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1996(7) Supreme 459
SUPREME COURT OF INDIA
S.P. Bharucha and K. Venkataswami, JJ.
State of Punjab -Appellant
versus
M/s. Yoginder Sharma Onkar Rai & Co. & Ors. -Respondents
Civil Appeal No. 7992 of 1996
with
Civil Appeal Nos. 7993/96, 7994/96
Decided on 17-9-1996
Counsel for the Parties :
For the Appearing Parties : M.L. Sarin, Advocate General, Punjab, Soli J. Sorabjee, Dushyant D. Dave, D.P. Gupta, Sr. Advocates, S. Bhoumick, Atul Sharma, Manoj Swarup, P.H. Parekh, Amit Dhingra, E.R. Kumar, G.K. Banerjee, Mohan Jain, Ms. Nandini Gore, Pradeep Mishra, V.C. Rishi, Ms. Mukta Sharma and Goodwill Indeevar, Advocates.
Held : This is a question of fact. It was rightly referred to the Financial Commissioner under the statutory provision by the Division Bench in its order on the earlier writ petition. On the order passed by the Financial Commissioner the High Court could interfere in a writ petition under Article 226 only if it found it to be perverse, that is to say, if it found its conclusions such as could not reasonably have been arrived at upon the record. The Division Bench in the order under appeal has not so held, specifically or impliedly. (Para 11)
Further held that the judgment of the Division Bench is based upon conjectures and inferences more tenuous than those it found the Financial Commissioner guilty of. Such conjectures and inferences are impermissible in a judgment upon a writ petition under Article 226 where the fact-finding authority has arrived at a conclusion which is not perverse or so unreasonable that, upon the record, it could not have been reached. (Para 15)
The Division Bench was, in the circumstances, in error in reaching the conclusion that the auction was not fairly and properly held with the result that the State exchequer had been subjected to a huge loss. In any event, loss to the exchequer is a factor which may be taken into account in genuine cases, as it was in the case of M/s. Rajshila cited by learned counsel for the first respondent. At the same time, the finality of auctions must also be recognised to be in the interests of the exchequer. If auctions are set aside and re-auctions ordered on less than satisfactory material, the loss of the exchequer would be far greater. (Para 18)
In cases where there is real need to set aside an auction, he who challenges it must be required to prove his bona fides before the auction is set aside by depositing a substantial portion of what he says he will bid. It is only if the deposit is made that the auction should be set aside and a re-auction ordered. (Para 21)
JUDGMENT
Bharucha, J.-These are appeals against the judgment and order dated 8th May, 1996, of a Division Bench of the High Court of Punjab & Haryana, passed upon a writ petition filed by the first respondent, M/s. Yoginder Sharma Onkar Rai & Co. The subject matter of the writ petition was the auction of liquor vends of Group Nos. 108 to 111 in Khanna Circle, District Ludhiana, State of Punjab for the year 1996-97. The first appeal is by the State of Punjab. The other appeals are by the successful bidders.
2. The auction took place on 11th March, 1996. On 18th March, 1996, the first respondent filed an earlier writ petition (Writ Petition No. 4047/1996) before the High Court challenging the auction. Thereon the Division Bench ordered :
"After hearing the learned counsel for the parties and perusing the record were are of the opinion that the points raised by the petitioners do require a consideration by the competent authority authorised a reject the higher bid offered and the auction held. The disputed questions of facts raised in this litigation can also better be appreciated by such authority.
xxx xxx xxx
In view of the facts and circumstances of the case, this petition is disposed of with the following directions :
(i) That Shri Y.S. Ratra, Financial Commissioner, Taxation shall treat this writ petition as representation/revision in terms of Rule 36(18) of the Rules filed before him to determine the legality of the bids in auction held in favour of the private respondents.
(ii) The parties shall be given an opportunity of being heard before passing the appropriate orders."
Consequential directions were also given.
3. The Financial Commissioner heard the parties as directed by the High Court and rejected the representation/revision filed by the first respondent. He noted various circumstances on the basis of which he came to the conclusion that the first respondent had not given a bid of Rs. 4.21 crores for Group No. 108 or a bid of Rs. 3.50 crores for Group No. 111. The Financial Commissioner found that the possession of a receipt for entry into the auction pandal did not mean that the first respondent had made a bid unless it was shown from the bid sheet that its name was recorded thereon. Being a sitting licensee for the last 4 or 5 years did not give the licensee any right to get the vend again unless he bid for it in open auction. Not much reliance could be placed on newspaper reports, as the Supreme Court had held that newspaper reports had no evidentiary value but were only hearsay evidence. That a bank counter had been opened in the pandal did not bar the successful bidders from depositing the requisite amount of 15 of the bid money in the Government Treasury at Khanna in the stated time. In the pandal there were 1200-1300 persons. They were not all bidders. Being the first auction of liquor vends in the State for the given year, licensees from other districts had come to see the trends and make a market survey. That only 2 or 3 bidders had given bids for a particular vend was, therefore, not noteworthy. Though the partners of S.P. Kalia and Co. and Puneet Kalia and Co. were relations there was no reason why they should not bid against each other. It was next to impossible that 34 drafts could have been prepared on the day of the auction in banks at Khanna and Mandi Gobind Garh which would reach the pandal by 11 a.m. considering the fact that the banks opened at 10 a.m. at Khanna and Mandi Gobind Garh, which was approximately 40-50 kms. from the site of the auction at Ludhiana. It was more likely that all this would take 2 hours. This indicated that the first respondent did not have adequate funds to deposit 15 of the bid money at the fall of the hammer and, therefore, did not bid at all. Note was taken of the pattern of bidding. For Group No. 108 the initial bid was for Rs. 3.55 crores, the next was Rs. 3.65 crores, then 3.68 crores
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