IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY THIRD DAY OF APRIL TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE N.V. RAMANA WRIT PETITION NO : 1607 of 2008 Between: Anil T. George S/o. T. J. Jeorge Kutti Chennai ..... PETITIONER AND 1 The A.P. State Cooperative Bank Limited, Rep. by its General Manager, Troop Bazar, Hyderabad. 2 The Deputy General Manager,Loans and Advances APCOD (AP State Cooperative Bank Ltd., Troop Bazar, Hyderabad 3 The Special Cadre Deputy Registrar/OSD A.P State Cooperative Bank Limited, Troop Bazar, Hyderabad .....RESPONDENT(S) Petition under Article 226 of the constitution of India praying that in the circumstances stated in the Affidavit filed herein the High Court will be pleased to to issue a writ or order or direction one particularly in the nature of writ of Mandamus declaring the action of the respondents in not return the amount ,laying with the respondents as per the assurance given by the respondents vide Ref.IF/Legal F.13/2007-08 dt. 29-11-2007 as illegal, arbitrary and also to declre the proceedings of the 3rd respondent dt. 26-12-2007 is arbitrary and in violation of principles of natural justice opposed to the promissory estopel and consequently direct the respondents to return the money deposited by the petitioner pursuant to the public auction of Lot No.1 conducted on 23-8-2007 in respect of the property situated at Ramayampatnam Village, Ulavapadu mandal, Prakasam District and pass Counsel for the Petitioner:MR.N.SUBBA RAO Counsel for the Respondent : GP FOR COOPERATION FOR R MR.A.H.RAMA KRISHNA RAO (SC FOR APCOB) FOR RVAK-1 The Court made the following : .... THE HON’BLE SRI JUSTICE N.V. RAMANA W.P. No. 1607 of 2008 O r d e r: By this writ petition, the petitioner seeks to issue a writ or order or direction, one particularly in the nature of writ of Mandamus declaring the action of the respondents in not returning the amount lying with the respondents as per the assurance given by them vide Ref.IF/Legal F.13/2007-08, dated 29.11.2007 as illegal, arbitrary and also to declare the proceedings of respondent No.3 dated 26.12.2007 as arbitrary and illegal and violative of principles of natural justice and opposed to promissory estoppel and consequently to direct the respondents to return the money deposited by the petitioner pursuant to public auction of Lot No.1 conducted on 23.08.2007 in respect of the property situated at Ramayampatnam village, Ulavapadu Mandal, Prakasam District, and pass such other and further orders to meet the ends of justice. The petitioner is the highest bidder in respect of the property comprised in Item No.1, namely components of shrimp culture hatcheries, land, building, plant and machinery, including land in an extent of Ac.6.89 cents, situated in Ramayampatnam village, Ulavapadu Mandal, Prakasham district, belonging to M/s. Blue Gold Maritech International Limited in the public auction conducted by District Co-operative Central Bank, Nellore, on 23.08.2007, for Rs.1,01,00,000/-. Out of the said sum, the petitioner paid an amount of Rs.60,05,000/-, which is inclusive of EMD, and issued cheques for Rs.46,00,000/-, covering the balance amount and stamp duty, on 05.09.2007. While the matters stood thus, M/s. Blue Gold Maritech International Limited, approached the Debts Recovery Appellate Tribunal, Chennai, by filing Appeal No. 615 of 2007 and obtained orders dated 07.09.2007, staying all further proceedings pursuant to the auction on condition of its depositing Rs.2,08,41,2000/- with the respondent-Bank in two instalments each of Rs. 1,04,20,600/- - 1st instalment payable on or before 10.10.2007 and 2nd instalment payable on or before 12.11.2007. In view of the stay order granted by the Debts Recovery Appellate Tribunal, the petitioner made representation dated 07.09.2007 requesting respondent No.3, namely Special Cadre Deputy Registrar, who is the Sale Officer, to return the amounts paid by him and also not to present the cheques given by him, in the event the stay order granted by the Debts Recovery Appellate Tribunal, is not vacated by 23.09.2007. Since the stay order was not vacated by the Debts Recovery Appellate Tribunal, the petitioner stating that the confirmation of sale would not be possible, made another representation dated 21.11.2007 requesting respondent No.3 to refund the amount paid by him and also to return the cheques. In response thereto, respondent No.2, namely the Deputy General Manager, vide letter informed the petitioner that as a matter of policy, they intend to refund the money, but in view of the statement made by the Standing Counsel for the Bank before the Debts Recovery Appellate Tribunal that the amount should not be returned to the auction depositor during the pendency of the appeal, they are unable to refund the amount. The petitioner, therefore, got issued a legal notice dated 29.11.2007 calling upon respondent No.3 to refund the entire amount deposited by him and also to return the cheques. While the matters stood thus, M/s. Blue Gold Maritech International Limited, filed writ petition in W.P. No. 28227 of 2007 on the file of this Court, and obtained stay of the order of interim stay granted by the Debts Recovery Appellate Tribunal. Further, respondent No. 3 vide orders dated 26.12.2007, has set aside the sale of properties comprised in Lot No.1, purchased by the petitioner in the auction. In view of this, there is no scope for respondent No.3 to confirm the sale in favour of the petitioner as per Condition No. 6 of the Public Auction notice within 30 days, the petitioner requested to return the amount deposited and also return the cheques, and as the respondents refused to return the amount deposited by the petitioner and also the cheques given by him, the petitioner filed the present writ petition. The learned counsel for the petitioner submitted that as per Condition No. 6 of the Public Auction Notice dated 20.07.2007, the sale in favour of the highest bidder has to be confirmed within 30 days, and having regard to the fact that the auction proceedings in relation to the property in question, at the instance of M/s. Blue Gold Maritech International Limited, have become subject matter of proceedings before the Debts Recovery Appellate Tribunal and also this Court, and the auction proceedings having been stayed, there is no scope or possibility for the respondents-Bank to confirm the sale in favour of the petitioner. He further submitted that there is no condition prescribed in the auction notification that in the event of failure of the highest bidder to pay the entire amount in time, the amounts already paid would be forfeited. He submitted that the petitioner would have deposited the entire amount in time, but because the auction proceedings were stayed, he did not deposit the entire amount, and agreed to deposit the entire amount if the stay granted was vacated by the Debts Recovery Appellate Tribunal. Since there is no possibility for the respondents to confirm the same, he submits that the respondents have no other go, but to refund the amount paid by them and also return the cheques, and the action of the respondents-Bank in refusing to return the money deposited by him and return the cheques issued, is illegal and arbitrary, and prayed that the writ petition be allowed and the respondents-Bank be directed to refund the amount deposited and also to return the chques. Respondent Nos. 1 and 3 filed separate counters. The learned Government Pleader for Co-operation for respondent No.3 and the learned Standing Counsel for respondents-Bank the while reiterating the counter averments submitted that the petitioner is the highest bidder in respect of the properties comprised in Lot No.1 for Rs.1,01,00,000/-. As per the terms and conditions of the auction, the petitioner paid Rs.16,00,000/- on the same day of auction i.e. on 23.08.2007, being 15% of the total sale consideration, and the balance amount of Rs.85,00,000/- was to be paid within 15 days, but the petitioner instead of depositing the balance amount of Rs.85,00,000/-, which is inclusive of Rs.5,05,000/- towards stamp duty, on or before 07.09.2007, had deposited only Rs.39,00,000/-, and gave five cheques for the balance amount of Rs.46,00,000/-, promising the Sale Officer to remit the same in short period, and that if he fails to pay the same, he would forego his claim. They submitted that as per the terms and conditions of auction, if the auction purchaser fails to deposit the amount within the time stipulated, the amount already paid shall be forfeited. They contended that respondent No.3 could not confirm the sale because the Debts Recovery Appellate Tribunal has passed orders staying the auction proceedings. The respondents while admitting the amounts paid by the petitioner and issuance of cheques, and the request made by the petitioner for refund of the amounts paid and return of the cheques, submitted that respondent No.2 had inadvertently addressed letter dated 29.11.2007 informing the petitioner that as a matter of policy, the Bank would like to refund the money deposited, but because the Standing Counsel for the Bank had made a statement before the Debts Recovery Appellate Tribunal that the amounts should not be returned to the auction depositor during the pendency of the appeal, the request of the petitioner cannot be acceded. The learned Standing Counsel for respondent-Bank contended that since respondent No.3 has conducted the sale, and the monies were deposited before him, the petitioner has to approach respondent No.3. While the learned Government Pleader for Co-operation appearing on behalf of respondent No.3 contended that since the petitioner did not deposit the entire amount within time, the amounts already paid by the petitioner were forfeited, and the impugned sale was set aside by respondent No. 3 vide orders dated 26.12.2007. Hence, they prayed that the writ petition be dismissed. Heard the learned counsel for the petitioner, the learned Standing Counsel for respondent Nos. 1 and 2-Bank and the learned Government Pleader for Co- operation for respondent No.3. There is no dispute about the auction conducted by respondent No. 3 on 23.08.2007, and the petitioner was the highest bidder in respect of the property comprised in Lot No.1, belonging to M/s. Blue Gold Maritech International Limited, for Rs.1,01,00,000/-. There is also no dispute about the fact that the petitioner had paid an amount of Rs. 16,00,000/- on the date of auction being 15% of the entire sale consideration, and agreed to pay the balance sale consideration of Rs.85,00,000/-, which is inclusive of stamp duty of Rs.5,05,000/- within fifteen days as per the terms and conditions, i.e. on or before 07.09.2007. That the petitioner had paid an amount of Rs.60,05,000/- and gave five cheques for Rs.46,00,000/- on 05.09.2007, is also not disputed by the respondents. As stated above, the highest bidder was to deposit the balance sale consideration within 15 days from the date of auction i.e. on or before 07.09.2007. The sale was to be confirmed by respondent No.3 in favour of the petitioner upon receipt of the entire sale consideration. However, on the last day of expiry of 15 days period for payment of balance sale consideration by the petitioner, i.e. on 07.09.2007, the Debts Recovery Appellate Tribunal, Chennai, in the appeal preferred by M/s. Blue Gold Maritech International Limited, had granted interim stay of the auction, which order again became subject matter of writ petition before this Court in W.P. No. 28227 of 2007, wherein a Division Bench of this Court, vide order dated 28.12.2007, granted stay. Since the subject matter of the auction proceedings, became subject-matter of proceedings before the Debts Recovery Appellate Tribunal and also this Court, which precluded respondent No.3 from confirming the sale in favour of the petitioner, the petitioner, requested the respondents to refund the amounts deposited by him and also to return the cheques, but the respondents instead of refunding the amount and returning the cheques, have taken a stand that the amounts paid by him stood forfeited as he failed to pay the balance sale consideration in time. This stand taken by the respondents, is bereft of any merit. A reading of the auction notification, would indicate that there is no condition which enables the respondents to forfeit the amounts already deposited by the auction purchaser, in the event the auction purchaser fails to pay the balance sale consideration in time. In the absence of any condition in the auction notification providing for forfeiture of the amounts already paid in the event the balance amount is not deposited by the auction purchaser in time, the action of the respondents in refusing to refund the amounts already paid by the petitioner and return the cheques issued by him, is illegal and arbitrary. Even if the petitioner had paid the entire sale consideration on 07.09.2007, yet respondent No.3 could not have confirmed the the sale in favour of the petitioner because of the orders of stay of auction proceedings granted by the Debts Recovery Appellate Tribunal, which even became subject-matter before this Court in writ petition. Since there was no way out for respondent No.3 to confirm the sale in favour of the petitioner, neither respondents-Bank nor respondent No.3 are justified in refusing to refund the amounts already paid and return the cheques. Had there been a condition in the auction notification that in the event of the auction purchaser not paying the entire sale consideration in time, then the amounts already paid would be forfeited, but such a situation would also not arise in the instant case because the orders of the Debts Recovery Appellate Tribunal had disabled the respondents from confirming the sale in favour of the petitioner. The respondents-Bank, having taken a stand that as a matter of policy they are ready and willing to return the amount paid by the petitioner as also the cheques, could not have refused to return the amounts paid and return the cheques on the ground that the learned Standing Counsel appearing on their behalf had made a statement before the Debts Recovery Appellate Tribunal that the amounts deposited by the auction purchaser shall not be returned, they have not acceded to the request of the petitioner. I fail to understand how the Standing Counsel for the respondents- Bank could have made such a statement, when the amounts of private parties, who have nothing to do with the loans taken by M/s. Blue Gold Maritech International Limited, are involved. The respondents, for one other reason, are not justified in refusing to refund the amount paid by the petitioner for the reason that while the matters are pending before the Debts Recovery Appellate Tribunal and the High Court, respondent No.3 had set aside the sale. When the sale itself has been set aside, I fail to understand how the respondents can seek to forfeit the amounts already paid by the petitioner, and more so when there is no fault on his part in performing his part of his duty pursuant to the auction in question. In the result, the writ petition is allowed. The respondents are directed to refund the amount of Rs. 60,05,000/- paid by the petitioner as also the cheques issued by him in pursuance of the impugned auction forthwith. No costs. _________________ N.V. RAMANA, J. Dated: 23rd April, 2008. KSR