IMPORTANT POINT
The acceptance of the highest bid is subject to the conditions of holding the public auction and the right of the highest bidder has to be examined in context with the different conditions under which such auction has been held.

JUDGMENT

N.P. Singh, J.-This appeal has been filed for setting aside the judgment of the High Court quashing the resolution dated 27.2.1981 of the respondent - Nagpur Improvement Trust (hereinafter referred to as the Trust) and directing the Trust to transfer the land in question to writ-petitioner/respondent (hereinafter referred to as the respondent) being the highest bidder.

2. The said Trust had framed a scheme known as "Central Avenue Scheme" and Plot No. 57 in circle No. 7/12 was leased out to C.P. Syndicate, Nagpur. However, the aforesaid C.P. Syndicate on 30.10.1957 transferred its right, title and interest in the lease-hold to the appellant No. 1, Laxmikant. The other appellants are brothers of appellant No. 1. One of the conditions imposed by the Trust in respect of the aforesaid lease was that the construction should start within four years from the date of the agreement of lease and it should be completed within three years thereafter. As this condition was not complied with, a notice was issued to the appellants alongwith other defaulters as to why the lease be not cancelled. Show cause was filed on behalf of the appellants which was accepted by the Trust on a condition that the appellants should make the construction on the plot on or before 30.6.1971. As there was a default on the part of the appellants, the allotment of the plot was cancelled on 11.1.1972. Again representations were filed before the Trust but the plot in question was put on auction on 21.1.1974. The respondent participated at the said auction and offered Rs. 3,12,000/- and he was the highest bidder till the second round of the bid. But before the third round of the bid could be held on order staying the auction was received. There is no dispute that the third round of bid could not be held. However, the respondent deposited an amount of Rs. 31,200/- as an earnest money as per conditions of the auction.

3. The Writ Petition (W.P. No. 102 of 1974) filed on behalf of the appellants was admitted on 11.3.1974. It appears that in the meantime the Trust took a decision to reinstate the allotments which had been cancelled due to non completion of the construction over the plots of different lessees. We were informed that there were 17 lessees including the appellants. It is an admitted position that the cancellation order in respect of 16 lessees have been recalled and their allotments have been reinstated with reference to the different plots allotted in their favour. On behalf of the appellants, it was stated that as the writ petition on their behalf was pending, they were required to withdraw the writ petition, so that further action could be taken. The appellants withdrew the said writ petition on 30.9.1980. Thereafter, a meeting of the Board of the Trust was held on 27.2.1981 to consider the question as to whether the highest bid of the respondent be rejected and the plot be reinstated in favour of the appellants. The relevant part of the resolution says :-

"The Board, therefore, decided by majority of votes that the highest bid of Shri S.S. Bhojwani, Chief Promoter, Indus Cooperative Housing Society, Ltd., received in the auction should be rejected and the plot should be reinstated in favour of the original allottees Shri Laxmikant Itkelwar and others on the following terms and conditions............."

This very resolution has been quashed by the High Court by the impuged judgment saying that as the respondent was the highest bidder at the auction aforesaid, the Trust had to perform its statutory obligation under Rule 4(3) of the Nagpur Improvement Trust Land Disposal Rules, 1955 which is as follows :-

"Where it is proposed to depose of any Trust land by auction, the premium to be paid for the transfer of such land shall be put to auction after giving due publicity to the date and place of auction and the Trust land to be auctioned and the land shall be transferred to the highest bidder subject among other things, to be condition of payment of ground r