IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD MONDAY, THE TWENTY FIRST DAY OF FEBRUARY TWO THOUSAND AND ELEVEN PRESENT THE HON'BLE SRI JUSTICE K.C. BHANU SECOND APPEAL No.541 OF 2008 Between: M/s. Obuleswara Enterprises and another .....APPELLANTS AND Anantapur Municipality ....RESPONDENT The Court made the following: THE HON’BLE SRI JUSTICE K.C. BHANU SECOND APPEAL No.541 OF 2008 JUDGMENT: This Second Appeal, under Section 100 of the Code of Civil Procedure, 1908, (for short, “C.P.C.”) is directed against the judgment and decree, dated 21.01.2008, in Appeal Suit No.1 of 2007, on the file of I Additional District Judge, Anantapur, whereunder and whereby, the judgment and decree, dated 17.11.2006, in Original Suit No.508 of 2003, on the file of the Principal Junior Civil Judge, Anantapur, dismissing the suit filed for recovery of amount from Anantapur Municipality, were confirmed. 2. The averments of plaint, in brief, may be stated as follows: Plaintiff No.1 firm represented by its Managing Partner by name D. Sumathi is doing business in stone crusher. While so, the defendant-Municipality advertised a notification inviting the public of Anantapur town to participate in the auction to lease out the shop rooms of a multi storied shopping complex situated near Clock Tower, Anantapur. In pursuance of the said notification, plaintiff No.1 sent an application to the defendant for allotment of one shop room and also two pay orders bearing Nos.390237/2000 and 390236/2000 for an amount of Rs.40,000/- to be drawn in Andhra Bank, Anantapur. Plaintiff No.1 complied with all the formalities that are to be followed by a person to participate in the said auction. Managing Partner of plaintiff No.1 firm, being a woman, found it difficult to participate in the said auction and therefore, she authorized plaintiff No.2 to participate in the said auction on the particular day of auction by way of authorization letter signed by her. The said auction was conducted on 18.01.2000 and also on 19.01.2000 and some hundreds of people have gathered there to participate in the said auction. Plaintiff No.2, to whom the said authorization was given to participate in the auction, could not participate in the auction due to heavy crowd on both days. While so, plaintiff No.1 received a communication from the defendant vide ROC.No.1050/98, dated 01.02.2000, calling upon the firm to pay the balance amount of the good-will towards shop room Nos.94 and 96 to a sum of Rs.3,20,000/- and Rs.2,66,000/- respectively. Having surprised by the said notices, the Managing Partner of plaintiff No.1 firm met the defendant i.e., the Commissioner of Municipality and questioned him as to why it is liable to pay the above said amounts when it has not participated in the said auction. For that the Commissioner is said to have promised the Managing Partner of plaintiff No.1 firm that he would not take any action against them. Therefore, plaintiff No.1 firm is not liable to pay the said amount demanded by the defendant. Plaintiff No.1 firm came to know that some third person participated in the auction on their behalf and that was the reason as to why the defendant issued the said demand notice for payment of the balance amount. Plaintiff No.1 firm issued two legal notices dated 03.05.2000 and 30.07.2001 to the defendant to repay the said amount of Rs.40,000/- deposited by the firm with them at the time of sending the application for participation in the auction. As the defendant did not repay the said amount, a case was also filed before the District Legal Services Authority, Anantapur, but in vain. Hence, the suit. 3. On the other hand, the defendant-Municipality has filed its detailed written statement by denying the maintainability of this suit and also its liability to pay the suit amount to plaintiff No.1 firm. The defendant admitted in its written statement the advertisement given to lease out the shop rooms of the said multi complex; the receipt of Rs.40,000/- from plaintiff No.1 firm by way of two demand drafts; and the authorization given by the Managing Partner of plaintiff No.1 firm in favour of plaintiff No.2 to participate in the auction. But it is the contention of the defendant that plaintiff No.2 and another person by name Sri Lakshmi Sankaraiah, who is a responsible member of the firm and who is known to the large number of public in Anantapur town, participated in the public auction and became successful bidders for the shop room Nos.94 and 96 and the auction towards the said rooms were knocked down in favour of plaintiff No.1 firm. It is also stated by the defendant that the said auction was conducted in the presence of the then Municipal Chairman, one B. Koteswara Rao, Managing Director of Profit Shoe Company, Vijayawada, N. Thippaiah, C.H. Amarkumar, Managing Director of Popular Shoe Company and one C.H. Arunkumar, who was a Managing Director of M/s. Popular Shoe Company, Vijayawada; that the said Lakshmi Sankaraiah has participated in the public auction on behalf of plaintiff No.2 and also signed in the relevant documents for plaintiff No.2 towards the shop room Nos.94 and 96. The defendant denied the allegation as leveled by plaintiff No.1 firm in its plaint about its non- participation in the auction and contended that the auction went in favour of plaintiff No.1 firm on that day. The defendant denied its liability to pay the suit amount to plaintiff No.1 firm and prayed to dismiss the suit. 4. Basing on the above pleadings, the following issues are framed for trial: “1. Whether the plaintiff is entitled to the suit claim as prayed for? 2. To what relief?” 5. The trial Court came to the conclusion that PW.1, who is the authorized representative of plaintiff No.1 firm, participated in the auction and plaintiff No.1 firm became the highest bidder; but plaintiff No.1 firm did not honour the auction by paying the remaining amount for the reasons best known to it and accordingly, dismissed the suit filed by the plaintiffs. On appeal, the judgment and decree of the trial Court were confirmed. Challenging the same, the present appeal is filed. 6. Learned counsel for the appellants/plaintiffs raised the following substantial questions of law: 1. Whether the defendant took any steps to examine the alleged signatory Mr. Lakshmi Shankaraiah, who signed on the auction confirmation without authorization and whether alleged signature of Lakshmi Shankaraiah ought to have fulfilled condition No.10 of the auction notification. 2. Whether the confirmation of auction is binding on the appellants/plaintiffs who allegedly not participated in the auction. 7. Learned counsel for the appellants contended that the evidence of PW.1 would go to show that he has not participated in the auction conducted by the respondent – Municipality and one Shankaraiah was the highest bidder, but not appellant No.1/plaintiff No.1 firm; that Shankaraiah is not the authorized person by appellant No.1 and he has no connection with appellant No.1 firm; that therefore, when inadmissible evidence has been taken into consideration that can be said to be a substantial question of law involved and hence, he prays to admit the Second Appeal. 8. In view of the amendment of Section 100 C.P.C., admission of Second Appeal is not automatic or routine. Substantial questions of law must be raised so as to admit the Second Appeal. The word ‘substantial question of law’ is not defined under C.P.C., but it must mean which will affect the substantial rights of the parties. When a perverse finding is given by both the Courts below or inadmissible evidence has been taken into consideration or admissible evidence has been over looked or there was a misreading of evidence with reference to the law or fact are some of the illustrations, where the Second Appeal can be admitted. 9. The entire case of appellant No.1 firm is that though it deposited Rs.40,000/- for the purpose of participation in the auction, when the respondent/defendant conducted auction for shop Nos.94 and 96, it has not participated in the auction; that it received a communication from the respondent to pay the balance bid amount, as it knocked down the auction and failed to deposit the balance bid amount; that thereafter, the plaintiff issued a reply stating that plaintiff No.1 firm has not participated in the auction and therefore, the present suit is filed for refund of Rs.40,000/- which was deposited by plaintiff No.1 firm with the Municipality under Exs.A1 and A2 receipts. Appellant No.2/plaintiff No.2 examined himself as PW.1. The evidence of PW.1 would go to show that though the appellants paid the earnest money to the Municipality to enable them to participate in the auction, they did not participate in the auction and therefore, they sought refund of the earnest money. On the other hand, it is the specific case of the respondent that by virtue of Exs.B4 and B5, PW.1 on behalf of plaintiff No.1 firm participated in the auction and appellant No.1 firm became the highest bidder and failed to pay the remaining amount in spite of giving notice; that the respondent forfeited the earnest money and hence, the appellants are not entitled for refund of the earnest money. 10. According to the Gazette Notification, only the persons who paid the earnest money or their authorized representatives are entitled to participate in the auction. Ex.B3 is the Authorization letter given by the Managing Partner of appellant No.1 firm authorizing one N. Narayana Swamy, who is examined as PW.1, to participate in the auction. According to PW.1, he did not participate in the auction. If really PW.1 had not participated in the auction, he would not have signed on Exs.B4 and B5. No doubt, Ex.B4 is signed by one Shankaraiah on behalf of PW.1 but as seen from Ex.B4 it is very clear that it was signed by PW.1 also. Though it is stated that Shankaraiah signed on behalf of PW.1, as seen from Ex.B4 it can be safely said that PW.1 was actually present at the time of conducting auction. Therefore, the presence of PW.1 at the time of auction is established beyond preponderance of probability. 11. Furthermore, an employee of the respondent - Municipality was examined as DW.1. He categorically stated that PW.2 authorized PW.1 to participate in the auction on her behalf and PW.2 has given Ex.B3 authorizing PW.1 to participate in the auction. Exs.B4 and B5 are the copies of the auction chits duly attested by the Municipal Commissioner. Except suggesting that Exs.B4 and B5 are fabricated by the respondent, nothing has been elicited to discredit the testimony of DW.1. The originals of Exs.B4 and B5 were also produced before the trial Court and the trial Court after comparison of the same, marked Exs.B4 and B5. When it is the specific case of DW.1 that Ex.B4 contained the signature of PW.1, the said aspect has not been denied or disputed by PW.1. Once a fact has been stated by a witness and the same has not been denied or disputed, it can be safely said that such a fact is admitted. It is also not in dispute that PW.2, who is the Managing Partner of appellant No.1 firm, sent a letter dated 17.01.2000 to the Municipal Commissioner authorizing PW.1 to participate in the auction. If really PW.1 had not participated in the auction certainly his signature would not have been found on Ex.B4. Ex.B4 would clearly reveal about the presence of PW.1. So, having participated in the auction and having became the highest bidder, appellant No.1 firm has to pay the remaining bid amount. That has not been done so. 12. If the contention of the appellants is to be accepted that PW.1 has not participated in the auction, the normal conduct of a prudent person is to apply to the Municipality immediately on the next day or on the subsequent working day making a request to the Municipal Commissioner to refund the earnest money. The silence on the part of the appellants in not making any such request would clearly go to show that PW.1 participated in the auction. The appellants kept quiet till the receipt of notice from the respondent directing them to pay the balance of the bid amount. So, the conduct of the appellants is very unnatural in the sense that having deposited the earnest amount, they would not have kept quiet for a long period without claiming the same. That suggests that the authorized representative of appellant No.1 firm had participated in the auction. 13. The contention of the learned counsel for the appellants that PW.1 signed on behalf of one Shankaraiah cannot be accepted because when the document is marked through DW.1, the attention of DW.1 has not been drawn as to why PW.1 has to sign on behalf of one Shankaraiah. Whether PW.1 signed on behalf of Shankaraiah or not, the document Ex.B4 would clearly establish the presence of PW.1 for the reasons best known to the appellants. To avoid the payment of remaining bid amount, the appellants must have come forward with a concocted version stating that PW.1 has not participated in the auction. Therefore, the findings of both the Courts below are based upon proper appreciation of evidence on record. None of the findings is shown to be perverse or contrary to law. The findings are based upon proper appreciation of evidence on record. There are no grounds to interfere with the impugned judgment. 14. Learned counsel for the appellants relied upon a decision of the Honourable Supreme Court in Hero Vinoth (Minor) v. Seshammal[1], wherein it is held thus: “The general rule is that High Court will not interfere with the concurrent findings of the courts below. But it is not an absolute rule. Some of the well-recognised exceptions are where (i) the courts below have ignored material evidence or acted on no evidence; (ii) the courts have drawn wrong inferences from proved facts by applying the law erroneously; or (iii) the courts have wrongly cast the burden of proof. When we refer to “decision based on no evidence”, it not only refers to cases where there is a total dearth of evidence, but also refers to any case, where the evidence, taken as a whole, is not reasonably capable of supporting the finding.” There is no dispute about the law laid down by the Honourable Supreme Court. When the findings are based upon no evidence, then it can be said to be a perverse finding calling for interference in the Second Appeal. But, in this case, none of the findings of the Courts below is shown to be perverse. 15. In view of the foregoing discussion, there is no question of law, much less substantial question of law, to admit the Second Appeal. The Second Appeal is devoid of merit and is liable to be dismissed. 16. Accordingly, the Second Appeal is dismissed at the stage of admission. There shall be no order as to costs. _______________ K.C. BHANU, J February 21, 2011 MD THE HON'BLE SRI JUSTICE K.C. BHANU SECOND APPEAL No.541 OF 2008 February 21, 2011 [1] (2006) 5 SCC 545