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2010 DIGILAW 2222 (ALL)

GOPI KUMAR SINGHANIA v. STATE OF UTTAR PRADESH

2010-07-28

RAJESH CHANDRA, SHEO KUMAR SINGH

body2010
JUDGMENT By the Court.—By means of the present writ petition, the petitioner has prayed for quashing the auction proceedings conducted pursuant to the recovery certificate and recovery citation dated 6.1.2001 and 14.2.2001 (Annexures 6 and 7) respectively. 2. There is further prayer for a direction to the District Collector, Varanasi (Respondent No. 2) to restore back the possession over the properties, which were illegally auctioned pursuant to the recovery certificate/citation referred above. 3. Heard Sri R.N. Singh, learned Senior counsel assisted by Sri V.K. Singh who appeared in support of the petitioner. 4. Sri Rajeev Mishra has filed appearance on behalf of the respondent No. 5 and he states that he has not filed the counter-affidavit as nobody turned up after filing the Vakalatnama. On the asking of the Court he argued the matter in the light of the facts so available on record. 5. The State Officials are represented by the learned Standing Counsel. 6. After hearing the learned counsel for the parties, it is clear that the facts are not in dispute and, therefore, on a brief notice the writ petition can be conveniently disposed of. 7. Proceeding for recovery of certain dues from the petitioner started pursuant to the issuance of recovery certificate/citation under the provisions of U.P. Public Money (Recovery of Dues) Act, 1972 (hereinafter referred to as ‘Act’). 8. Recovery certificate/citation as noted above is dated 6.1.2001 and 14.2.2001. 9. Challenging the aforesaid move of the U.P. Financial Corporation (respondent No. 4), petitioners filed the writ petition in this Court i.e. Civil Misc. Writ Petition No. 27141 of 2001 which was dismissed on 27.4.2001. Although, Special Leave Petition was filed in May, 2001 but before any relief could be granted, the properties in question was auctioned on 26.11.2002. The Special Leave Petition filed by the petitioner was finally decided by the Apex Court vide judgment dated 20.12.2002 which is reported in (2003) 1 Local Bodies Education Cases 901 (SC). 10. The Apex Court while allowing the Special Leave Petition, in the concluding paragraph gave a clear direction that the impugned order is set aside and the proceedings under the U.P. Act are quashed. It was left open for the Corporation to take action under the Act or the financial Act as is legally available to it. 11. 10. The Apex Court while allowing the Special Leave Petition, in the concluding paragraph gave a clear direction that the impugned order is set aside and the proceedings under the U.P. Act are quashed. It was left open for the Corporation to take action under the Act or the financial Act as is legally available to it. 11. The observation as made by the Apex Court in paragraph 16 of the judgment noted above is quoted here for convenience : “The impugned order is set aside and the proceedings under the U.P. Act are quashed. It shall be, however, open to the Corporation to take such action under the Act or the Financial Act, as is legally available to it. The appeal is allowed without any costs.” 12. There is no dispute that the judgment of the Apex Court has become final between the parties. 13. After the judgment of the Apex Court, the petitioner moved an application before the District Magistrate and served a copy of the order of the Apex Court on 27.1.2003 with a request that possession of the properties in question which was so auctioned on 26.11.2002 be restored to them. As there was inaction on the part of the District Officials, the writ petition was filed before this Court (the present writ petition). In this writ petition, a direction was given by the Bench on 31.10.2003 that the District Magistrate is to pass appropriate orders in accordance with law. 14. After the directions of this Court, the District Collector, Varanasi rejected the petitioners’ application by order dated 6-1/2-2006. It is mainly observed that as matter is pending in the Court, unless there is clear direction nothing is possible. 15. By means of the amendment application, the petitioner has challenged the order of the District Magistrate dated 6-1/2-2006 also. 16. Thus, in addition to the prayers in the petition, there is a prayer for quashing the order of the District Collector by which the petitioner’s claim for restoration has been rejected. 17. 15. By means of the amendment application, the petitioner has challenged the order of the District Magistrate dated 6-1/2-2006 also. 16. Thus, in addition to the prayers in the petition, there is a prayer for quashing the order of the District Collector by which the petitioner’s claim for restoration has been rejected. 17. Submission of the learned counsel for the petitioner is that although the recovery proceedings initiated by the respondent No. 4 was upheld by this Court by dismissing the writ petition but ultimately the Apex Court allowed the Special Leave Petition and the order of this Court was set aside and at the same time the proceedings for recovery under the Act was quashed with a liberty to the Corporation to take any action which may be permissible in law and thus the claim is that as the recovery proceeding under the Act has been quashed, petitioners are entitled for restoration of the status/possession which stood before start of the recovery proceedings. 18. Further submission is that it is not a case where only intervening proceeding has been quashed rather it is a case where entire proceedings started under the Act stood quashed and, therefore, when no recovery process started pursuant to the recovery certificate/citation remained in existence, consequential steps will have to be treated as annuled and thus petitioners are entitled to get the relief. 19. In support of the submission of applicability of principle of lis pendens in respect to Court sale also reliance has been placed on a decision given by the Apex Court in the case of Kedarnath v. Sheonarain, AIR 1970 SC 1717 . The observation as made by the Apex Court in the aforementioned case as is contained in para 17 is quoted hereunder : “Lastly it was contended that the sale was by the Court auction and the doctrine of lis pendens would not apply to such a sale. This point was considered in Samarendra Nath Singh v. Krishna Kumar Nag, 1972 (2) SCR 18 : AIR 1967 SC 1440 , by one of us (Shelat, J.) and it was observed as follows : “The purchaser pendente lite under this doctrine is bound by the result of the litigation on the principle that since the result must bind the party to it so must it bind the person deriving from his right, title and interest from or through him. This principle is well illustrated in Radhamadhub Holder v. Monohar, (1887) 15 Ind App 97, where the facts were almost similar to those in the instant case. It is true that Section 52, strictly speaking, does not apply to involuntary alienations such as Court sales but it is well established that the principle of lis pendens applies to such alienations. (See Nilkant v. Suresh Chandra, (1885) 12 Ind App 171 and (1897) 24 Ind App 170 (PC).” This ground also has no validity.” 20. In support of the submission that if very initiation of proceeding is found to be nullity/faulty then all consequential action is to fall though reliance has been placed on a decision given by the Apex Court in the case of Badrinath v. Government of Tamil Nadu and others, 2000 (8) SCC 395 . 21. The observation as made by the Apex Court in the aforesaid case as is contained in para 27 of the judgment is quoted hereunder : “This flows from the general principle applicable to “consequential order”. Once the basis of a proceeding is gone, may be at a later point of time by order of a superior authority, any intermediate action taken in the meantime-like the recommendation of the State and by the UPSC and the action taken thereon-would full to the ground. This principle of consequential orders which is applicable to judicial and quasi-judicial proceedings is equally applicable to administrative orders. In other words, where an order is passed by an authority and its validity is being reconsidered by the superior authority authority (like the Governor in this case) and if before the superior authority has given its decision, some further action has been taken on the basis of the initial order of the primary authority, then such further action will fall to the ground the moment the superior authority has set aside the primary order.” 22. In response to the aforesaid, Sri Rajeev Mishra submits that although by the judgment of the Apex Court, order of this Court dismissing the writ petition was set aside and the proceedings under the Act itself was quashed but as the auction took place on 26.11.2002 it was open for the petitioners to have informed the Apex Court about this development while the Special Leave Petition was being decided on 20th December, 2002. On the aforesaid premise, Sri Rajeev Mishra submits that the petitioners are not entitled to get any relief. 23. In view of the aforesaid fact, this Court has to deal with the matter. 24. As noticed above, there is no dispute about the fact that not only the order of this Court was set aside by the Apex Court rather the entire proceedings under the U.P. Act was quashed. The question before the Apex Court was that whether the recovery proceeding initiated by the Financial Corporation under the U.P. Public Money (Recovery of Dues) Act, 1972 can be said to be justified and within jurisdiction. 25. This issue was answered by the Apex Court in favour of the petitioner and it was found that proceeding initiated by the Corporation under the Act referred above were not permissible and it is on this ground entire proceedings were quashed and at the same time the Corporation was given the liberty to take recourse as permitted in law. 26. This being the situation, the auction pursuant to recovery citation as has taken place being a result/consequence of the recovery certificate/citation which has been found to be not permissible, this Court is convinced that petitioners are entitled to get the relief. Once the recovery certificate/citation itself stood quashed, there cannot be any valid auction. 27. A similar situation arose in a matter before this Court in the case of Mohan Lal Baghla v. Board of Revenue and others (W.P. No. 4450 of 1986) in which against the petitioners the dues were found to be of lessor amount and for the higher amount, the recovery proceedings were started and auction of property took place. 28. On examination of propriety of sale proceeding, having found the same to be not in accordance with law, this Court set aside the auction proceedings and as a consequence restoration of possession was also directed. 29. The judgment of this Court was appealed in the Apex Court but the Special Leave Petition i.e. Appeal No. 8624 of 2002 was finally dismissed. The order of this Court for restoration of possession and for refund of amount with a reasonable interest was approved by the Apex Court. 30. At this stage, we may refer to a decision given by the Apex Court in the case of Nani Gopal Paul v. T. Prasad Singh, AIR 1995 SC 1071. The order of this Court for restoration of possession and for refund of amount with a reasonable interest was approved by the Apex Court. 30. At this stage, we may refer to a decision given by the Apex Court in the case of Nani Gopal Paul v. T. Prasad Singh, AIR 1995 SC 1071. Where the Apex Court observed that if sale proceedings are vitiated then the Courts are not to remain a mute or helpless spectator to permit the illegality committed in conducting the Courts sale. Unless aggrieved party by his own conduct permits the effect of the auction to become operative, that cannot be legalised only by passage of time. 31. Here is a case where the petitioners having succeeded from the Apex Court, immediately approached the District Collector for restoration of possession and thus there being no lapses on the part of the petitioners and having promptly moved for giving effect to the final decision of the Apex Court nullifying the entire thing, the Court will have to come to rescue of the petitioners. 32. The observation as made by the Apex Court in the decision given in the case of Nani Gopal Paul v. T. Prasad Singh (supra) is quoted hereunder : “We are of the view that we can take suo motu judicial notice of the illegality pointed out by the Division Bench, committed by the Single Judge of the High Court in bringing the properties to sale. Accordingly, we are of the view that the circumstances are sufficient to vitiate the validity of the sale conducted by the Court Recover as approved by the learned Single Judge. Confirmation of sale was illegal. Though, as contended by Sri Ganesh that normally an application under Order XXI Rule 89 or 90 under Section 48 C.P.C. need to be filed within limitation to have the sale conducted by the Court set aside and that procedure need to be insisted upon. We are of the view that this Court or appellate Court would not remain a mute or helpless spectator to obvious and manifest illegality committed in conducting Court sales. We are informed and it is not disputed that the appellate had deposited only Rs. 5 lakhs and balance amount was assured to be deposited only after delivery of possession. That also would be illegal.” 33. We are informed and it is not disputed that the appellate had deposited only Rs. 5 lakhs and balance amount was assured to be deposited only after delivery of possession. That also would be illegal.” 33. As the recovery proceedings/citation and the entire proceedings under the Act has been found to be invalid and were quashed by the Apex Court, we are of the view that the petitioners are entitled for all the reliefs so claimed in this petition. 34. So far as the Private respondent who claims to be the auction purchaser, he is entitled to get the bid amount returned with a simple interest to be calculated at the rate of 7% from the date of deposit. 35. As the money is lying with the respondent No. 4, we give a direction to that respondent that on moving appropriate application by respondent No. 5 for refund of the amount that will be refunded within a period of six weeks from the date of receipt of the move. 36. So far as the petitioners are concerned, this Court directs that the District Collector, Varanasi will ensure possession of the property restored with the petitioners within a period of two months from the date of receipt of the certified copy of this order Under immediate/proper notice to respondent No. 5. —————