Mohit Exim Pvt Ltd Through ... vs Joint Charity Commissioner

1. This petition under Article 226 of the Constitution of India is filed challenging order dated 26.04.2018 passed by respondent No.1-Joint Charity Commissioner rejecting applications dated 07.02.2018 and 01.03.2018 in Application No.36/05/2016. By the impugned order, respondent No.1 had rejected the application of the petitioner making offer of higher amount towards property of the trust which was auctioned in due process.

2. Learned Advocate for the petitioner submitted that the offer of the petitioner was 44% higher than the highest offer made at auction. It is submitted that after offer of respondent No.3, which was highest, was Page 1 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER accepted, the proceedings are still pending. Towards the partial amount which was to be paid, Demand Draft was issued by respondent No.3, but the same was never encashed and deposited in the account of respondent No.2- Trust and hence, situation in terms of the property has remained unchanged. Moreover, respondent No.3 is also not out of pocket of the amount of Rs.75 lakhs which respondent NO.3 has issued Demand Draft towards 15% of the highest bid. It is submitted that as there is no change in the situation of the property in question, there is no prejudice caused to respondent No.3 or respondent No.2-Trust and hence, when the petitioner has come forward with offer which is far higher than the highest bid made by respondent No.3, respondent No.1 ought to have taken into consideration such offer of the petitioner.

2.1 It is submitted that the impugned order is passed on the ground that auction proceedings have been finalized and the proceedings for carrying out necessary formalities were at the final stage. It is submitted that though the proceeding may be at final stage, yet offer has not culminated into execution of any document or passing of any order under Section 36 of the Bombay Public Trusts Act ("the Act" for short) so as to create any right, title or interest in favour of respondent Page 2 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER No.3.

2.2 It is lastly submitted that respondent No.2- Trust, though is to receive higher amount and that too substantially higher, the fact that respondent No.2-Trust is opposing such offer with a view to benefit respondent No.3, smacks foul.

2.3 Learned Advocate for the petitioner relied upon decision of the Chenchu Rami Reddy & Anr. Vs. Government of Andhra Pradesh & Ors., reported in (1986) 3 SCC, page No.391, to submit that interest of the trust is to be protected while dealing with the property of the trust and the decision which would be more beneficial in the interest of the trust is required to be taken.

3. As against this, learned AGP submitted that though prayer is to challenge the order rejecting offer of the petitioner, but in effect, it will be method of subverting the auction proceedings which have been undertaken duly in accordance with law and without there being challenge to such auction proceedings. 3.1 It is submitted that to preserve sanctity of the auction proceedings, no interference is required in the facts of the present case.

4. Learned Advocate for respondent Nos.2 and 3 Page 3 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020

C/SCA/20255/2018 ORDER submitted that there is no challenge by the petitioner to the auction proceedings. It is not the case of the petitioner that auction proceedings have been undertaken in any objectionable or illegal manner. 4.1 It is submitted that even before the petitioner made his offer for the first time, the auction proceedings, after following due process, have already been concluded and pursuant thereto, respondent NO.3 had already issued draft of 15% of the amount of the highest bid. It is submitted that on account of several objections which were raised time and again by various parties and the same not having been concluded at various stages, the Demand Draft paid by respondent No.3 was not encashed. However, later on, once objections of various parties including two separate petitions filed by the objectors as well as person who had made offer like the petitioner, came to be disposed of by this Court, it is thereafter now Demand Drafts have been paid to the Trust and are now deposited in the account of the trust. 4.2 It is submitted that the present petition is also premature as by the impugned order, only objection and offer of the petitioner have been decided. The main proceedings under Section 36 of the Act are yet to be decided by respondent No.1. The decision of respondent No.1 in this regard can be subjected to challenge before Page 4 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER the Gujarat Revenue Tribunal under Section 36 and hence, present petition in itself cannot be used to scuttle the ongoing proceedings as well as rights accrued in favour of respondent No.3.

4.3 It is submitted that separate petitions have been filed by two other persons who are objectors as well as offerers in the same auction proceedings. Their petitions being SCA No.22361 of 2017 and SCA No.11351 of 2016 came to be disposed of as withdrawn by orders dated 18.12.2017 and 19.06.2018 respectively.

5. Having considered the rival submissions of the parties and having perused documents on record, it appears that the auction was of the trust property which consisted of dilapidated house occupied by the tenants. An order came to be passed on 08.09.2016 by the Joint Charity Commissioner in application No.36/05/2016 below Exh.1 on the issue of public notice. The property belonging to the respondent-trust and identified as Rukshmani Residency, city survey ward No.10, entry No.2009/B admeasuring 8135545 sq. mtrs. occupied by tenants was declared to be auctioned for upset price of Rs.4.25 crores. Pursuant thereto, an advertisement came to be issued on 17.06.2019 in public newspaper. The auction proceedings took place where three persons objected and three persons made their offers on or before Page 5 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER the last date of public auction offer. The offer made by respondent No.3 was highest at Rs.5,00,00,000/-. The auction proceedings were therefore closed, where respondent No.3 was the highest bidder on 15.10.2016. It is thereafter on 07.02.2018 for the first time, the petitioner made offer for Rs.7.20 crores. Along with the offer, the petitioner had also forwarded draft of 15% of the offer amount to the Charity Commissioner. However, the said draft came to be returned.

6. The chronology of the dates clearly indicates that the offer of the petitioner was 18 months after completion of the auction proceedings and acceptance of the bid of respondent No.3 as the highest bidder. Once such bidding was concluded, merely on the ground of another person making higher offer cannot be treated to be a ground to nullify a valid process of auction. It is pertinent to point out that neither the petitioner has challenged the validity of the auction proceedings nor the petitioner has been able to satisfy the Court the reason why petitioner did not participate in the auction proceedings, more particularly when the auction proceedings were conducted in due process including issuance of public advertisement and carrying out of public auction. In the facts of this case, this Court is of the opinion that sanctity of auction proceedings, duly Page 6 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER conducted in accordance with law, has to be preserved and merely on the ground of higher subsequent offer by the petitioner, not having participated at any stage in the auction proceedings, cannot create a ground to nullify the auction proceedings and once again undertake the same procedure.

7. On the issue of preserving sanctity of auction sale in absence of any allegation of fraud, collusion, etc., the Apex Court in case of Valji Khimji and Company Vs. Official Liquidator of Hindustan Nitro Product (Gujarat) Limited & Ors., reported in (2008) 9 SCC, 299 has recorded as under:-

"11. It may be noted that the auction sale was done after adequate publicity in well-known newspapers. Hence, if any one wanted to make a bid in the auction he should have participated in the said auction and made his bid. Moreover even after the auction the sale was confirmed by the High Court only on 30.7.2003, and any objection to the sale could have been filed prior to that date. However, in our opinion, entertaining objections after the sale is confirmed should not ordinarily be allowed, except on very limited grounds like fraud, otherwise no auction sale will ever be complete.

27. In our opinion the decision of this Court in Divya Manufacturing Company (P) Ltd. (supra) Page 7 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER cannot be treated as laying down any absolute rule that a confirmed sale can be set aside in all circumstances. As observed by one of us (Hon. Katju, J.) in his judgment in Civil Appeal No. 4908/2008 (Dr. Rajbir Singh Dalal vs. Chaudhary Devi Lal University, Sirsa & Anr pronounced on 6.8.2008), a decision of a Court cannot be treated as Euclid's formula and read and understood mechanically. A decision must be considered on the facts of that particular case.

28. If it is held that every confirmed sale can be set aside the result would be that no auction sale will ever be complete because always somebody can come after the auction or its confirmation offering a higher amount. It could have been a different matter if the auction had been held without adequate publicity in well- known newspapers having wide circulation, but where the auction sale was done after wide publicity, then setting aside the sale after its confirmation will create huge problems. When an auction sale is advertised in well-known newspapers having wide circulation, all eligible persons can come and bid for the same, and they will be themselves be to blame if they do not come forward to bid at the time of the auction. They cannot ordinarily later on be allowed after the bidding (or confirmation) is over to offer a higher price. Of course, the situation may be different if an auction sale is finalized say for Rs.1 crore, and subsequently somebody turns Page 8 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER up offering Rs. 10 crores. In this situation it is possible to infer that there was some fraud because if somebody subsequently offers 10 crores, then an inference can be drawn that an attempt had been made to acquire that property/asset at a grossly inadequate price. This situation itself may indicate fraud or some collusion. However, if the price offered after the auction is over which is only a little over the auction price, that cannot by itself suggest that any fraud has been done.

29. In the present case we are satisfied that there is no fraud in the auction sale. It may be mentioned that auctions are of two types - (1) where the auction is not subject to subsequent confirmation and (2) where the auction is subject to subsequent confirmation by some authority after the auction is held."

8. The Division Bench of the Allahabad High Court in the judgment in case of Singh & Ors. Vs. State of U.P. & Ors. in CMWP No.232 of 2003 dated 22.05.2003 has recorded as under:-

"28. So far as the offer made by the writ petitioners in paragraphs 16 of the writ application, which has been quoted herein above is concerned, we are of the view that according to Clause 8 of the Government order dated 2-11-

2002, which is contained in Annexure 4 to the writ application and which has not been challenged by the writ petitioners in this writ application, the lease would be granted fro Page 9 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER various sectors of the Tahsils, as may be notified. The State Government, in its wisdom, had decided to auction different sectors of the area separately and not the entire area of the district collectively. This could be for the reason that the Government may not have been wanting one, party to monopolise the mines and minerals of the entire district and was desirous that smaller sectors of the total area be auctioned separately so that there may be more persons who could be benefited as leases could then be granted to different persons for different sectors. The same being the policy decision of the State cannot be challenged before this Court in its writ jurisdiction until and unless it is proved that such policy decision was against the public policy and without jurisdiction. Therefore, the offer made for the entire area collectively, at a much later stage by the writ petitioner firm or writ petitioner No. 2 individually, who had not even completed the, requisite formalities for participation in the auction, cannot be accepted. In our opinion, if such offers were to be accepted, then the very purpose of auction would be defeated and after acceptance of the highest bid, a party who was not even a participant in the auction, would challenge the same by offering a higher bid, which will become a never ending process. The sanctity of the auction proceedings ought to be maintained and as long as it is found that the same has been conducted fairly in accordance with law, without causing any prejudice to any party, the Page 10 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER offer of higher amount cannot be permitted to be accepted at a subsequent stage merely for the sake of asking. In any view of the matter, we are of the firm opinion that this writ application cannot be entertained for yet another simple reason that the writ petitioners were not the genuine participants in the auction and had not even complied with the requisite conditions in the notice within the specified period or even thereafter before the actual date of auction."

9. The reliance placed by the petitioner on the decision in case of Chenchu Rami Reddy (supra) does not help the case of the petitioner as in the said decision, it is observed that, "property of institutions or endowments must be jealously protected. It must be protected for a large segment of the community has beneficial interest in it. The authorities exercising the powers under the Act must not only be most alert and vigilant in such matter but also show awareness of the ways of the present day world as also the ugly realities of the world of today". These observations by the Apex Court were in the background where the property of the trust was sought to be disposed of by private negotiations and therefore, the Apex Court had strongly held that the property of the trust must be disposed of by way of holding public auction. In the instant case, it is undisputed that the auction proceedings were Page 11 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020 C/SCA/20255/2018 ORDER carried out by issuing public advertisement and therefore, there is no challenge as such to the procedure adopted for auctioning of the property in question.

10. One more ground why the Court would detest from entering into the merits any further of the present case is that the proceedings are still at large and order under Section 36 is yet to be pronounced by respondent No.1. At this stage, therefore, when the application of the petitioner making his offer is rejected, filing of the present petition is premature.

11. A perusal of the impugned order indicates that respondent No.1 has assigned cogent reasons while dealing with the application of the petitioner and has given sufficient grounds for not entertaining such application. The Court, therefore, is of the opinion that no ground exists to interfere at this stage. The petition therefore deserves to be and is hereby dismissed. Notice is discharged. No order as co costs.

(A.Y. KOGJE, J) SHITOLE Page 12 of 12 Downloaded on : Sun Feb 16 08:21:24 IST 2020