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Karnataka High Court · body

2016 DIGILAW 432 (KAR)

B. N. Jayadeva v. Bangalore Development Authority, Bangalore

2016-06-09

B.V.NAGARATHNA

body2016
JUDGMENT : B.V. Nagarathna, J. Though the appeals are listed for admission, with the consent of the learned Counsel for the parties, they are heard together finally. 2. R.F.A. No. 1236 of 2012 is filed by the plaintiff in O.S. No. 7984 of 1997, while R.F.A. No. 762 of 2012 is filed by defendant no. 3 in that suit. 3. For the sake of convenience, parties herein shall be referred to, in terms of their status before the Trial Court. 4. Plaintiff filed the suit against defendants nos. 1 to 3 seeking the relief of declaration that the show-cause notice dated nil, signed on 27-11-1995 issued by the second defendant and order dated 6-5-1996 issued on behalf of the first defendant (Commissioner, Bangalore Development Authority) ('BDA' for the sake of brevity) and letter dated 17-1-1996, show cause dated 21-2-1996 and decision sought to be communicated through letter dated 6-5-1996 are without jurisdiction and illegal, as they are opposed to the principles of natural justice and consequently direct the defendants to provide an opportunity as per rules and grant such other reliefs as the Court deems fit. 5. Aforesaid show-cause notice, orders and communications pertain to suit schedule property bearing Survey No. 1141 in Sector - VII of HSR Layout, Bangalore, measuring North to South 9.20 meters and East to West 17.15 meters, morefully described in the schedule to the plaint. 6. According to the plaintiff, the first defendant is the Authority constituted under the provisions of Bangalore Development Authority Act, 1976 ('BDA Act' for short) which is looking after proper and orderly growth of City of Bangalore. It is empowered to form layouts and to dispose of sits either by allotment or by auction. Separate rules have been framed for the same. The first defendant issued a newspaper notification dated 7-4-1995 notifying an auction to be conducted by it. In response to the said notification, a sum of Rs. 5,000/- was deposited by the plaintiff in order to participate in the auction. Auction was held on 19-4-1995. The plaintiff was the successful bidder. He offered a sum of Rs. 5,310 per square meter, which would amount to Rs. 8,37,812/- for the entire suit schedule site. At the time of deposit of earnest money, plaintiff was residing at No. 161, 3rd Cross, Rajmahal Vilas Extension, Bangalore-80. Auction was held on 19-4-1995. The plaintiff was the successful bidder. He offered a sum of Rs. 5,310 per square meter, which would amount to Rs. 8,37,812/- for the entire suit schedule site. At the time of deposit of earnest money, plaintiff was residing at No. 161, 3rd Cross, Rajmahal Vilas Extension, Bangalore-80. On the conclusion of the auction, on the same day plaintiff went to Canara Bank Extension Counter near BDA Office around 1.45 p.m. for deposit of 25% i.e. a sum of Rs. 2,09,500/- and the same was accepted by Canara Bank. According to the plaintiff-defendants had to intimate the plaintiff about acceptance of the bid or otherwise. On confirmation of the auction in his favour, he was to pay balance 75% of sital value within 45 days from the date of confirmation. Defendants Nos. 1 and 2 took a long time to take a decision in the matter and intimate the decision taken by them. Plaintiff did not receive any intimation or confirmation about his bid for about four months. He addressed a letter to the BDA, but at that stage, he noticed that in the Bank challan the address of the plaintiff has been stated as No. 125, 3rd Cross, RMV Extension, Bangalore. Plaintiff addressed a letter dated 21-8-1995 to the defendant-BDA and brought to their notice about the discrepancy in the address stated in the challan. He requested the first defendant to send confirmation letter to his address at No. 161, 3rd Cross, Rajmahal Vilas Extension, Bangalore-80. The said letter was received by the first defendant on 24-8-1995. 7. Thereafter, plaintiff did not receive any confirmation of the bid or any communication in that regard. When he made enquiries with the first defendant, he was directed to approach the office of the first defendant situated at Koramangala, Bangalore. Plaintiff was directed to approach the Office of the BDA for clarification with regard to confirmation of the auction. Accordingly, plaintiff visited the said office on 26-9-1995. He was given a copy of the bid which was dated 13-6-1995. He addressed a letter dated 26-10-1995 to the BDA requesting them to grant him 90 days time as per the rules to pay the balance of 75% of the bid amount. Accordingly, plaintiff visited the said office on 26-9-1995. He was given a copy of the bid which was dated 13-6-1995. He addressed a letter dated 26-10-1995 to the BDA requesting them to grant him 90 days time as per the rules to pay the balance of 75% of the bid amount. But, show-cause notice dated nil signed by the second defendant was sent to the plaintiff on 27-11-1995 calling upon the plaintiff to give explanation with regard to his letter dated 26-10-1995 that he had received a confirmation letter regarding the auctioned site from Koramangala Office of BDA. According to the plaintiff, the BDA acted in a manner so as to suit their convenience. They presumed that the confirmation of the bid by letter dated 13-6-1995 was received by the plaintiff on 1-7-1995 being the date on which the said letter was returned by the postal authorities and since then 90 days time was given to pay balance 75% of the bid amount which came to an end on 12-11-1995. Therefore, the BDA intended to forfeit 25% of the amount deposited by the plaintiff. Plaintiff gave an explanation on 8-12-1995 by addressing a letter to the BDA stating that he did not receive any communication from the BDA by letter dated 5-2-1996, which was in fact sent to the plaintiff's address but to one Mr. B.K. Gopinath, No. 161, 3rd Cross, Rajmahal Vilas Extension, Bangalore-90. The address of the plaintiff was mentioned along with the name of some other person. 'Therefore, plaintiff addressed one more letter to the BDA in June 1996 informing the BDA that plaintiff had not received any reply from the BDA in respect of the status of the bid of the schedule site. 8. Plaintiff approached the first defendant in the first week of July 1996 and also second defendant who alleged that the reply was sent to the plaintiff. But, the same had been sent to the Revenue Office of the BDA, R.T. Nagar during the second week of July 1996 and it had been returned to the office of the second defendant as the same could not be served on the plaintiff. But, the same had been sent to the Revenue Office of the BDA, R.T. Nagar during the second week of July 1996 and it had been returned to the office of the second defendant as the same could not be served on the plaintiff. The plaintiff could not understand as to why the same was not served on him even though he is permanently residing in Sadashivanagar which is quite close to the Office of the BDA, but he was told that he could receive the said letter from the first defendant directly. Accordingly, plaintiff met the second defendant on 18-7-1996 in his office and requested him to hand over letter meant for the plaintiff. The decision stated to have taken by the second defendant on the reply given by the plaintiff was not in favour of the plaintiff. Therefore, the plaintiff once again addressed a letter dated 25-7-1996 to the second defendant in that regard. The second defendant refused to divulge the decision or deliver the letter meant for the plaintiff. Therefore, plaintiff was constrained to file W.P. No. 26666 of 1996 against the BDA. The BDA filed its reply. Plaintiff found that there was necessity to let in evidence in the matter. Therefore, he withdrew the writ petition with liberty to file the suit and the writ petition was dismissed as withdrawn on 25-3-1997 and thereafter the suit was filed. 9. According to the plaintiff, the BDA has been lethargic in not communicating the decision to the plaintiff and that plaintiff was ready to pay balance 75% of the amount within the time prayed by him. Though he had already deposited 25% of the amount, BDA threatened to forfeit the said amount. Plaintiff contended that the BDA was guilty of violation of the principles of natural justice in not giving proper opportunity to the plaintiff to explain his stand in the matter and trying to confuse the plaintiff with contradictory allegations. The BDA has violated the norms of allotment of site and therefore the plaintiff sought a declaration that the show-cause notices, orders, communications issued by the BDA were illegal being in violation of the principles of natural justice. 10. In response to the suit summons BDA filed an independent written statement. Defendant No.3 was impleaded during the pendency of the suit. Defendant No.3 claims to be a subsequent purchaser of the suit property. 11. 10. In response to the suit summons BDA filed an independent written statement. Defendant No.3 was impleaded during the pendency of the suit. Defendant No.3 claims to be a subsequent purchaser of the suit property. 11. It was contended by the BDA that the clerk of the Canara Bank has committed a mistake in writing the address of the plaintiff and that the plaintiff though was highest bidder in the auction held on 19-4-1995 had not deposited the balance amount. It was contended that the confirmation letter was sent to the plaintiff's address and that the confirmation letter was sent to the plaintiff himself. Therefore the plaintiff had to pay balance 75% of the amount. As the plaintiff had furnished a wrong address, BDA was not responsible for the show-cause notice, letters and communications not reaching him. Under the rules, BDA has power to cancel the auction and therefore it had exercised its power under the rules. Therefore, the action taken by BDA was proper. 12. After amendment of the plaint, additional written statement was filed denying the amended pleas in the plaint. It was specifically contended that the letter dated 17-1-1996 was not in accordance with the provisions of the Bangalore Development Authority Rules, 1975. 13. Defendant No.3 in his written statement denied the allegations made in the plaint and contended that he was not aware of the auction purchase of the schedule site by the plaintiff. He contended he was unaware about the wrong mentioning of the address in the communication of the clerk of the Canara Bank Extension counter to the plaintiff. He contended that the BDA cancelled the bid of the plaintiff as the latter had not paid the balance sital value. He asserts that on 25-8-2008, a fresh auction was conducted by BD A in which he was the successful bidder. He wanted to deposit 25% of the bid amount on the spot, but he was told not to pay the said amount. The availability of the suit schedule site was published in both English and Kannada daily newspapers. He had already deposited earnest money of Rs. 20,000/-. When defendant no. 3 approached BDA, he was told about the pendency of the suit. Defendant No.3 also sought dismissal of the suit. Defendant No.3 also filed additional written statement to the amended plaint. 14. The availability of the suit schedule site was published in both English and Kannada daily newspapers. He had already deposited earnest money of Rs. 20,000/-. When defendant no. 3 approached BDA, he was told about the pendency of the suit. Defendant No.3 also sought dismissal of the suit. Defendant No.3 also filed additional written statement to the amended plaint. 14. On the basis of the aforesaid pleadings, the Trial Court raised the following issues and additional issues for its consideration: "(1) Whether the plaintiff proves that notice disused by 2nd defendant singed on 27-11-1995 is opposed to principles of natural justice and without jurisdiction? (2) Whether plaintiff proves that the order dated 6-5-1996 issued by the first defendant as per Annexure-R5 is opposed to principles of natural justice and without jurisdiction? (3) Whether the plaintiff is entitled for declaratory relief as prayed against the defendant? (4) Whether the plaintiff is entitled for mandatory injunction against defendants as prayed? (5) What decree or order? Additional Issues: (1) Whether defendant no. 3 proves that he has become the successful bidder in fresh auction held on 25-8-1998 in respect of suit schedule property?" 15. In order to substantiate his case, plaintiff examined himself as P.W. 1. He produced seventeen documents which were marked as Exs. P. 1 to P. 17. Defendants examined three persons and twelve documents were produced which were marked as Exs. D. 1 to D. 12. On the basis of the said evidence, the Trial Court answered Issues 1 to 4 in the affirmative and decreed the suit of the plaintiff in the following terms: "The suit of the plaintiff is decreed. It is declared that show-cause notice dated nil singed on 27-11-1995 issued by the second defendant and orders dated 6-5-1996, issued on behalf of the first defendant, and letter dated 17-1-1996, show-cause notice dated 24-2-1996 and decision sought to be communicated through letter dated 6-5-1996 are without jurisdiction and illegal and also opposed to the principles of natural justice. Consequently, defendants nos. 1 and 2 are directed to provide an opportunity to the plaintiff and defendant no. 3 in particular, and public at large in general to participate in auction to be conducted afresh in respect of the suit schedule property. The defendants nos. 1 and 2 have to conduct the said public auction afresh within 3 months from the date of this order. 3 in particular, and public at large in general to participate in auction to be conducted afresh in respect of the suit schedule property. The defendants nos. 1 and 2 have to conduct the said public auction afresh within 3 months from the date of this order. Under the circumstances, there is no order as to costs. There shall be decree in the above terms." 16. Being aggrieved by the judgment and decree of the Trial Court dated 27-2-2012, plaintiff has preferred R.F.A. No. 1236 of 2012, while the defendant no. 3 has preferred R.F.A. No. 762 of 2012. 17. I have heard learned Counsel for the respective parties. 18. It is the case of the appellant/plaintiff that when the Trial Court answered all issues in favour of the plaintiff and thereby held that the show-cause notice, orders and communications issued by the respondent-BDA were without jurisdiction and illegal, as they were opposed to the principle of natural justice, then the matter ought to have rested at that stage. The status quo ante was restored. Therefore, it was for the respondent-BDA to issue fresh show-cause notice and take action in accordance with law. Therefore, the trial could not have issued consequential directions to the respondent-BDA to provide an opportunity to the plaintiff and defendant no. 3, at a fresh public auction on the suit schedule site within three months from the date of the judgment. He contended that on account of the consequential directions the right which had enured to the benefit of the plaintiff on account of he being successful bidder in the auction conducted on 19-4-1995 has been nullified. Therefore, learned Counsel contended that the consequential directions issued by the Trial Court may be set aside by allowing the appeal filed by the plaintiff. 19. Learned Counsel for the appellant in RFA No. 762 of 2012, who was third defendant in the suit contended that he is a bona fide purchaser without notice. That when once the BDA had taken a decision to cancel the auction that was conducted on 19-4-1995, in which the plaintiff was allegedly successful, what became necessary was a second fresh auction to be conducted. In fact, the same was conducted on 25-8-1998 in which the third defendant was the successful bidder, he had bid Rs. 1,71,00,000/-, his bid was accepted by the BDA. He had paid the initial amount of Rs. In fact, the same was conducted on 25-8-1998 in which the third defendant was the successful bidder, he had bid Rs. 1,71,00,000/-, his bid was accepted by the BDA. He had paid the initial amount of Rs. 20,000/- and he was directed to pay the balance sale consideration which he was ready to pay. Hence, the Trial Court was not right in decreeing the suit in favour of the plaintiff, as a result, the right, title and interest of this appellant in the s\A schedule property has been nullified for not fault of his. He contended that being a bona fide purchaser without notice of the previous proceedings, the BDA must be directed to confirm the auction in favour of this appellant. Therefore the Trial Court was not justified in granting a decree in favour of the plaintiff nor holding that there should be fresh auction in respect of the suit schedule site involving the plaintiff and the third defendant. Hence, learned Counsel for the appellant/third defendant contended that the appeal may be allowed and BDA may be directed to confirm the auction that took place on 25-8-1998, in which this appellant was the successful bidder, in the name of the appellant. 20. Per contra, learned Counsel for the respondent-BDA, who were defendants nos. 1 and 2 in the suit brought to my notice the fact that it is not just that there was an auction in favour of the third defendant during the pendency of the suit, but one more auction was conducted on 23-5-2011 during the pendency of the suit in which one Sunil Dut Prasad Varma was the successful bidder and his bid was Rs. 1,81,98,082/-. The bid was confirmed in his favour on 19-10-2011. Subsequently, the sale deed was registered in his name on 25-11-2015 and therefore as on date neither of the two appellants have any right, title and interest in respect of the suit schedule site. He contended that the plaintiff had not paid the balance sale consideration in respect of the auction that took place on 19-4-1995 and therefore the BDA was justified in cancelling the bid in his favour. Similarly, the third defendant neither deposited 25% of the bid amount nor the balance sital amount and therefore, the third defendant who is the appellant herein also has no right, title and interest in respect of the suit schedule site and. Similarly, the third defendant neither deposited 25% of the bid amount nor the balance sital amount and therefore, the third defendant who is the appellant herein also has no right, title and interest in respect of the suit schedule site and. presently, defendant no. 4 in RFA No. 762 of 2012 is the rightful owner of the suit schedule property. Therefore, the appeals may be dismissed. 21. In response to this submission, learned Counsel for the plaintiff/appellant brought to my notice Section 52 of the Transfer of Property Act, 1882, to contend that the suit was filed on 3-11-1997, suit was decreed on 22-7-2012 and during the pendency of the suit, without seeking permission of the Trial Court, BDA could not have auctioned the suit schedule site to the third defendant on 25-8-1998. Further, BDA could not have also auctioned the site to the 4th respondent in RFA No. 762 of 2012, on 23-9-2011. Both these auctions are during the pendency of the suit and they are hit by the doctrine of lis pendens as enunciated in Section 52 of the said Act. In support of his contentions reliance is placed on a decision of the Hon'ble Supreme Court in the case of A. Nawab John and Others v. V.N. Subramaniyam, (2012) 7 SCC 738 . He further contended that since the judgment and decree is now in favour of the plaintiff, BDA must be directed to restore the status quo ante and proceed with the matter from the stage of auction conducted on 19-4-1995 in which plaintiff was the successful bidder. 22. Having heard learned Counsel for the parties and on perusal of the material on record, the following points would arise for my consideration: "(1) Whether the Trial Court having decreed the suit in favour of the plaintiff was justified in granting consequential directions to the BDA to provide an opportunity to the plaintiff and defendant no. 3 to participate in a public auction to be conducted afresh in respect of the suit schedule site within three months from the date of the judgment and decree? (2) Whether the auction conducted by the BDA on 25-8-1998 and 23-9-2011 which was confirmed on 19-10-2011 during the pendency of the suit are hit by the doctrine of lis pendens as stated in Section 52 of the Transfer of Property Act, 1882?" 23. (2) Whether the auction conducted by the BDA on 25-8-1998 and 23-9-2011 which was confirmed on 19-10-2011 during the pendency of the suit are hit by the doctrine of lis pendens as stated in Section 52 of the Transfer of Property Act, 1882?" 23. The detailed narration of facts would disclose that there is no dispute with regard to factual aspects of the matter. In a nutshell, it could be stated that on 19-4-1995, the plaintiff was the successful bidder at an auction conducted in respect of the suit schedule property and his bid of Rs. 8,37,812/- was accepted, 25% of the bid amount was also paid by him and balance 75% of the sital value had to be paid within 45 days from the date of confirmation of the auction which according to the plaintiff's Counsel, is 45 days from the date of receipt of the letter confirming the bid in favour of the plaintiff. 'The dispute arose at that stage, as it is the case of the plaintiff that no communication confirming the bid in his favour was received by him. Consequently, payment of 75% of the sital value did not take place. In the circumstances, the BDA did not confirm the sale in favour of the plaintiff and in that context notices, orders and communications which were assailed by the plaintiff in the suit, came to be issued by the BDA. Show-cause notice, orders and communications of the BDA which ultimately resulted in cancellation of the bid in favour of the plaintiff were declared to be illegal by the Trial Court as they are opposed to the principles of natural justice. Insofar as that portion of the decree is concerned, the plaintiff has no grievance. The BDA has also not filed any appeal. But the grievance of the plaintiff is with regard to consequential directions issued by the Trial Court to the BDA for holding a fresh auction and by giving an opportunity to the plaintiff and defendant no. 3 to participate in the fresh public auction. The BDA has also not filed any appeal. But the grievance of the plaintiff is with regard to consequential directions issued by the Trial Court to the BDA for holding a fresh auction and by giving an opportunity to the plaintiff and defendant no. 3 to participate in the fresh public auction. In my view, consequential directions were unnecessary as once the Trial Court had come to a conclusion that BDA had not complied with the principles of natural justice, then the status quo ante was restored and the BDA ought to have been simply directed to take action from the stage when the show-cause notice had to be issued to the plaintiff in respect of the suit schedule site. 24. In this regard, learned Counsel for the plaintiff submits that he had in fact made a representation seeking time for payment of the sital value on coming to know about the confirmation of the bid in his favour as he was not in receipt of the communication regarding the same and the grievance of the plaintiff is that the said representation has not yet been considered by the BDA. 25. Be that as it may, having regard to the first portion of the decree of the Trial Court, the status quo ante having been restored, the BDA is at liberty to take action in respect of the auction held on 19-4-1995 vis-a-vis the plaintiff. In that view of the matter, consequential directions issued by the Trial Court which are as follows: "Consequently, defendants nos. 1 and 2 are directed to provide an opportunity to the plaintiff and defendant no. 3 in particular, and public at large in general to participate in auction to be conducted afresh in respect of the suit schedule property. The defendants nos. 1 and 2 have to conduct the said public auction afresh within 3 months from the date of this order. Under the circumstances, there is no order as to costs. There shall be decree in the above terms." are set aside. The appeal of the plaintiff could have been allowed in part at this stage, by answering Point No. 1 in his favour, but the matter does not rest here. 26. Under the circumstances, there is no order as to costs. There shall be decree in the above terms." are set aside. The appeal of the plaintiff could have been allowed in part at this stage, by answering Point No. 1 in his favour, but the matter does not rest here. 26. Plaintiff's contentions is with regard to the subsequent auction of the suit schedule site by the BDA on 25-8-1998 and thereafter on 23-9-2011 are hit by the doctrine of lis pendens and therefore the said auctions may be declared to be null and void particularly, having regard to the fact that plaintiff has been successful in his suit and the suit has been decreed. Section 52 of the Transfer of Property Act reads as under: "52. Transfer of property pending suit relating thereto. - During the pendency in any Court having authority within the limits of India excluding the State of Jammu and Kashmir or established beyond such limits by the Central Government of any suit or proceedings which is not collusive and in which any right to immoveable property is directly and specifically in question, the property cannot be transferred or otherwise dealt with by any party to the suit or proceeding so as to affect the rights of any other party thereto under the decree or order which may be made therein, except under the authority of the Court and on such terms as it may impose." 27. It is not in dispute that the BDA conducted auctions on the aforesaid dates during the pendency of the suit. The suit was filed on 3-11-1997 and it was decreed on 27-2-2012. The Hon'ble Supreme Court in the judgment referred to above, while adverting to Section 52 of the Transfer of Property Act held that it is a settled position that the effect of Section 52 is not to render transfers effected during the pendency of a suit by a party to the suit void, but only to render such transfers subservient to rights of the parties to such suit, as may be, eventually, determined in the suit. In other words, the transfer remains valid subject, or course, to the result of the suit. The pendente lite purchaser would be entitled to or suffer the same legal rights and obligations of his vendor as may be eventually determined by the Court. In other words, the transfer remains valid subject, or course, to the result of the suit. The pendente lite purchaser would be entitled to or suffer the same legal rights and obligations of his vendor as may be eventually determined by the Court. The mere pendency of a suit does not prevent one of the parties from dealing with the property constituting the subject-matter of the suit. The section only postulates a condition that the alienation will in no manner affect the rights of the other party under any decree which may be passed in the suit, unless the property was alienated with the permission of the Court. In these circumstances, it would not be necessary for this Court to declare that the auction conducted on 25-8-1998 and subsequently on 23-9-2011 as null and void. Those auctions would be subject to the result of the further action to be taken by the BDA vis-a-vis the plaintiff concerning the auction dated 19-4-1995 in which the plaintiff was the successful bidder. Therefore, the said auctions would be subject to the result of the further action to be taken by the BDA, in view of the show-cause notice, orders, communications issued by the BDA to the plaintiff being quashed. Accordingly, Point No. 2 is answered. 28. It is needless to observe that having regard to the decision which the BDA may take with regard to the plaintiff/appellant who was the successful bidder and keeping in mind the fact that the suit schedule property is now in the ownership and possession of the respondent no. 4 in RFA No. 762 of 2012, the BDA would take appropriate steps in the matter while considering the case of the plaintiff. In the event, the BDA takes any decision in favour of the plaintiff/appellant and the suit schedule site not being available at this point of the time, the BDA to consider the case of the plaintiff with regard to an alternative site. 29. Liberty is given to the appellant in RFA No. 762 of 2012 to initiate action against the BDA in accordance with law. 30. In the result, R.F.A. No. 1236 of 2012 is allowed in part. R.F.A. No. 762 of 2012 is disposed in the aforesaid terms. Parties to bear their respective costs.