAJUSH PAUL ADDL.R4 BY SRI.P.V.JYOTHI PRASAD THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 07/12/2010, THE COURT ON 21/12/2011 DELIVERED THE FOLLOWING: JM WPC NO. 3253 OF 2010 APPENDIX PETITIONER'S EXHBITS: P1: COPY OF THE PROCLAMATION OF SALE DT. 20.11.2009 IN D.R.C NO. 638/FB IS ISSUED BY THE RECOVERY OFFICER P2: COPY OF DEMAND DRAFT DT. 14.1.2010(5 NOS.) FOR A TOTAL SUM OF RS. 270000/- P3: COPY OF DEMAND DRAFT DT. 14.1.2010 (5 NOS.) FOR A TOTAL SUM OF RS. 4,10,000/- P4: COPY OF THE BIDDING SHEET IN RESPECT OF THE AUCTION HELD ON 14.01.2010 ISSUED FROM THE OFFICE OF D.R.T. P5: COPY OF ORDER DT. 14.1.2010 PASSED BY THE 1ST RESPONDENT P6: COPY THE LAND TAX RECEIPT ISSUED BY THE VILLAGE OFFICER DT. 17.09.2009 P7: COPY OF THE PROCLAMATION OF SALE DT. 28.07.2008 FIXING THE RESERVE PRICE AS RS. 18,00,000/- (EIGHTEEN LAKH) P8: COPY OF NOTICE DT 16.10.209 ISSUED BY THE RECOVERY OFFICER P9: TRUE COPY OF THE JUDGMENT/ORDER IN T.A. NO. 1111/1997 DT. 01.08.2001. P10: COPY OF THE JUDGEMENT DT. 24.9.2008 IN WP(C) NO.28193/2008 P11: COPY OF THE DOCUMENT NO. 2927/2001 D. 12.11.2001 RESPONDENTS EXHIBITS: NIL \\TRUE COPY\\ PA TO JUDGE JM C.K. ABDUL REHIM,J. ------------------------------------------------- W.P.(c) No. 3253 OF 2010-F ------------------------------------------------- DATED THIS THE 21st DAY OF DECEMBER, 2011 J U D G M E N T Petitioner is the bidder in an auction sale of immovable property conducted by the 1st respondent, on 14.1.2010. The bid in question was knocked in favour of the petitioner, his offer being the highest for an amount of Rs.16.20 lakhs. The petitioner is aggrieved by Ext.P5 proceedings issued by the 1st respondent whereby the auction conducted was cancelled and the petitioner is restrained from participating in any subsequent auction. 2. It is evident that, the 3rd respondent Bank got Ext.P1 recovery certificate for realisation of amounts due from owners of the immovable property which was put to auction, to the extent of permitting realisation of a sum of Rs.1,06,56,494.14, along with future interest from 19-11- 2009 and cost and expenses. The reserved price fixed for the auction sale was Rs.16 lakhs. It is stated that only two W.P.(c) No.3253/2010 -2- bidders were present in the auction, the petitioner and one Sri.Raju Sebastian. The petitioner participated in the auction after remitting 10% of the reserve price, as earnest money deposit. The auction was scheduled at 2.30 p.m. and the intending bidders were to pay EMD before 1.00 p.m. 3 other bidders who came after 1.00 p.m. were not permitted to remit the EMD and to participate in the auction. The contesting bidder Sri.Raju Sebastian had responded to the bid for Rs.16,10,000/- whereas the petitioner had offered Rs.16, 20,000/- . The above facts are evident from the bid sheet, copy of which is produced as Ext.P4. As per terms of the auction sale the successful bidder has to deposit 25% of the bid amount, inclusive of the EMD, on the date of auction itself. Accordingly the petitioner has to remit an additional sum of Rs.2,61,210/-. It is stated that the petitioner was ready with Demand Draft to the tune of Rs.2,70,000/- drawn in favour of the 1st respondent. But the contesting bidder Sri.Raju Sebastian, had snatched away the Demand Draft for Rs.2,70,000/- W.P.(c) No.3253/2010 -3- from the possession of the petitioner at a place outside the chamber of the 1st respondent, within the premises of her office, and handed over the same to a person who was standing near to him, who in turn ran away from the office with the Demand Draft. Suddenly the petitioner made complaint to the 1st respondent who interfered in the matter. Initially Sri.Raju Sebastian denied the incident. But when a third person who was witnessing the incident spoke about the same, Sri.Raju Sebastian had to confess. The 1st respondent interfered in the matter and threatened Sri. Raju Sebastian stating that she will call police and that he will not be allowed to leave the place. Then he called his brother who was waiting on the ground floor of the building and asked to come over to the office of the 1st respondent with the Demand Draft. Accordingly the Demand Draft was handed over to the petitioner in the chamber of the 1st respondent and the petitioner expressed his willingness to remit the amount. According to the petitioner, he was having other Demand Drafts also with him, kept ready for W.P.(c) No.3253/2010 -4- deposit of 25%, amounting to a total sum of Rs.4,10,000/-. 3. It is stated that the contesting bidder Sri.Raju Sebastian was accompanied by a team of 'goondas' and he is a member of a land mafia in Ernakulam. It is alleged that the said person is having close association with the 2nd respondent who is also a Recovery Officer attached to the Debt Recovery Tribunal, Ernakulam. According to the petitioner, it was subsequently came to notice that Sri.Raju Sebastian was only the binami of the judgment debtor and he participated in the auction only to bid the property on behalf of the owner. It is stated that the draft in question was snatched away from the custody of the petitioner only when Sri.Raju Sebastian came out of the chamber of the 2nd respondent. However, after recovery of the Demand Draft from custody of Raju Sebastian, when the petitioner was about to make deposit, the 2nd respondent who has nothing to do with the auction sale in question made a request to the 1st respondent to cancel the auction and accordingly the 1st respondent had informed the petitioner that the auction W.P.(c) No.3253/2010 -5- is cancelled and given back the Demand Draft to petitioner. It is alleged that, even thereafter the petitioner was threatened by the goondas arranged by the rival bidder and the petitioner was to ran away from the premise of the Debt Recovery Tribunal. 4. Subsequently it was noticed that the 1st respondent passed Ext.P5 order which is noted in the Diary kept at her office. According to the petitioner, the reason mentioned in Ext.P5 for cancellation of the sale and for conduct subsequent auction, is totally incorrect and baseless. Further it is pointed out that there was absolutely no reason to take a decision for preventing the petitioner from participating in any subsequent auction. It is contended that such a decision is taken in a malafide manner under the undue influence of the 2nd respondent, who acted in collusion with the rival bidder Sri.Raju Sebastian. Since the decision taken in Ext.P5 is totally unreasonable, arbitrary and irrational the petitioner is challenging the said decision in this writ petition. W.P.(c) No.3253/2010 -6- 5. The additional 4th respondent impleaded is the owner of the property which was auctioned. In the affidavit filed in support of the impleading application it is stated that, if he is given a chance to pay the amount at which the property was sold in auction, he can pay the amount with a view to save the property from being sold. He filed I.A.No.7748/10 seeking permission to settle the dues with the Bank. 6. In the counter affidavit of the 3rd respondent Bank it is stated that the Additional 4th respondent was one among the co-obligants in the loan transaction and as such he is jointly and severally liable to pay the debt along with the loanee. According to the 3rd respondent they were totally unaware of the incident which happened on 14.1.2010 and they are not in a position to make any comment on the various allegations raised against respondents 1 and 2. According to the 3rd respondent they are interested only in recovering the debt and that indefinite pendency of the of the matter is causing severe W.P.(c) No.3253/2010 -7- prejudice. However it is conceded that the bid amount offered by the petitioner is above the upset price fixed by the Recovery Officer. It is further pointed out that the Additional 4th respondent had filed an application before this court seeking permission to remit an amount of Rs.16,50,000/- to release charge upon the property. 7. A counter affidavit has been filed on behalf of the 1st respondent wherein it is stated that the sale was proclaimed after completing all the required formalities. It is also admitted that, earnest money deposit was received only from two bidders, on that day 3 others came after 1 p.m. were not allowed to participate in the auction. It is also admitted that the auction was knocked in favour of the petitioner. According to the 1st respondent, after close of the bid the bid sheet was signed by both the bidders and the 1st respondent, and the petitioner was directed to make payment of the balance amount after ascertaining the exact amount from the office. According to the 1st respondent, after about 10 minutes of the petitioner as well as the rival W.P.(c) No.3253/2010 -8- bidder had left her cabin. But the petitioner rushed into her cabin and complained about snatching of the Demand Draft by Sri. Raju Sebastian. Petitioner told that Sri.Raju Sebastian is available outside the cabin. Thereupon the 1st respondent came out of the cabin and asked Sri.Raju Sebastian about the complaint, which he denied. But Sri.Raju Sebastian told the 1st respondent that he was cheated by the petitioner by not giving Rs.50,000/- which was offered to him as consideration for refraining from hiking the bid. It is further admitted that, another person came to the scene had told to the 1st respondent that he had seen Sri.Raju Sebastian snatching away demand draft. Still Sri.Raju Sebastian did not accept the allegations. Therefore the 1st respondent had informed the matter to the 2nd respondent who is the other Recovery Officer attached to the Tribunal. Having informed the 2nd respondent came out his seat and he tried to verify correctness of the allegation made by the petitioner. Thereupon Sri. Raju Sebastian was warned that police will be called and the matter will be W.P.(c) No.3253/2010 -9- entrusted to them. Thereupon Sri.Raju Sebastian admitted before respondents 1 and 2 that he had snatched the Demand Draft as alleged by the petitioner and handed over the same to his brother who had gone to the ground floor of the building by that time. Sri.Raju Sebastian was directed to get back the demand draft and he telephoned his brother, who came and handed over the Demand Draft to the 1st respondent. She immediately handed over the same to the petitioner. Even after handing over the Demand Draft both Sri.Raju Sebastian and the petitioner were making allegations and counter allegations regarding payment of Rs.50,000/- alleged to have been offered by the petitioner to Sri.Raju Sebastian. According to the 1st respondent, she had reasonable belief which she gathered from the conversations between the petitioner and Sri.Raju Sebastian and that both of them were colluding to bid the property at a low price, on the basis of an earlier understanding regarding and that they came with a pre- determined notion. According to the 1st respondent, it is W.P.(c) No.3253/2010 -10- nothing but a fraud committed to the process of sale, otherwise the sale might have fetched more amount. Therefore considering the totality of circumstances and on analysing the situation and the materials on record she had taken a decision that the sale proceedings has been interfered with by concerted and unholy action on the part of the petitioner and Sri.Raju Sebastian. Therefore the 1st respondent had taken a decision to cancel the sale and also decided to conduct fresh auction. It is stated that she had only taken a correct decision in restraining the parties from participating in the subsequent auction. Contention of the 1st respondent is that, the impugned decision is one taken in exercise of the quasi judicial function vested on her and it is an independent decision which is taken without interference of anybody. It is stated that the 1st respondent has got power to accept or reject the bid or to cancel or postpone the sale, in exercise of such power vested on her and the decision is taken only at the interest of the institution and at the interest of the office of the 1st respondent. W.P.(c) No.3253/2010 -11- 8. Challenge is raised by the 4th respondent against maintainability of the writ petition pointing out that, under section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act 1993, an effective alternative remedy is provided by way of appeal to the Debt Recovery Tribunal, and the writ petition filed bye-passing such remedy is unsustainable. 9. The petitioner had produced Ext.P9 judgment of the DRT in which it is specifically stated that the Additional 4th respondent is one among the borrowers and he had joint liability to pay off the entire amount due under the recovery certificate. He also produced Ext.P10 judgment of this Court in W.P (c) No.28193/2008, from which it is evident that the 4th respondent had approached this court on an earlier occasion when the 1st respondent had proclaimed sale of the property. It is evident from Ext.P10 that the 4th respondent pleaded before this Court for a last opportunity to pay off the debt by deferring the sale by two months. This court ordered adjournment of the sale to a date immediately W.P.(c) No.3253/2010 -12- after two months, without any fresh proclamation or notice, affording as last chance to the petitioner to pay off the liability. Inspite of Ext.P10 judgment passed as early as in September 2008, the 4th respondent has neither discharged the liability nor had taken any steps to avert the sale. It is also contended by the petitioner that the sale with respect to the property was proclaimed on earlier occasions about 13 times and the sale cannot be materialised due to want of bidders for any price higher than the upset price fixed. 10. While considering the question of maintainability on the basis of availability of alternative remedy of appeal Sri. O.V. Radhakrishnan, learned senior counsel appearing for petitioner contended that availability of alternative remedy is not an absolute bar for entertaining the writ petition if it is convinced that patent illegality had occasioned or when an authority had taken a decision which is totally unconscionable or a decision which can be termed as unreasonable, irrational and arbitrary. He had place reliance on various decisions. The Hon'ble Supreme Court W.P.(c) No.3253/2010 -13- in the decision in Rajasthan State Electricity Board V. Union of India and others ((2008) 5 SCC 632) held that, by now it is a well-settled principle of law that availability of alternative remedy is not an absolute bar for granting relief in exercise of power under Article 226 of the Constitution. In Kanak (Smt) and another V. U.P. Avas Evam Vikas Parishad and others (2003) 7 SCC 693 the Hon'ble Apex Court held that the High Court in exercise of its jurisdiction under Article 226 may not grant a relief inter alia on the ground of existence of alternative remedy. But it is another thing to say that the writ petition was not maintainable at all. The Hon'ble Supreme Court took a view that entertainment of a writ petition as well as the filing of counter affidavit and the argument on the merit are further more reasons to hold that it is too late to contend that the respondent could had availed the alternative remedy. Learned senior counsel pointed out that in the case at hand, since the writ petition was admitted and since it was contested on merits by filing counter affidavit, it is not W.P.(c) No.3253/2010 -14- justified on the part of this court in refusing adjudication of the issues on the ground of availability of alternative remedy. 11. Learned senior counsel appearing for the petitioner raised vehement contentions narrating the facts and circumstances upon which he places reliance in order to contend that Ext.P5 order is totally vitiated by extraneous considerations and malafides. He strongly assailed the reasons in Ext.P5 stated for cancellation of the sale. It is contended that illegality, unreasonableness and arbitrariness is writ at large on the face of the impugned order. According to him judicial review is permissible to set at right such patent illegality and arbitrary and unreasonable actions. In this regard reliance is placed on the decision of the Hon'ble Supreme Court in Tata Cellular V. Union of India ((1994) 6 SCC 651). Referring to legal principles governing tenders, the Hon'ble apex Court observed therein that, right to refuse the lowest or any other tender is always available to the Government. But, the W.P.(c) No.3253/2010 -15- principles underlying in Article 14 of the Constitution have to be kept in view while accepting or refusing any tender. There cannot be any question of infringement of Article 14 if the Government tries to get the best persons or the best price. The right to choose cannot be said to be an arbitrary power and if the said power is exercised for any collateral purpose such exercise can be struck down. Hon'ble Supreme Court further observed that in the exercise of judicial review in such cases it is the duty of the courts to confine itself to the question of legality on the basis of specific concern as to whether the decision making authority had exceeded its powers and, committed an error of law, committed a breach of rules of natural justice, reached a decision which no reasonable tribunal would have reached or, abused its powers. According to learned senior counsel the decision taken by the 1st respondent in Ext.P5 will satisfy many of the above parameters, justifying an interference of this court in its power of judicial review. Learned senior counsel further placed reliance on the W.P.(c) No.3253/2010 -16- decision of the Hon'ble Supreme Court in Shimnit Utsch India (P) Ltd. and another V. West Bengal Transport Infrastructure Development Corporation Ltd. and others ((2010) 6 SCC 303). Referring to Tata Cellular's case and many other cases, the Hon'ble Supreme Court held that judicial review is possible when there is total unreasonableness in the action of the authority concerned. In another decision of the Hon'ble Supreme Court in Jagdish Mandal V. State of Orissa and others ((2007) 14 SCC 517) it is held that judicial review of administrative action is intended to prevent arbitrariness, irrationality, unreasonableness, bias and malafides. Its purpose is to check whether the choice or decision is “lawfully” and not to check whether the choice or decision is “sound”. When the power of judicial review is invoked in matters relating to tenders or award of contracts, certain special features should be borne in mind. Attempts by unsuccessful tenderers with imaginary grievances, wounded pride and business rivalry, to make mountains out of W.P.(c) No.3253/2010 -17- molehills of some technical/procedural violations or some prejudice to itself, and to persuade courts to interfere by exercising power of judicial review, should be resisted. According to the learned senior counsel the circumstances which led to cancellation under Ext.P5 is purely based on such attempts made by the rival tenderers which the 1st respondent ought not have entertained. Referring to yet another decision in Sorath Buildes V. Shreejikrupa Buildcon Limited and another ((2009) 11 SCC 9) it is contended that when there is no fault or arbitrariness in the decision arriving at acceptance of the bid, such decision is not liable to be reversed on the basis of any allegation made by the rival contestant. Referring to another decision in Meerut Development Authority V. Association of Management Studies and another ((2009) 6 SCC 171) the learned senior counsel pointed out that the Hon'ble apex Court had held that bidders participating in the tender process have no other right except the right to equality and fair treatment in the matter of evaluation of competitive W.P.(c) No.3253/2010 -18- bids. One cannot challenge the terms and conditions of the tender except on the above stated ground, the reason being the terms of the invitation to tender are in the realm of the contract. 12. Considering the issue involved in the case at hand when analysed in view of settled legal precedents quoted above, question evolved for decision is as to whether a judicial review is warranted to interfere with Ext.P5. As observed above, availability of alternative remedy is not an absolute bar to entertain the writ petition when the court is convinced that there occurred patent illegality or when it is convinced that the decision is totally unreasonable and arbitrary or that it is totally lacking rational or when there is patent infringement of Article 14. Hence, while deciding the question regarding the scope of judicial review the merit of Ext.P5 need be examined in relation to the attendant circumstances. Exhibit P5 says that the auction was knocked in favour of the petitioner at the bid amount of Rs.16,20,000/-. It is also admitted that the petitioner had W.P.(c) No.3253/2010 -19- informed the 1st respondent about snatching away the Demand Draft by the opposite bidder from his custody. The order further says that Sri. Raju Sebastian, had initially denied it. But conspicuously the impugned order does not indicate about the subsequent confession made by him or about return of the Demand Draft and the handing over of the Draft to the petitioner. On the other hand without any further explanation the 1st respondent observed that, allegations and counter allegations were made by both of them and in the circumstances it is strongly suspected the fraud and cartal between the bidders. Therefore the 1st respondent cancelled the auction and also restrained both the parties from participating in subsequent auction. But in the counter affidavit filed by the 1st respondent an attempt is made by her case by narrating somany other facts. For the first time in the counter affidavit mention is made about of Sri. Raju Sebastian with respect to an alleged offer of the petitioner for payment of Rs.50,000/-. Even on taking the contentions in the counter affidavit as true and correct it is W.P.(c) No.3253/2010 -20- clear and evident that Sri. Raju Sebastian had practised a high handed and illegal act within the office premise of the 1st respondent, which may amount to criminal offence punishable. Inspite the 1st respondent has not taken any serious note of such an act nor had proceeded in any manner to book the culprit under law, or to take any precautionary steps to curb repeating of any such incident in any of the future auction sales. Going by the terms of Ext.P5 which is further explained through the counter affidavit, it has to be presumed that the 1st respondent had decided to cancel the auction sale believing words of a person who had committed a criminal offence in the office of the 1st respondent, which is of serious nature. The successful bidder, the petitioner, admittedly has not committed any irregularity in complying with any of the terms of bid nor he is attributed of any failure to make deposit of the amount within the prescribed date and time. Question to be posed is whether under such given circumstances the 1st respondent was justified or W.P.(c) No.3253/2010 -21- reasonable in arriving at a conclusion to cancel the sale. Apart from the statement made in the counter affidavit about an allegation