Case: Seth Bararsi Dass (Dead) by LRs Vs. The District Magistrate and Collector, Meerut

1. The original appellant Seth Banarasi Dass was the lessee of S.B. Sugar Mills, Bijnor in the State of Uttar Pradesh. In respect of sugarcane cess, purchase tax and other Government dues of S.B. Sugar Mills, Bijnor, the Collector, Bijnor issued a recovery certificate for Rs. 61,48,674.21 against the appellant in his personal capacity. The appellant was the owner of 94,320 equity shares of the face value of Rs.10/- each and 2,260 preference shares of the face value of Rs.100/- each in M/s. Jaswant Sugar Mills Ltd., Meerut. The Company Secretary of M/s. Jaswant Sugar Mills received a prohibitory order dated 21-12-1970 restraining him from permitting any transfer of 94,320 equity shares and 2,260 preference shares held by the appellant in the said company. The Company Secretary, by his letter dated 6th of February, 1971 addressed to the Collector, informed him that on the date of the receipt of the prohibitory order, that is to say, on 14th of January, 1971 only 25, 150 equity shares and 2,260 preference shares stood in the name of the appellant. He further informed the Collector by the said letter that these shares had been received by them from Oriental Bank of Commerce Ltd., Meerut Cantonment for transfer in their name, and that these shares were already pledged with the said bank. Copies of the letters received by M/s. Jaswant Sugar Mills from the Oriental Bank of Commerce Ltd. were also enclosed with the said letter.2. Thereafter, on 31-7-1972 a citation was issued by the Tehsildar, Meerut on the appellant under Section 280 of the U.P. Zamindari Abolition and Land Reforms act, 1950 calling upon him to pay a sum of Rs.50,42,523/- failing which his property, inter alia, would be attached and sold. Thereafter, the appellant filed his objections dated 8-11-1972 before the Sale Officer raising various objections to the amount claimed and also pointing out that the shares for which notice of auction was given were already pledged with the Oriental Bank of Commerce Ltd., Meerut and the Punjab Co-operative Bank, New Delhi. Another set of objections was again filed by the appellant before the Officer-in-Charge, Collectors Office, Meerut on 13-8-1973. These objections, inter alia, stated that the amount of Rs.61,48,674.21 mentioned in the recovery certificate of the Collector of Bijnor was not outstanding; that a sum of Rs.49,67,101.25 had already been realised by the Collector, Bijnor through the Punjab National Bank, Bijnor and a revised recovery certificate was also issued. He claimed that full recovery had been effected by then. He also reiterated his objections to the sale of the said shares. None of these objections were decided by the Collector and/or Sale Officer. In the meanwhile, several attempts had been made to sell the said shares by public auction. None of these attempts, however, succeeded as nobody came forward to buy these shares.3. On 24-11-1973 a sale proclamation was issued by the Sale Officer for the recovery of Rs.61,48,674.21, fixing 2nd of January, 1974 as the date of auction sale. Pursuant to this proclamation, an auction sale was held on 2nd of January, 1974 when Rs.94,320 equity shares of the face value of Rs.10/- each and 2,260 preference shares of the face value of Rupees 100/- each in M/s. Jaswant Sugar Mills Ltd. held by the appellant were auctioned for Rs.2,90,000/-. The highest bid of Rupees 2,90,000/- which was accepted, was of Seth Hira Lal and Shiv Raj Gupta jointly, respondents 2 and 3 herein. Out of the total auction amount, a sum of Rs.75,000/- was deposited by the auction purchasers with the Tehsildar, Meerut on the date of the auction. On 5th of January, 1974 the auction purchasers wrote a letter to the Sale Officer asking where they should deposit in the balance amount. As per the directions of the Sale Officer the auction purchasers deposited the balance amount of Rs.2,15,000/- with the Tehsildar, Meerut on 7th of January, 1974.4. On 11th of January, 1974 the appellant filed objections to the auction sale before the Collector, Meerut. On 14th of January, 1974 the Oriental Bank of Commerce also filed objections to the auction sale before the Collector, Meerut. On 16th of January, 1974, the District Magistrate, Meerut, passed an order declaring the auction sale as invalid and setting aside the same. Thereupon, the auction purchasers filed Writ Petition No.879 of 1974 before the High Court of Allahabad challenging the order of the District Magistrate dated 16th of January, 1974. The Collector, in the meanwhile, apparently having realised the mistake committed by him issued a notice to the appellant as well as to the auction purchasers to appear before him on 13th of March, 1974. Thereafter, the Collector heard the parties on various dates in August, 1974. Before he could pass final orders, however, the appellant filed a writ petition being Writ Petition No.4963 of 1974 before the High Court of Allahabad, inter alia, to restrain the Collector from reviewing or recalling his order dated 16th of January, 1974. An interim order to that effect was issued by the High Court. Both these petitions were heard together and disposed of by a common judgment. The High Court has upheld the validity of the auction sale held on 2nd of January, 1974. The present appeals are from the judgment and order of the High Court in these two writ petitions.

Court's reasoning:
6. Therefore, the Officer conducting the sale has the power to grant time to pay the price. In the absence of such facility being given, the auction purchaser must pay the full price at the time of the sale, otherwise the property is liable to be resold. Respondents 2 and 3 have produced the order of the Sale Officer dated 2nd of January, 1974 where he has directed respondents 2 and 3 to deposit one fourth of the sale price, approximately, in the treasury forthwith. This clearly implies that he has given time to the purchasers to pay the balance amount. Respondents 2 and 3 accordingly deposited Rs.75,000/- on 2nd January, 1974. On 5th of January, 1974, the Sub-Divisional Officer/Sale Officer directed the auction purchasers to deposit the remaining amount in the treasury. 6th of January, 1974 was a Sunday. On 7th of January, 1974 the auction purchasers deposited the balance amount of sale price in the sub-treasury of the Tehsil Meerut and a receipt was issued to them by the Sub-Divisional Officer/Sale Officer. Therefore, the auction purchasers have deposited the purchase price as directed by the Officer holding the sale and have also been issued a receipt for the same. The auction sale, therefore, cannot be faulted on thisWe need not examine the merits of the objections raised by the appellant. But it is important to notice that these objections were not decided prior to the holding of the auction sale. The first respondent has given no explanation for not deciding these objections earlier. In our view the High Court was not right in observing that the objections could be decided at a later date even after the sale of the shares to which the objections pertained. Proceeding with the auction sale without adjudicating upon the objections is a material irregularity which vitiates the sale. The appellant has thereby lost his valuable right to have his objections adjudicated upon in accordance with law. The objections were raised much prior to the auction sale and they ought to have been decided before the auction sale took place. Failure to do so vitiated the sale.This contention is raised for the first time before us. It was not raised before the High Court. Nor is there any factual data in the records before us which would go to show the quantum of compensation to which S.B. Sugar Mills would be entitled under the said Act. We, therefore, decline to examine this submission which is raised before us for the first time.