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2004 DIGILAW 292 (JK)

JAMMU DEV. AUTHORITY v. CHANDER SHEKHAR

2004-10-11

S.K.GUPTA, V.K.JHANJI

body2004
JUDGMENT V. K. JHANJI, J. This shall dispose of two letters patent appeals, i.e. LPA No. 41/2004 filed by Jammu Development Authority and LPA No. 271/2002 filed by Shri Mata Vaishno Devi Shrine Board. In both appeals under challenge is order/judgment dated 14.06.2002 of the learned Single Judge passed in OWP No. 1038/2001 permitting writ petitioner to pay an amount of Rs. 22,35,750 along with compound interest at the rate of 18% per annum from the date Jammu Development Authority came in possession of the site in question. In brief, facts of the case are that on 18.09.1989 hotel site No. 3 measuring 3.75 kanals situated at Rail Head Complex, Jammu, was auctioned by Jammu Development Authority (hereinafter called as JDA). The highest auction bid was offered by Chander Shekhar (writ petitioner in OWP No. 1038/2001 and hereinafter called as bidder) representing his firm M/s. Krishen Chand Ganesh Dass Girdhari Lal and Company. The bid was accepted for consideration of Rs. 30.01 lacs and in consequence thereof the bidder deposited 25% of the bid amount i.e. Rs. 7,50,250 on the fall of hammer as stipulated in the auction notice. In terms of Clauses 6 and 7 of the auction notice, balance 3/4th of the bid amount was to be paid by the successful bidder within a period of thirty days from the date of communication of acceptance of the bid and in the event of any default in making payment of balance amount within the stipulated period, the earnest money deposited by the bidder was liable to be forfeited and site put to fresh auction. The balance amount of Rs. 22,35,750 was to be deposited within one month from the date of communication of acceptance of the bid which was communicated to the bidder on 23.10.1989. On receiving notice to this effect the bidder assured that the balance amount would be remitted to the JDA within couple of days. However, instead of depositing balance amount with the JDA, the bidder approached the then Minister, Government of J&K Housing & Urban Development Department, requesting to pay balance amount in five equal annual instalments starting from 18.09.1990. It appears that the Minister sent request of the bidder to pay balance amount in five equal instalments to the JDA for its consideration. However, instead of depositing balance amount with the JDA, the bidder approached the then Minister, Government of J&K Housing & Urban Development Department, requesting to pay balance amount in five equal annual instalments starting from 18.09.1990. It appears that the Minister sent request of the bidder to pay balance amount in five equal instalments to the JDA for its consideration. However, JDA in its 41st meeting held on 05.06.1990 decided to forfeit 1/4th of the bid amount because it was of the opinion that terms and conditions as advertised in the auction notice cannot be altered once the auction is closed and highest bid offered is accepted at the fall of hammer, as it would give undue financial advantage to the bidder. The decision of the Board was communicated to the bidder informing him that 1/4th of the bid amount has been forfeited as he had failed to deposit the balance amount within the stipulated time. The bidder filed arbitration application No. 218 of 1990 for referring the matter to the arbitrator. The grievance made in the arbitration application was that forfeiture of 1/4th of the bid amount and re-auctioning of the site in question without disposal of representation filed by the bidder to deposit balance amount in five equal annual instalments, is illegal. Vide order dated 28.09.1990 notice of the arbitration application was ordered to be issued and in the meantime the Court directed that hotel site in question shall not be re-auctioned. It appears that during pendency of the arbitration proceedings the site in question along with the adjoining land was offered to the Shri Mata Vaishno Devi Shrine Board (hereinafter called as the Shrine Board) and price of the site offered was Rs. 10 lacs per kanal. The site in question along with adjoining land, total measuring seven kanals, was allotted to Shrine Board after accepting Rs. 70 lacs as the amount of price of the land. On deposit of the amount of consideration possession of the land including the hotel site in question was handed over to the Shrine Board on 21.10.1994 and since then the Shrine Board is in physical possession of the land. Shrine Board when, on coming in possession of the land, started raising construction at the site in question, bidder filed an application in the arbitration proceedings for restraining the Shrine Board from raising any construction. Shrine Board when, on coming in possession of the land, started raising construction at the site in question, bidder filed an application in the arbitration proceedings for restraining the Shrine Board from raising any construction. Learned Judge seized of the arbitration application, vide order dated 11.01.1996, permitted the bidder to implead Shrine Board as party to the arbitration proceedings and by an interim order of the even date restrained Shrine Board from raising any construction over the site in question. Shrine Board challenged the said order in appeal and vide order dated 15.03.1996 appeal was disposed of permitting the Shrine Board to file objections. It is stated that Shrine Board filed objections on 26.03.1996. During the pendency of the arbitration proceedings bidder submitted an application dated 19.12.1997 to the Chief Minister J&K State, seeking permission to deposit balance amount in easy instalments and on the said application the Chief Minister directed : "Please see that these both cases are completed and put up to Cabinet." Pursuant to the aforesaid directions of the Chief Minister, Vice Chairman JDA appears to have discussed the matter with the Chief Minister, who directed him to cancel the allotment earlier made in favour of the Shrine Board and hotel site be given to the bidder at the market value. However, Vice Chairman in his note dated 10.02.1999 recorded that it is difficult to determine the present market value unless plot is put to re-auction. The Vice Chairman also proposed that party should deposit the belated amount of Rs. 22,35,750 along with compound interest at 18% per annum from 23.12.1989 till the amount is deposited. The note/proposal of the Vice Chairman JDA was to be put up to Commissioner/Secretary to Government, J&K Housing & Urban Development Department. Before any decision on note/proposal dated 10.02.1999 could be taken by the Commissioner/Secretary to Government J&K Housing & Urban Development Department to whom note was to be submitted or any decision could have been taken by the Board of Directors of JDA, the bidder filed writ petition (i.e. OWP No. 1038/2001) challenging the note/proposal of the Vice Chairman JDA dated 10.02.1999 (terming the note dated 10.02.1999 to be an order). In the writ petition, challenge to the note/proposal dated 10.02.1999 was in regard to the condition to charge compound interest at the rate of 18 % per annum with effect from 23.12.1989. In the writ petition, challenge to the note/proposal dated 10.02.1999 was in regard to the condition to charge compound interest at the rate of 18 % per annum with effect from 23.12.1989. The perusal of the record of the Writ Court shows that on 29.11.2001 writ petition was admitted and by interim order of even date it was directed that site in question be not dealt with or allotted to any third person. In response to notice of the writ petition, counsel for JDA appeared on 11.12.2001, when Writ Court granted time to JDA to file counter to writ petition. On the next date of hearing i.e. 02.03.2002 none was present on behalf of the parties and case was adjourned. Thereafter, case was listed before the Court on 14.06.2002 when order/judgment impugned in this appeal came to be passed. The learned Single Judge in the order impugned has observed that though writ petition was admitted on 29.11.2001 but no counter has been filed and on the basis of averments made in the writ petition, the learned Single Judge concluded that land in question became available to the JDA only on 02.01.1998 and, therefore, question of calling upon the bidder to pay interest on the belated amount does not arise. The learned Single Judge disposed of the writ petition directing that bidder would pay interest with effect from the date JDA came in possession of the plot and was in a position to handover vacant possession of the land to the bidder. In regard to appeal preferred by JDA it deserves to be mentioned that initially JDA had challenged finding of the learned Single Judge only to the limited extent whereby learned Single Judge held bidder liable to pay interest with effect from 02.01.1998. However, later on JDA filed an application (i.e. CMP No. 9-A/2004) seeking permission to amend the memorandum of appeal so as to challenge order of the learned Single Judge in its entirety. However, later on JDA filed an application (i.e. CMP No. 9-A/2004) seeking permission to amend the memorandum of appeal so as to challenge order of the learned Single Judge in its entirety. The application seeking amendment was filed, inter alia, on the grounds that on scrutiny of the record it was noticed that allotment made in favour of the bidder had already been cancelled by the Board of Directors of JDA in its 41st meeting and the partial amount deposited by the bidder has also been forfeited and there is no change in the position thereafter, that note/proposal dated 10.02.1999 submitted by the then Vice Chairman JDA and his decision, to accept balance amount from the bidder was not approved by the competent authority; that the land in question was allotted to the Shrine Board on the orders of the then His Excellency the Governor of J&K State in the larger public interest and, therefore, there was no justification of taking decision of receiving the payment from the bidder; that action to receive amount from the bidder was one of the various acts of omission and commission of the then Vice Chairman JDA on account of which he not only was removed from that post but the vigilance organisation has also proceeded against him; that the Government, after examining the entire issue also wrote to the JDA and made its stand clear that action/decision of the then Vice Chairman in asking bidder to deposit the balance amount was without any competence. Vide order dated 23.07.2004 application to amend memorandum of appeal has been allowed. In regard to appeal preferred by Shrine Board it may be noted that Shrine Board was not party to the writ proceedings but has been permitted to file appeal against the order of the learned Single Judge. The grievance of the Shrine Board, inter alia, is that at the instance of bidder it was impleaded as party to the arbitration proceedings and it was very well known to the bidder that Shrine Board was in possession of the site in question but the bidder purposely did not implead Shrine Board as party to the writ petition. Further grievance of the Shrine Board is that order passed by the learned Single Judge affects its rights and could not have been passed without giving opportunity of hearing to it. On the other hand, Mr. Further grievance of the Shrine Board is that order passed by the learned Single Judge affects its rights and could not have been passed without giving opportunity of hearing to it. On the other hand, Mr. Z. A. Shah, learned senior advocate appearing for the bidder, submitted that initially appeal preferred by the JDA was only to the limited extent in regard to payment of interest and it cannot be allowed to enlarge the scope of appeal. Mr. Shah further submitted that pursuant to order/judgment of the learned Single Judge, bidder has deposited the balance amount of Rs. 41,30,548.00 and now only lease deed is to be executed. His precise submission is that JDA is estopped from changing the stand and questioning legality of the order impugned after it had accepted the amount pursuant to the order/judgment of the learned Single Judge. Learned counsel appearing for JDA submits that if JDA had been provided adequate opportunity to file counter it would have been in a position to bring to the notice of learned Single Judge that note dated 10.02.1999 was only a proposal of the then Vice Chairman and no decision on the said proposal was ever taken nor was it communicated to the bidder and, therefore, writ petition filed by the bidder was totally misconceived. Similar is the submission of counsel for Shrine Board. In answer to this submission, Mr. Z. A. Shah, learned senior counsel appearing for the bidder, submitted that before the learned Single Judge it was never the case of the JDA that note/proposal dated 10.02.1999 of the then Vice Chairman had not culminated into an order. His submission is that it is now too late in a day to say that it was only a proposal. His other submission is that after order/judgment of the learned Single Judge, JDA accepted the balance amount along with interest from the bidder and thus it is estopped by its own act and conduct in questioning the legality of order impugned. We have heard learned counsel for the parties and carefully gone through the record of the case. We have also perused the original record produced by JDA. We have heard learned counsel for the parties and carefully gone through the record of the case. We have also perused the original record produced by JDA. It is no more in dispute that in terms of auction notice bidder only deposited 25% of the bid amount at the fall of hammer and balance amount was to be deposited by him within a period of thirty days from the date of communication of acceptance of the bid, which was communicated to him on 23.10.1989, but he did not deposit the balance amount within the prescribed period. His request to deposit the balance amount in five equal annual instalments was considered by the Board of Directors of JDA in its 41st meeting held on 05.06.1990, but the Board decided not to accept the request of the bidder and accordingly decided to forfeit 1/4th of the bid amount and to re-auction the site in question. The bidder thereafter filed arbitration application for referring the matter to the arbitrator in which he was able to obtain interim order that hotel site in question shall not be re-auctioned. Subsequently, on deposit of Rs. 70 lacs, site in question and its adjoining land was allotted to Shrine Board and when Shrine Board was in the process of raising construction on the spot it was restrained from doing so and it was ordered to be arrayed as party in the arbitration proceedings. Thereafter, bidder approached the Chief Minister and on asking of the Chief Minister the then Vice Chairman JDA prepared a note/proposal dated 10.02.1999 to be put up to Commissioner/Secretary to Government J&K Housing and Urban Development Department for asking the party to deposit the belated amount of Rs. 22,35,750 along with compound interest at the rate of 18% per annum from 23.12.1989 till the date of deposit of money. The bidder by terming the note/proposal dated 10.02.1999 as an order made it subject-matter of challenge in the writ petition filed by him. A bare perusal of the note dated 10.02.1999 shows that it was only a proposal to be submitted to Commissioner/Secretary Housing and Urban Development Department. The note/proposal dated 10.02.1999 reads as under : "Office of the Vice Chairman JDA Jammu. xxx xxx xxx Subject : Representation of Shri Chander Shekhar regarding allotment of plot at Rail Head Complex. A bare perusal of the note dated 10.02.1999 shows that it was only a proposal to be submitted to Commissioner/Secretary Housing and Urban Development Department. The note/proposal dated 10.02.1999 reads as under : "Office of the Vice Chairman JDA Jammu. xxx xxx xxx Subject : Representation of Shri Chander Shekhar regarding allotment of plot at Rail Head Complex. xxx xxx xxx Hotel site measuring 3.75 kanals located in front of Railway Station was auctioned on 18.09.1989 and the highest bid offered by Shri Chander Shekhar was accepted by the Authority in consideration of Rs. 30.01 lacs. In consequence thereof the highest bidder deposited an amount of Rs. 7,50,250 on the fall of hammer as stipulated in the auction notice. In terms of Clauses 6 and 7 of the notification of auction notice balance 3/4th bid amount was to be paid by the successful bidder within a period of thirty days from the date of communication of the acceptance of the bid which was communicated on 23.10.1989. In the event of any default in the payment of balance amount of auction money within the stipulated period, the amount deposited by the bidder on the fall of the hammer was to be forfeited and site put to fresh auction. The bidder had to deposit the balance amount of Rs. 22,35.750 by 23.12.1989. Instead of depositing the balance bid money with JDA the bidder approached the then Hon'ble Minister for Housing & UD for recovery of the balance amount in five equal annual instalments starting from 18.09.1990. The authority examined the application of the highest bidder and was of the firm opinion that the terms and conditions as advertised in the auction notice cannot be altered after the auction is closed as it tantamounts to giving undue financial advantage to the highest bidder. Had the recovery of the balance instalments been advertised in the original auction notice a much highest bid would have been received in response to the auction. Administrative department vide letter No. UD-7/90-HUD, dated 28.06.1990 intimated that the law department has confirmed that the amount of 1/4th money should be forfeited. The JDA Board in its 41st Board meeting held on 05.06.1990 also decided that forfeiture of 1/4th bid money should be done immediately. The orders of the Board were complied. Administrative department vide letter No. UD-7/90-HUD, dated 28.06.1990 intimated that the law department has confirmed that the amount of 1/4th money should be forfeited. The JDA Board in its 41st Board meeting held on 05.06.1990 also decided that forfeiture of 1/4th bid money should be done immediately. The orders of the Board were complied. The party approached to Hon'ble High Court where Court issued an order that till the finalisation of arbitration application the plot shall not be re-auctioned. Since the Court had ordered that plot shall not be re-auctioned the plot was offered to Shrine Board at the rate of Rs. 10.00 lacs per kanal vide No. JDA/L-376/332, dated 12.07.1994 and the Shrine Board deposited a sum of Rs. 70 lacs towards the cost of the seven kanals of land including that of under discussion and took over the possession on 21.10.1994. Formal agreement with Shrine Board has not been signed. The matter was discussed with Hon'ble Minister on 10.02.1999 who is also incharge of Housing and UD Department. Hon'ble Chief Minister directed that plot to the extent of 3.75 kanals allotted to Shrine Board should be cancelled and retrieved and given to Chander Shekhar at the present market value. In this case the party should withdraw the arbitration case pending in the High Court. It is difficult to determine the present market value unless plot is put to auction. To sort out of this problem it is proposed that the party should deposit the belated amount of Rs. 22,35,750 along with compound interest at 18 % per annum from 23.12.1989 till the date of deposit of money. Needless to mention here that recently JDA has advertised a hotel site at Rail Head Complex at a minimum premium of Rs. 30 lacs per kanal. There is apprehension that Shrine Board will go into litigation as the amount has already been deposited by the Shrine Board and possession given in 1994. It is requested that the matter may kindly be taken up with the Hon'ble Chief Minister for calling the Chief Executive Officer of the Shrine Board and ask him to surrender the plot without litigation. However it shall not be possible for JDA to pay any interest to Shrine Board on the payment made by them. Sd/- (R. K. Handa) Vice Chairman Comm./Secy. to Govt. Housing & UD Department No. JDA/VC/PS/1005 Dt. 10.02.1999 Encl. However it shall not be possible for JDA to pay any interest to Shrine Board on the payment made by them. Sd/- (R. K. Handa) Vice Chairman Comm./Secy. to Govt. Housing & UD Department No. JDA/VC/PS/1005 Dt. 10.02.1999 Encl. Thirteen leaves." In his writ petition bidder has nowhere stated that note/proposal dated 10.02.1999 (which has been termed by him as an order and made subject-matter of writ petition) was ever communicated to him or he was called upon to deposit the amount in terms of aforesaid note/proposal of the then Vice Chairman. In fact the said note/proposal was to be put up to Commissioner/Secretary Housing & UD Department but before any decision could be taken on the said note/proposal, bidder filed writ petition challenging the said note/proposal dated 10.02.1999 by terming it as an order. Perusal of record shows that subsequently note/proposal dated 10.02.1999 was put before the Government who after examining the entire issue informed the JDA that action of the Vice Chairman in receiving balance amount from the bidder was without any competence. Otherwise too, the ultimate authority to take decision in this regard was with the Board of Directors of JDA but note/proposal dated 10.02.1999 was neither put up nor considered by the Board of Directors. In fact, the Board of Directors in its 41st meeting had already taken decision to reject the representation of the bidder to pay balance amount in five equal annual instalments and forfeit the earnest money which he had deposited at the fall of hammer. The Board of Directors of JDA never reviewed its decision taken in 41st meeting nor the decision taken therein has ever been challenged by the bidder. The submission of Mr. Z. A. Shah, learned senior counsel appearing for the bidder, that JDA is estopped in questioning the legality of the order/judgment of the learned Single Judge as the JDA has accepted the balance amount from the bidder, is without any substance. Firstly for the reason that order impugned was passed by the learned Single Judge under the misconception of the note/proposal dated 10.02.1999 being an order, whereas the same was only a proposal which too was not approved by the competent authority and secondly the amount, if any, deposited by the bidder was received without any competence and, in such circumstances, the doctrine of estoppel cannot be pressed into service. In fact in our considered view writ petition against proposal on which decision was yet to be taken was totally misconceived and not maintainable. Learned counsel appearing for JDA also submitted that arbitration application filed by the bidder was totally misconceived and an abuse of the process of the Court to get over the decision taken by the Board of Directors of JDA to forfeit the earnest money and to put the site to re-auction. On the other hand submission of Mr. Z. A. Shah, learned senior counsel appearing for the bidder, is that the auction notice contained arbitration clause and, therefore, it cannot be said that the arbitration proceedings were without any justification. Although it is not necessary for us to go into the bona-fide of the arbitration proceedings since these proceedings have since been withdrawn. However, on carefully going through the auction notice and arbitration clause contained therein, we find that liability to pay consideration amount was a condition precedent for the grant of lease of the site in question and merely because auction notice contained an arbitration clause would not mean that the dispute relating to non-payment of consideration could be termed as a dispute referable to adjudication. We have serious doubts that if such a dispute could be referred to arbitration. In view of the above, we are of the considered view that order/judgment dated 14.06.2002 of the learned Single Judge is not sustainable in law. Resultantly, both the appeals are allowed, impugned order/judgment dated 14.06.2002 is set aside and in consequence thereof, OWP No. 1038/2001 stands dismissed, with no order as to costs. Amount, if any, deposited by the bidder in pursuance of the order of the learned Single Judge shall be returned to him forthwith.