IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 19.04.2010 CORAM THE HONOURABLE MR. JUSTICE N. PAUL VASANTHAKUMAR WRIT PETITION NO.23479 OF 2009 AND M.P.NOS.1 & 2 OF 2009 S. Muthukrishnan ... Petitioner Vs. 1. The Commissioner HR & CE Department Nungambakkam High Road Chennai – 600 034. 2. The Asst. Commissioner HR & CE Department Sub Jail Road Cuddalore – 60 7 001. 3. The Executive Officer Arulmigu Varadaraja Perumal Temple Thirupathiripuliur Cuddalore – 607 002. ... Respondents Writ Petition filed under Article 226 of the Constitution of India praying for the issuance of a Writ of Certiorarified Mandamus calling for the records from the file of the third respondent and quash the auction held on 1.2.2008 in pursuance of the tender-cum- auction notice dated 31.12.2007 issued by the third respondent and the consequential letter of the third respondent dated 8.10.2009 and further direct the respondents to refund the EMD amount of Rs.10 lakhs paid by the petitioner on 1.2.2008 and the deposit amount of Rs.50,11,600/- paid on 4.2.2008 with interest at 24% per annum within a stipulated time. For Petitioner : Mr. B.S.Ganandesigan Senior Counsel for M/s.B.S.G.Firm For Respondent Nos.1 and 2 : Mr. T. Chandrasekar Special Government Pleader For Respondent No.3 : Mrs.Chitra Sampath https://hcservices.ecourts.gov.in/hcservices/ O R D E R The prayer in the writ petition is to quash the auction held on 1.2.2008 pursuant to the tender-cum-auction notice dated 31.12.2007 and the consequential letter of the third respondent dated 8.10.2009 with a further direction to the respondents to refund the EMD amount of Rs.10 lakhs paid by the petitioner on 1.2.2008 and the deposit amount of Rs.50,11,600/- made on 4.2.2008 with interest at 24% per annum within a stipulated time. 2. The case of the petitioner is that the land measuring 4.84 acres in S.Nos.2750/1 (3.58 acres), 2750/2 (0.71 acre) and 2751 (0.55 acre) in Ward No.3, Block No.75 is owned by Arulmigu Varadaraja Perumal Temple, Thirupathiripuliur, Cuddalore District. Based on the order passed by the Division Bench of this Court in Writ Appeal No.3861/2003, dated 16.11.2007, tender-cum-auction notice for the sale of the said lands was issued by the third respondent fixing the upset price at Rs.2 crores. It was indicated in the auction notice that the said land can be utilised for construction of factory or commercial complex or hotel and the sealed tenders are to be submitted before the Assistant Commissioner, Hindu Religious & Charitable Endowment, Sub-Jail Road, Cuddalore-1 on 29.1.2008 between 10 a.m. and 12.30 p.m., and the auction was ordered to be conducted on 1.2.2008 at 1 p.m. The cost of the tender form was fixed at Rs.5,000/-. 3. According to the tender conditions, a sum of Rs.10 lakhs by way of Demand Draft drawn in favour of the Executive Officer of the temple has to be enclosed by the participants and the successful tenderer has to pay 10% of the auction/bid amount within three days from the date of auction, and on receipt of the communication from the third respondent, the balance amount has to be paid within thirty days from the date on which the Commissioner, Hindu Religious & Charitable Endowment has to sanction and approve the successful bid as per clause-9 of the tender conditions. It is stated in condition No.10 that if the above condition is not complied with, the deposit amount already made will be forfeited and will further consequences. Since wide publicity was made in the daily newspapers for the the said auction, several persons participated and the petitioner's bid amount having been the highest bid, i.e. Rs.5,01,16,000/- (Rupees Five Crores One Lakh and Sixteen Thousand only), the petitioner was declared as the highest bidder by the third respondent on 1.2.2008. 4. According to the petitioner, he participated in the auction, under the impression that he can construct a commercial complex in the said place and lease out the same to various persons and he also obtained commitments from third parties to raise huge amount to the tune of Rs.5,01,16,000/-. Apart from submitting the Demand Draft for Rs.10 Lakhs towards EMD as per condition contained in Clause-9, the petitioner being declared as successful bidder he paid Rs.50,11,600/- https://hcservices.ecourts.gov.in/hcservices/ representing 10% of the bid amount on 4.2.2008 i.e. within the stipulated period of three days from the date of auction, which was conducted on 1.2.2008. The third respondent also issued the receipt for the said amounts. The petitioner having deposited the said amounts, as he being declared as highest bidder, he was expecting orders of confirmation after getting permission from the first respondent. However, no intimation regarding confirmation of auction in favour of the petitioner was received even after one year and six months. The petitioner visited the office of the third respondent several times, who in turn informed that the papers have been sent to the first respondent and confirmation order will be issued after receiving the permission from the first respondent and the petitioner has to pay the balance bid amount on receiving the order of confirmation. According to the petitioner he had made commitments to third parties for the construction of commercial complex and the matter being delayed unduly and the petitioner having parted with huge amount to the tune of Rs.60,11,600/-, he was put to serious financial problems. 5. The petitioner having waited for more than one and half years and due to the commitments to the third parties given by the petitioner and the same could not be honoured due to undue delay in getting the auction confirmed, he has submitted a representation on 19.8.2009 and requested the respondents to cancel the public auction for the sale held on 1.2.2008 and the EMD and the initial deposit amount made by the petitioner may be returned to the petitioner with 24% interest from the date of payment, namely, 1.2.2008 and 4.2.2008 respectively within fifteen days. The third respondent after the receipt of the petitioner's letter dated 19.8.2009, sent a communication on 8.10.2009, wherein it is stated that the first respondent by his letter dated 27.9.2009 confirmed the auction in favour of the petitioner and the petitioner was directed to remit the balance amount within 30 days and execute the sale deed. 6. In the said letter of the third respondent, it is further stated that there is no time limit prescribed to get the confirmation of auction from the first respondent and therefore, the petitioner has to accept the confirmation and the reason given by the petitioner for withdrawing from the auction through letter dated 19.8.2009 cannot be accepted. 7. On 5.11.2009 after the receipt of the said communication of the third respondent, the petitioner sent a representation to the respondents and stated that the confirmation appears to have been granted by the first respondent in his order dated 27.9.2009 and before even communicating the order of confirmation i.e. as early as on 19.8.2009, the petitioner has offered to withdraw from the auction and prayed for return of the EMD as well as initial deposit and in spite of the said representation, the third respondent issued the order on 8.10.2009, the petitioner has filed this writ petition with https://hcservices.ecourts.gov.in/hcservices/ the above said prayer on the ground that in the auction held, the highest bid of the petitioner having not been confirmed by the first respondent as per the tender conditions in spite of more than one and half years, the petitioner submitted the representation to withdraw his offer and before confirming the auction in favour of the petitioner is entitled to withdraw from the auction proceedings and the respondents cannot compel the petitioner to accept the confirmation order, which was communicated to the petitioner long after the withdrawal of the petitioner's auction proposal. The petitioner having opted to withdraw from the auction before confirmation, the respondents are bound to refund the amount which he had already deposited with 24% interest. There is unreasonable delay on the part of the respondents in confirming the auction and therefore, the huge amount deposited by the petitioner, which was raised through various sources get locked and therefore, the petitioner submitted his offer to withdraw and prayed for refund of the auction already paid with 24% interest. 8. The first respondent filed a counter affidavit by stating that as per Section 34 of the Hindu Religious and Charitable Endowments Act, 1959, the first respondent can give sanction only with the previous approval of the Government. The writ petitioner having taken part in the public auction after accepting of the conditions cannot now seek cancellation of public auction and the respondents are not concerned with the alleged contractual obligations of the writ petitioner with private parties and the writ petitioner kept quiet till August, 2009 with regard to the highest bid and after knowing the clearance given by the State Government, the writ petitioner wrote a letter to the third respondent about his intention to withdraw from the offer and also to refund the deposit amount. As per condition No.9 contained in auction notice, if the balance amount is not deposited within thirty days from the date of confirmation of auction, the EMD and the initial deposit will have to be forfeited and if in the subsequent tender, the highest bid amount is lower than the previous bid, the respondents can claim differential amount and the same can be recovered from the previous highest bidder/petitioner. 9. The third respondent filed a separate counter affidavit by stating that the public auction sale was confirmed by the Government by issuing G.O.Ms.No.184, Tamil Development, Religious & Information Department, dated 15.7.2009 and thereafter, the first respondent sent an internal communication to the third respondent on 27.9.2009 and after the same being received by him on 6.10.2009, the petitioner was informed about the confirmation of sale by the first respondent, by letter dated 8.10.2009 and directed the petitioner to deposit the balance amount within thirty days, failing which the initial deposit made will be forfeited. The petitioner without depositing the balance sale price, has chosen to file this writ petition challenging the auction with consequential prayers. According to the third https://hcservices.ecourts.gov.in/hcservices/ respondent, there is no provision for the refund of the deposit with interest as claimed by the petitioner. The temple is in huge arrears of payment of tax and other dues to the Government and the temple also incurred huge expenses to the tune of Rs.1.5 lakhs for conducting auction on 1.2.2008. 10. Mr.B.Gnanadesigan, learned Senior Counsel appearing for the petitioner submitted that admittedly auction was not confirmed in favour of the petitioner and no communication was sent to the petitioner before withdrawal of offer made by the petitioner on 19.8.2009 and the third respondent issued a communication only on 8.10.2009 and informed the petitioner that the first respondent has granted permission for confirmation on 27.9.2009 and the petitioner having withdrawn the offer, the respondents are bound to refund the amount already deposited by the petitioner and there being delay of more than one and half years, the respondents are bound to return the amount with interest. In support of his contention, the learned Senior Counsel for the petitioner relied on Section 5 of the Contract Act and following decisions. 1) AIR 1947 MAD 366 (Somasundaram Pillai v.Provinial Government of Madras) 2) AIR 1963 AP 110 (Raghunandhan v. State of Hyderabad) 3) AIR 1963 PAT 433 (Abdul Rahim Khan v. Union of India and Others) 4) 1969 (3) SCC 146 (Union of India and Others vs. Messrs. Bhim Sen Walaiti Ram) 5) AIR 1975 MAD 292 (State vs. Ranganatham Chettiar) 6) AIR 1978 ORISSA 41 (Sri Durga Saw Mill v. State of Orissa and Others) 7) AIR 1995 AP 362 (M/s.Krishnaveni Constructions v. The Executive Engineer, Panchayat Raj, Darsi and Others) 8) AIR 2000 SC 3505 (State of Kerala and Others vs. V.Narayana Pillai (dead) by L.Rs. And Others) 9) 2007(2) SCC 624 (Yogesh Mehta vs. Custodian Appointed under the Special Court and Others) 11. Relying on the abovesaid decisions, the learned Senior Counsel for the petitioner prayed for allowing the writ petition for refund of the amounts with appropriate interest as may be decided by this Court. https://hcservices.ecourts.gov.in/hcservices/ 12. Mr. T.Chandrasekaran, learned counsel for respondents 1 and 2 submitted that as per Section 34 of the Hindu Religious & Charitable Endowments Act, 1959 the Government has to grant permission to sell the temple land and on the basis of proposal received from the first respondent on 25.3.2008 through the Principal Commissioner, Hindu Religuous & Charitable Endowments in his proceedings dated 16.4.2009, the Government accorded approval by G.O.Ms.No.184, Tamil Development, Religious & Information Department, dated 15.7.2009. Pursuant to which, the first respondent issued confirmation order on 27.9.2009 and the same was communicated to the third respondent, who in turn communicated the same to the petitioner on 8.10.2009 and the petitioner instead of paying the balance amount and execute the sale deed, has chosen to file the writ petition and the same is liable to be dismissed. 13. Mrs.Chitra Sampath, learned counsel for the third respondent submitted that as per Clause-8 of the tender conditions, the petitioner was put on notice that the confirmation will be given only after the approval/permission granted by the first respondent and the petitioner being aware of the said condition is not entitled to contend that already one and half years have passed and no confirmation order having been communicated, he is entitled to withdraw his offer. The learned counsel also cited a judgment of this Court in THE RAJANAGARAM VILLAGE CO-OPERATIVE SOCIETY VS. P.VEERASAMI MUDALY, reported in 1950 MLJ 486, in support of her contention. The learned counsel also submitted that while accepting the successful bid of the petitioner, the petitioner was informed that the auction is confirmed and only formal approval has to be given by the first respondent and the same is also granted after getting orders from the Government as stated supra and therefore, the petitioner is not entitled to maintain the writ petition and as per the Clause-10 of the tender conditions, his initial deposits are to be forfeited. 14. I have considered the rival submissions made by the learned counsel for the petitioner, learned counsel for respondents 1 and 2 and the learned counsel for the third respondent. 15. The auction for the sale of of the said land was conducted pursuant to the order of the Division Bench of this Court made in Writ Appeal No.3861 of 2003 and W.P.No.36958 of 2005, dated 16.11.2007. In paragraphs 17 to 25 of the judgment, it is held as follows:- " 17. The only question is, whether the present appellant should be permitted to complete the transaction by matching the offer given by the ninth respondent? 18. The earlier auction lost its significance in view of the passage of time and the land value had also been increased in the meantime, as evident by the valuation https://hcservices.ecourts.gov.in/hcservices/ certificate produced by the learned counsel for H.R.& C.E. Department. 19. It is quite clear from the provisions contained in section 34 of the H.R. & C.E. Act that while permitting the temple authority to alienate any property, the best interest of the temple has to be kept in mind. In fact, the previous decision of the Division Bench also clearly reflects such a sentiment. As has been observed earlier, the auction had not been held properly and therefore, such auction had been set aside and there was a direction for holding a fresh auction. It is no doubt true that the temple authority had no grievance against the last auction and only the appellant has challenged the said auction. 20. Therefore keeping in view of the overriding factor relating to the protection of the deity and keeping in view the long passage of time, we do not think it fit, in the interest of justice, to accept the submission of the appellant to complete the transaction by matching the offer given by the ninth respondent. 21. The proper course which could be resorted to for receiving best price for public property would be conducting public auction in a fair and transparent manner after giving wide publicity. 22. In AGARWAL & MODI ENTERPRISES PVT.LTD. & ANR. v. NEW DELHI MUNICIPAL COUNCIL (2007(10) SCALE 549, the Supreme Court observed as follows:- "Disposal of public property partakes the character of trust and there is distinct demarcated approach for disposal of public property in contradiction to the disposal of private property i.e. it should be for public purpose and in public interest. Invitation for participation in public auction ensures transparency and it would be free from bias or discrimination and beyond reproach." 23. In the above circumstances, we are inclined to direct the conduct of fresh auction to sell the property in T.S.Nos.2750/1, 2750/2 and 2751 in Cuddalore O.T, belonging to the third respondent through tender-cum-auction by fixing the upset price at Rs.2 crores. 24. Fresh tender-cum-auction notice should be issued by the third respondent within a period of thirty days from the date of receipt of a copy of this order. Such notice should be published in leading newspapers in English and Tamil. The auction should be conducted in a fair and transparent manner. https://hcservices.ecourts.gov.in/hcservices/ 25. The amount which had been deposited by the present appellant as well as the ninth respondent shall be refunded along with the accrued interest within thirty days from the date of receipt of a copy of this order." 16. Admittedly, auction notice was issued by the third respondent on 31.12.2007 based on the Division Bench order inviting bid for the sale of the lands to an extent of 4.84 acres. The date of issuing of tender forms was fixed from 24.1.2008 10.00 a.m., to 31.1.2008 5.00 p.m., The date of receipt of tender forms was fixed from 29.1.2008 10.00 a.m., to 1.2.2008 12.30 p.m., The date of auction was fixed on 1.2.2008 at 1.00 p.m. The authority to conduct the auction was notified as the second respondent-Assistant Commissioner, Hindu Religious and Charitable Endowments, Cuddalore. The upset price was fixed Rs.2 crores. It is not in dispute that several persons had participated in the auction by submitting their tender and the petitioner's bid being the highest bid i.e. a sum of Rs.5,01,16,000/-, he was declared as the successful bidder on 1.2.2008 and the petitioner having been declared as a successful bidder, he has paid Rs.10% of the bid amount of Rs.50,11,600/- on 4.2.2008 apart from the payment of EMD to the tune of Rs.10 lakhs. As per the tender condition No.8, the confirmation order has to be issued by the first respondent and the balance bid amount, i.e. 90% of the bid amount has to be remitted by the successful bidder within thirty days from the date of receipt of the confirmation order and thereafter, to execute the sale deed. The parties to the proceedings namely, the petitioner and the respondents are bound by the terms and conditions in the tender notice dated 31.12.2007. Admittedly, no confirmation order was served on the petitioner either by respondents 1 and 2 or by the third respondent before the petitioner submitted his application to withdraw from the bid that was on 19.8.2009. The receipt of the withdrawal letter submitted on 19.8.2009 is accepted by the third respondent in his proceedings dated 8.10.2009 in paragraph-3. Thus, it is beyond doubt that before the communication of the confirmation order on 8.10.2009 sent to the petitioner by the third respondent, the petitioner has submitted his application to withdraw the offer. The issue to be decided is whether the petitioner is entitled to withdraw his offer. 17. Section 5 of the Indian Contract Act (9 of 1872) is to be referred to at this juncture, which reads as follows:- " Revocation of proposals and acceptance:- A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards. An acceptance may be revoked at any time before the communication of the acceptance is complete as against the https://hcservices.ecourts.gov.in/hcservices/ acceptor, but not afterwards." 18. While directing forfeiture of the "Earnest Money Deposit" the provisions of the Contract Act, 1872 are to be kept in mind. In the decision reported in 2007 (1) SCC 228 (Saurabh Prakash vs. DLF Universal Ltd), the Honourable Supreme Court held that forfeiture is permissible only when a concluded contract has come into being and not prior thereto. 19. In this case, as stated supra, the confirmation order was passed by the first respondent only on 27.9.2009, which was communicated by the third respondent to the petitioner only on 8.10.2009. Thus, it is manifest that till 27.9.2009, there was no confirmation of sale as stated in the auction notice. As long as there is no confirmation of sale, the petitioner as a successful bidder is entitled to withdraw the offer, as there is no concluded contract in terms of Section 5 of the Indian Contract Act, 1872. A similar issue was considered by the Supreme Court in the decision reported in AIR 2000 (5) SC 3505 ( State of Kerala v. V. Narayana Pillai), wherein it is held as follows:- " 3. Admittedly, in the present case the auction period commenced on 1-4-1981. The auction-sale had taken place on 27-3-1981 but confirmation of sale, however, was not made by the Board of Revenue till 7-5-1981. It was not communicated to the successful bidder till 11-5-1981. The mandate of Rule 5(14) to the effect that the rejection or confirmation shall be conveyed “as soon as possible” was obviously respected in its breach. The respondent pleaded justification, in the admitted facts of the case, to withdraw because of the delay. 5. ....... the legal representatives of the successful bidder, have been deprived of the use of the amount of Rs 8,70,300/-, which has been lying in deposit with the State Government all this time. The State had no justification to withhold that amount. That amount shall be refunded to the respondents within two months from today together with interest @ 12% per annum from the date of deposit of the security amount till the amount is paid to the respondents together with interest. The solvency certificate for Rs.5,80,200 shall also be returned to the respondents, within the aforesaid period." 20. In the above referred judgment, the Supreme Court has taken note of the delay in concluding the contract, namely, the confirmation and upheld the order of the High Court, which cancelled the auction and ordered return of the amount with interest. In this case, even though no time limit is stated for approving/confirming the bid by the first respondent, admittedly, there is unreasonable delay on the part of the first respondent only on 16.4.2009 i.e. https://hcservices.ecourts.gov.in/hcservices/ after one year and three months from the date of auction, the proposal was sent to the Government for approval/permission which is required under Section 34 of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959. The said delay on the part of the first respondent is not at all explained in the counter affidavit filed. The delay in sending the proposal to the Government on the part of the first respondent is evident from the reading of G.O.Ms.No.184, Tamil Development, Religious & Information Department, dated 15.7.2009, wherein the letter of the first respondent dated 16.4.2009 is referred to. In the counter affidavit, even though it is stated that the first respondent can issue the confirmation order only after according previous approval of the Government, there is unreasonable delay on the part of the first respondent in sending the proposal to the Government, for which the petitioner cannot be blamed, as the petitioner has already parted with huge amount of more than Rs.60 lakhs and without any return waited for confirmation for about one and half years. In the decision reported in AIR 1969 SC 1157 (Visweswaradas Gokuldas v. Narayan Singh & Another), it is held that letter of withdrawal sent before communication of acceptance by the competent authority is valid. 21. In the decision reported in AIR 1975 MAD 292 (State