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2013 DIGILAW 1836 (MAD)

Prajasekar v. Visharda Charitable Trust

2013-04-30

R.SUDHAKAR

body2013
Judgment : R. Sudhakar, J. 1. This application is filed under Order XIV Rule 8 of the Original Side Rules read with Section 151 of the Code of Civil Procedure to set aside the order passed on 3.4.2013 in O.P.No.209 of 2013 permitting the sale of the trust property mentioned in the schedule to the application at the price offered by M/s.Egberts India Private Limited. 2. The facts of the case in a nutshell are as under: The first respondent is a charitable Trust. The trust was substantially in need of funds for improving the activities of the trust, namely to provide education and medical relief. They also wanted to revamp the existing facilities in the school run by the Trust. The Trust in its meeting convened on 20.11.2012 decided to mobilize funds and unanimously resolved to sell the trust property after obtaining permission of this Court. The Trust identified the applicant herein as a purchaser and agreed to sell the property to him at Rs.4 Crores in as is where is condition and a sale agreement was entered into on 25.11.2012 for a sum as above. 3. With this backdrop, the first respondent herein/Trust filed the Original Petition under Section 34 of the Indian Trust Act, 1882 to grant permission to sell the petition schedule property to the applicant herein, by way of one or more sale deed(s) for a total sale consideration of Rs.4 Crores as per the sale agreement dated 25.11.2012 and to deposit the sale proceeds in a nationalized bank, namely M/s.Vijaya Bank, Anna Nagar Branch, Chennai – 600 040 in A/c.No.304401010001599 belonging to “VISHADRA CHARITABLE TRUST”. 4. Considering the extent of the property, its location and the guideline value and in order to ensure that there is a transparency in the sale, so as to get the best possible price for the benefit of the Trust, the Court thought it fit to invite offers from public. In such view of the matter, the Court appointed an Advocate Commissioner to effect paper publication and to invite offers from intending purchasers. The applicant was also permitted to participate in the bid, despite the agreement referred to above. 5. Pursuant to the paper publication, two offers were received. One was from the applicant herein. In such view of the matter, the Court appointed an Advocate Commissioner to effect paper publication and to invite offers from intending purchasers. The applicant was also permitted to participate in the bid, despite the agreement referred to above. 5. Pursuant to the paper publication, two offers were received. One was from the applicant herein. His offer was enhanced from Rs.4,00,00,000/- to Rs.4,10,00,000/-(Rupees Four Crores and Ten Lakhs only) and such offer was made in a sealed cover to the Advocate Commissioner. The other offerer M/s.Egberts India Private Limited offered Rs.5,02,00,000/- (Rupees Five Crores and Two Lakhs only). 6. Since the offer made by M/s.Egberts India Private Limited at Rs.5,02,00,000/-is far higher than the offer made by the applicant/ agreement-holder, in excess of Rs.92,00,000/-, and in the absence of any other offer, the Court was of the view that its endeavour to get the best possible price by way of open bid had the benefit of substantial increase of the price for the property that is to be sold. Therefore, the Court accepted the highest price offered by M/s.Egberts India Private Limited. As a result, by an order dated 3.4.2013, the offer of M/s.Egberts India Private Limited for Rs.5,02,00,000/- (Rupees Five Crores and Two Lakhs only) was accepted. 7. Being aggrieved by the said order, dated 3.4.2013, the unsuccessful offerer has preferred this application for the relief stated above. 8.1. The main plea raised by the applicant herein is that he has entered into a sale agreement dated 25.11.2012 with the Managing Trustee of the first respondent/Trust for purchase of the trust property and paid a sum of Rs.10,00,000/-as advance and as a prior agreement holder, he was under the bona fide belief that the property would be sold to him. 8.2. It is pleaded that the only condition stipulated in the trust deed is to obtain prior approval of the Director of Income Tax, Chennai and there is no necessity to obtain permission from the Court. It is also pleaded that the Trust had obtained income tax clearance from the Director of Income Tax for sale of the trust property to him. 8.3. It is the further contention of the applicant that M/s.Egberts India Private Limited was aware of the agreement for Rs.4,00,00,000/-and, therefore, they made a higher offer and the applicant was in a disadvantageous position. 8.4. 8.3. It is the further contention of the applicant that M/s.Egberts India Private Limited was aware of the agreement for Rs.4,00,00,000/-and, therefore, they made a higher offer and the applicant was in a disadvantageous position. 8.4. He further claimed that to mobilize funds he has sold his properties at Karaikudi and Trichy, however he was not given opportunity to improve his offer. 8.5. Based on the above pleadings, it was submitted that the applicant should be given an opportunity to buy the trust property at the rate quoted by M/s.Egberts India Private Limited or even at a little higher price. 9. In the counter affidavit filed by the first respondent/Trust, it is stated that the applicant wants an opportunity to improve on the offer made by him and if the same is permitted, it will be in the benefit of the Trust. However, Mr.R.Anand Kumar, learned counsel for the first respondent/Trust, at the time of argument, left it to the Court to decide the best course of action. No other plea or objection is taken by the first respondent/Trust. The sale is not challenged by the first respondent/Trust. The learned counsel for the Trust fairly accepted that there is an error in describing the name of the Trust in the Original Petition and the same is reflected in the paper advertisement. This caused the highest bidder to furnish the demand draft in the incorrect name, which he pleaded should be corrected for encashment of the earnest money deposit. 10.1. Mr.Abdul Hameed, learned counsel appearing for M/s.Egberts India Private Limited contended that the plea of the applicant that higher offer was made after getting to know the price offered by the applicant is totally misconceived and untenable. Such contention is made only to gloss over the conduct of the applicant in not quoting the best possible price when the applicant was given an opportunity to bid along with the general public. The bid was by way of a sealer tender and there is no question of advantage to anybody. 10.2. He further contended that the present offer made by the applicant to match the offer made by M/s.Egberts India Private Limited clearly reveals the applicant's intention to buy the property at a lesser price and only when accosted by higher bids by public sale, the applicant comes forward to match the price and therefore, the applicant lacks bona fides. 10.2. He further contended that the present offer made by the applicant to match the offer made by M/s.Egberts India Private Limited clearly reveals the applicant's intention to buy the property at a lesser price and only when accosted by higher bids by public sale, the applicant comes forward to match the price and therefore, the applicant lacks bona fides. He has not come to Court with good intention to offer the best possible price to the property and such a person should not be shown indulgence, to better the offer. He further pleaded that the difference in this case is Rs.92,00,000/- (Rupees Ninety Two Lakhs only) and it is a substantial amount. The Court should take note of the conduct of the applicant and the lack of genuineness in the offer now made. This offer he could have made at the first instance, which he failed to do for reasons best known to the applicant. Nothing prevented the applicant from quoting higher amount that he is willing to give now. Hence, the application deserves to be dismissed. 10.3. It is further contended that the moment the applicant has participated in the sealed tender bid pursuant to the paper publication, he would lose his right as an agreement holder and, therefore, he cannot take a plea that the sale should be conducted in terms of the agreement, which is for a value less by Rs.92,00,000/-, and such a sale would be not in the interest of the Trust. 10.4. It is also pleaded that if the applicant's plea to make a higher bid is accepted, it will amount to reopening the sale and then no sale by Court will attain finality. He submitted that there cannot be any vagueness in such proceedings, particularly at the whims and fancies of a person like the applicant who failed to offer the best possible price either at the time of entering into agreement or at the time of submitting sealed tender bid. It is contended that equity also does not support the case of the applicant and, therefore, the application should be dismissed. 10.5. He submitted that, on the contrary, M/s.Egberts India Private Limited is ready and willing to deposit the balance sale amount immediately. 11. The issue that arises for consideration in this case is whether the application seeking cancellation of the sale is valid or not. 12. 10.5. He submitted that, on the contrary, M/s.Egberts India Private Limited is ready and willing to deposit the balance sale amount immediately. 11. The issue that arises for consideration in this case is whether the application seeking cancellation of the sale is valid or not. 12. At the outset, it is to be noted that the application is filed under Section 151 of the Code of Civil Procedure. Therefore, any order that can be passed is at the discretion of this Court. The plea of the applicant that he is a prior agreement holder and therefore based on the clearance given by the Director of Income Tax, which document has been produced by the applicant and not by the Trust, he should be allowed to purchase the property cannot be countenanced, as the clearance given by the Director of Income Tax is only for the purpose of ensuring that the Department is aware of the sale. If the Department comes to know about any violation of that law in the sale, it is for them to take action as may be advised. It, however, does not sanctify the so-called agreement between the Trust and the private individual. The Trust, which has sought the permission of this Court to sell the property, has to satisfy the Court that the price that is being offered for the purchase of the property is the best possible price, more so in the case of a public charitable trust. 13. In this case, the endeavour made by the Court to get the best possible price has reaped rich reward and a sum of Rs.92,00,000/-in excess of the sale agreement has been offered by M/s.Egberts India Private Limited and the sale has been confirmed in their favour. It is for the Income Tax Department to take note of this vast difference and proceed further as per law, if required. However, the Court taking note of the offer made by M/s.Egberts India Private Limited, which has fetched an additional sum of Rs.92,00,000/- to the Trust, does not find any justification to set aside the sale as sought for by the applicant. 14. However, the Court taking note of the offer made by M/s.Egberts India Private Limited, which has fetched an additional sum of Rs.92,00,000/- to the Trust, does not find any justification to set aside the sale as sought for by the applicant. 14. The plea of the applicant to better his offer to match that of M/s.Egberts India Private Limited or to make higher offer cannot be accepted at this stage because the applicant has not shown fairness or openness in making a bid when he was given an opportunity to participate along with the general public. Having accepted to make a sealed tender bid, the applicant should have in all fairness offered the best price. After opening the sealed tenders, the applicant cannot become wiser and state that he will match the price of the highest bidder. If such a plea of the applicant is accepted, then in every sale through Court there is a possibility of some person coming before the Court and make a marginally better offer. The Court cannot be treated as a playground for such persons to make offers as they wish and like. If a procedure is defined and adopted, the Court will restrict itself to such procedure and confirm the sale if all parameters are satisfied. It will not, at the whims and fancies of one or other party, cancel the sale. The applicant in this case has failed to make a proper offer when he was given an opportunity to make a bid in sealed cover. He, therefore, loses his right at the time when he has made an offer, which is Rs.92,00,000/-less than the highest bid. The offer made by the applicant lacks bona fides. 15. Further, it does not lie in the mouth of the applicant to state that no Court permission is required for sale of trust property. It is for the Trust to decide as to how it should proceed in the matter. The applicant's statement that he has sold the properties to buy the trust property is of no consequence and irrelevant. That is not a ground for setting aside the present sale. 16. It is for the Trust to decide as to how it should proceed in the matter. The applicant's statement that he has sold the properties to buy the trust property is of no consequence and irrelevant. That is not a ground for setting aside the present sale. 16. The next contention of the applicant that the highest bidder had the knowledge of the price as per the agreement and, therefore, he was at an advantageous position is no plea at all, as the applicant knowing fully well that his agreement is for Rs.4,00,00,000/-, has in the sealed tender bid offered a sum of Rs.4,10,00,000/-, whereas the highest bidder offered Rs.92,00,000/-more than the applicant at Rs.5,02,00,000/-. This only goes to show that the highest bid offered by M/s.Egberts India Private Limited is a bona fide offer and the applicant's increase in bid amount by Rs.10 Lakhs, namely from Rs.4,00,00,000/- to Rs.4,10,00,000/-, shows his lack of bona fides and intention to knock off the property for a far less amount. 17. If the sale had been confirmed in favour of the applicant for Rs.4 Crores without effecting publication for sale, the loss to the Trust would be in the order of Rs.1,02,00,000/- (Rupees One Crore and Two Lakhs only). It is, therefore, evident that the loss of Rs.1,02,00,000/- to the Trust is a gain to someone and it needs no inference to state the obvious. This Court is not inclined to sanctify such a transaction between the Trust and a private individual which is not in the interest of the Trust. 18. The Court cannot be a party to a private, negotiated deal which results in loss to a public charitable trust. If the Court's seal of approval is granted to such a deal at any stage, it would amount to sanctifying an illegality. This Court will not give its seal of approval for abuse of process of Court. For the foregoing reasons, the Court is constrained to hold that the application is devoid of merits and not maintainable. The issue raised is answered against the applicant and the application is accordingly dismissed.