IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY EIGHTH DAY OF APRIL TWO THOUSAND AND EIGHT PRESENT THE HON'BLE MR JUSTICE N.V. RAMANA WRIT PETITION NO : 288 of 2008 Between: V.Venkateshwara Rao, Prop: of M/s. Hotel Ayodhya, S/o.Late Balaraju Gupta, R/o.H.No.6-3-630/A, Anandnagar Colony, Khairatabad, Hyderabad. ..... PETITIONER AND 1 The Government of Andhra Pradesh, through the Deputy Registrar, Co-operative Societies Societies-cum-Official on Special Duty/arbitrator, The Vasavi Co- operative Urban Bank Limited, Malakpet, Hyderabad. 2 The Vasavi Co-operative Urban Bank Ltd., Malakpet, Hyderabad, rep. by its Managing Director, Regd. Office at Malakpet, Hyderabad. 3 Indian Overseas Bank, Regional Office, 3rd floor, Suryalok Complex, Gunfoundry, Hyderabad-1. Rep. by its Chief Manager. .....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 writ or direction or order more particularly one in the nature of Writ of Mandamus, declaring the action of the first respondent in neither accepting the acceptance letter of the petitioner's prospective purchaser - M/s. Govardhana Constructions, nor conducting fresh auction between the said prospective purchaser and the highest bidder in the auction conducted on 19.12.2007 i.e., the 3rd respondent, with a view to fetching the maximum price for the property, pursuant to the order dt. 30.8.2007 of this Hon'ble Court in W.P.No.64/2004 as being illegal, arbitrary and unsustainable, being violative of Art. 14 and Art. 300-A of the Constitution of India, and consequently direct the first respondent to consider the offer letter of my prospective purchaser and follow the course of action as has been directed by this Hon'ble Court in W.P. No.64 of 2004, in respect of my house property situated at H.No.6-3-630/A, Anandnagar Colony, Khairatabad, Hyderabad; and pass such other order or orders. Counsel for the Petitioner:MR.P.HEMACHANDRA Counsel for the Respondent : MR.D.RAMESH FOR R GP FOR COOPERATION FOR R MR.CH.SRINIVAS FOR R (SC FOR VASAVI BANK)G.VIDYA SAGAR FOR RR MR.M.ACHUTA REDDY FOR R2 The Court made the following : THE HON’BLE SRI JUSTICE N.V. RAMANA Writ Petition No. 288 of 2008 Order: The petitioner filed the present writ petition seeking the following relief: “To issue writ or direction or order more particularly one in the nature of writ of Mandamus, declaring the action of the first respondent in neither accepting the acceptance letter of the petitioner’s prospective purchaser – M/s. Govardhana Constructions, nor conducting fresh auction between the said prospective purchaser and the highest bidder in the auction conducted on 19.12.2007 i.e., the 3rd respondent, with a view to fetching the maximum price for the property, pursuant to the order dated 30.08.2007 of this Hon’ble Court in W.P. No. 64 of 2004 as being illegal, arbitrary and unsustainable, being violative of Articles 14 and 300-A of the Constitution of India, and consequently direct the first respondent to consider the offer letter of petitioner’s prospective purchaser and follow the course of action as has been directed by this Hon’ble Court in W.P. No. 64 of 2004, in respect of house property situated at H.No.6-3-630/A, Anandnagar Colony, Khairatabad, Hyderabad.” Respondent No.2, namely Vasavi Co-operative Urban Bank Limited, obtained an award under Section 62(4) of the A.P. Co-operative Societies Act, 1964, against the petitioner from respondent No.1, namely the Deputy Registrar of Co-operative Societies-cum-Officer on Special Duty/Arbitrator. In execution of the said award, respondent No.2-Vasavi Bank, filed E.P. No. 141 of 2003 on the file of respondent No.1, wherein the house in question was sought to be put to sale for realization of the award. Assailing the said E.P. proceedings, one of the creditors of the petitioner, namely Housing and Urban Development Corporation Limited, filed writ petition in W.P. No. 64 of 2004, and the said writ petition, by order dated 30.08.2007, was disposed of by this Court, permitting respondent No.1 to go ahead with auction of the properties mortgaged by the petitioner as per the conditions fixed therein. In pursuance of the above order of this Court, respondent No.1 issued notice of sale of the property in question by way of auction to be conducted on 19.12.2007. In the said auction, respondent No.3, namely Indian Oversees Bank having offered to purchase the property in question for Rs.3,63,50,000/- stood as the highest bidder and paid 15% of the said amount i.e. Rs.55,00,000/- immediately as per the conditions of auction and the balance amount of Rs.3,08,50,000/- on 01.01.2008 by way of demand drafts. The petitioner states that before expiry of 15 days, within which period the highest bidder was required to pay the entire sale consideration, he approached respondent No.2-Vasavi Bank on 01.01.2008 with his prospective purchaser Sri Alla Govardhan Rao of M/s. Govardhan Constructions, who offered and agreed to purchase the property in question for Rs.4.05,00,000/-, which is over and above the amount offered by respondent No.3-IOB for purchase of the property in question, and to that effect, he has also submitted letter and D.Ds. worth Rs.61,00,000/-. However, respondent No.2-Vasavi Bank, vide letter dated 02.01.2008, informed the petitioner that even though they are party to the E.P. proceedings, but since E.P. proceedings are pending before respondent No.1 and since auction was conducted in accordance with the directions of the Hon’ble High Court, he may approach respondent No.1. The petitioner contending that the sale conducted by respondent No.1 is not in accordance with the directions of this Court in W.P. No. 64 of 2004, dated 30.08.2007, and runs contrary to Clause (c) of the directions made therein, filed the present writ petition. The writ petition was filed on 07.01.2008. This Court on 18.01.2008, while admitting the writ petition, passed interim order directing that confirmation of sale pursuant to the auction already held shall be subject to the result of the writ petition. While so, the prospective purchaser, who offered to purchase the property in question for Rs. 4,05,00,000/-, filed application in W.P.M.P. No. 4039 of 2008 seeking to implead himself as party-respondent in the writ petition. And to vacate the interim order dated 18.01.2008, passed by this Court, respondent No.3- Bank filed application in W.V.M.P. No. 763 of 2008. Considering the offer made by respondent No.4-prospective purchaser, which is over and above the offer made by respondent No.3- IOB, and considering the fact that there are more than one financial institutions which have advanced monies to the petitioner, and to ensure that if a better price is fetched for the property in question, it would be in the interest of all the financial institutions, this Court having heard the learned counsel for the petitioner, the learned Government Pleader for Co-operation for respondent No.1, the learned Standing Counsel for respondent No.2-Vasavi Bank, the learned Standing Counsel for respondent No.3-IOB and the learned counsel for respondent No.4- prospective purchaser, orally directed the learned Standing Counsel for respondent No.3-IOB to ascertain whether his client would consider increasing the offer made by them for purchase of the property in question, and for the said purpose, the matter was adjourned on several occasions. Today when the matter was taken up for hearing, the learned Standing Counsel for respondent No.3-IOB submitted that his client is not willing to enhance the offer made by them, and prayed for disposal of the writ petition on merits. The learned Government Pleader for Co-operation appearing on behalf of respondent No.1 submitted that since the price offered by respondent No.4-prospective bidder is 10% over and above the offer made by respondent No.3-IOB, respondent No.1 having regard to Clause (c) of the directions of this Court made in W.P. No. 64 of 2004, dated 30.08.2007, should have given an opportunity to respondent No.4- prospective bidder to participate in the auction, and as such, the action of respondent No.1 in confirming the auction in favour of respondent No.3- IOB without taking into consideration the offer made by respondent No.4- prospective bidder is illegal and arbitrary. Heard the learned counsel for the petitioner, the learned Government Pleader for Co-operation for respondent No.1, the learned Standing Counsel for respondent No.2-Vasavi Bank, the learned Standing Counsel for respondent No.3-IOB and the learned counsel for respondent No.4-prospective purchaser. Admittedly, respondent No.1 conducted auction of the property as per Clause (a) of the directions made by this Court in W.P. No. 64 of 2004, dated 30.08.2007 on 19.12.2007 after issuing auction notice. In the said auction, respondent No.3-IOB which offered to purchase the property in question for Rs. 3,63,50,000/-, stood as the highest bidder. Immediately, as per the conditions of the auction, respondent No.3-IOB deposited 15% of the offer made by them. As per the conditions of auction, the balance amount was required to be paid by the highest bidder within 15 days of auction. Therefore, respondent No.3-IOB had time to pay the balance upto 02.01.2008. Before expiry of the said period, it is the case of the petitioner that he brought the prospective purchaser who agreed to purchase the property in question at Rs.4,05,00,000/-and approached respondent No.2-Vasavi Bank on 01.01.2008 along with demand drafts for Rs.62,00,000/- covering 15% of the amount offered by him, but it is his case that respondent No.2-Vasavi Bank, vide letter dated 02.01.2008 informed him that even though they are party to the E.P. proceedings, but since auction was conducted by respondent No.1, they are not inclined to accept any correspondence. It is this action of respondent No.2-Vasavi Bank, which the petitioner seeks to assail in this writ petition contending that as per Clause (c) of the directions given by this Court in W.P. No. 64 of 2004, dated 30.08.2007, the offer made by the prospective purchaser brought by him has to be taken into account as the same is 10% over and above the amount offered by respondent No.3-IOB, and as such, the action of respondent Nos. 1 and 2 in not considering the offer made by respondent No.4-prospective bidder brought by him, is illegal. To consider this contention, it is appropriate to set out Clause (c) of the directions given by this Court in W.P. No. 64 of 2004, dated 30.08.2007, which reads as follows: In case respondents 4 to 6 (the petitioner herein and others) are able to bring any prospective purchaser, within two weeks from the date of conclusion of auction, who is prepared to offer and pay at least 10% over and above the amount that is fetched in the auction, shall also be taken into account. In such an event, the highest bidder shall also be given an opportunity to revise his bid. From a reading of the above, it is clear that if the petitioner (HDFC or any other person), who is able to bring any prospective purchaser, within two weeks from the date of conclusion of auction, who is prepared to offer and pay at least 10% over and above the amount offered by the highest bidder in the auction, then such offer has also to be taken into account, and in such an event, the highest bidder shall also be given an opportunity to revise the bid. In the instant case, respondent No.1 conducted the auction of the property in question on 19.12.2007, and if the two weeks as provided in Clause (c) of the directions in W.P. No. 64 of 2004, dated 30.08.2007, is to be computed, it would come to an end on 01.01.2008. Admittedly, before respondent No.3-IOB paid the balance sale consideration, respondent No.4-prospective bidder brought by the petitioner approached respondent No.2-Vasavi Bank and offered to purchase the property in question for Rs.4,05,00,000/-, and to that effect he has also issued acceptance letter accompanied by demand drafts for Rs.61,00,000/- covering 15% of the offer made by him. However, respondent Nos. 1 and 2 did not accept the said offer, and this action of theirs, runs contrary to Clause (c) of the directions in W.P. No. 64 of 2004, dated 30.08.2007, for the said clause in very clear terms states that if any prospective purchaser comes within two weeks from the date of conclusion of auction and is prepared to offer and pay at least 10% over and above the amount offered by the highest bidder, then such offer shall also be taken in to account, and in that event, the highest bidder shall also be given an opportunity to revise his bid. The learned Judge appears to have included this clause in his order, purportedly to ensure that the maximum amount is realized from the sale of the property in question so that the financial institutions who have advanced loans to the petitioner, are able to recover their dues. Since in the instant case, the offer made by respondent No.4-prosepective bidder for purchase of the property in question for Rs.4,05,00,000/- and also paid 15% of the said amount, amounting to Rs.61,00,000/-, which in fact, was 10% over and above the offer made by respondent No.3-IOB at Rs.3,63,50,000/-, I am of the considered opinion that respondent Nos. 1 and 2 instead of refusing to accept the offer made by respondent No.4-prospective bidder, ought to have taken the same into consideration and should have given an opportunity to respondent No.3-IOB to revise their bid, and more so when the offer made by respondent No.4-prospective bidder was before the expiry of the period fixed for conclusion of the auction proceedings. In that view of the matter, the action of respondent Nos. 1 and 2 in refusing to accept the offer made by respondent No.4-prospective bidder, cannot be sustained, since the same runs contrary to the spirit of the orders of this Court, particularly Clause (c) of the directions made in W.P. No. 64 of 2004, dated 30.08.2007. In the result, the writ petition is allowed. The sale made in favour of respondent No.3-IOB is set aside. Now that the sale made in favour of respondent No.3-IOB is set aside, respondent No.1 shall as per Clause (c) of the directions of this Court in W.P. No. 64 of 2004, dated 30.08.2007, consider the offer made by respondent No.4-prospective purchaser, particularly when it is 10% over and above the offer made by respondent No.3-IOB, and while considering the same, he shall give an opportunity to respondent No.3-IOB who stood as highest bidder to revise their offer. Since respondent No.3-IOB is said to have already deposited the entire amount offered by them, respondent No.4-prospective purchaser to enable consideration of his offer, shall pay the entire amount offered by him, within a period of two weeks from the date of receipt of a copy of this order, to enable respondent No.1 consider his offer vis-à-vis respondent No.3-IOB. Thereupon, respondent No.1 shall conduct the auction between respondent No.3-IOB and respondent No.4-highest bidder. Basing on the outcome of the auction, respondent No.1 shall confirm the auction in favour of the highest bidder and shall return the monies to the unsuccessful bidder. _________________ N.V. RAMANA, J. Date: 28th April 2008 KSR