1. Dispute over eviction from evacuee property sold by public auction under the Displaced Persons (Compensation and Rehabilitation) Act, 1954, and claim of statutory immunity from eviction. (Para 1 , 2 , 3 )
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1957 Supreme(SC) 104
SUPREME COURT OF INDIA
4th October 1957.
S.R. DAS, C.J.I., T.L. VENKATARAMA AYYAR, S.K. DAS, A.K. SARKAR AND VIVIAN BOSE, JJ.
M/s. Bombay Salt and Chemical Industries, Appellants
Versus
L. J. Johnson and others, Respondents.
Civil Appeal No. 406 of 1956.
Advocates appeared
Mr. Purshottam Tricumdas, Sr. Advocate (M/s. C. M. Mehta and G. Gopalkrishnan, Advocates, of M/s. Gagrat and Co.) for Appellants; M/s. Gopal Singh and R. H. Dhebar, Advocates, for Respondents Nos. 1 to 3; Mr. C. K. Daphtary, Solicitor-General of India, (Mr. K. L. Hathi, Advocate, with him), for Respondents 4 and 5. 290
Advocates:
C.K.DAFTARY, C.M.MEHTA, G.GOPALAKRISHNAN, Gopal Singh, K.L.Hathi, PURSHOTTAM TRIKAMDAS, R.H.Dhebar
C.K.DAFTARY, C.M.MEHTA, G.GOPALAKRISHNAN, Gopal Singh, K.L.Hathi, PURSHOTTAM TRIKAMDAS, R.H.Dhebar
In a sale by public auction under the Displaced Persons (Compensation and Rehabilitation) Act, 1954, the transfer of property is not complete upon the declaration of the highest bidder or approval of the bid, but only upon full payment of the purchase price and issuance of a sale certificate.
Headnote:(A) Displaced Persons (Compensation and Rehabilitation) Act, 1954 - Sections 20 and 29 - Rule 90 - Sale by public auction - Transfer of property - Whether the declaration of a person as the highest bidder at an auction amounts to a completed sale and transfer of property - It is held that the declaration of a bidder as the highest bidder does not amount to a transfer. The approval of the bid by the competent authority creates a binding contract, but the actual transfer of ownership takes place only upon the realization of the full purchase price and the subsequent issuance of a sale certificate. (Paras 8, 9, 10)
(B) Displaced Persons (Compensation and Rehabilitation) Act, 1954 - Section 19 - Power to evict by force - Where the grounds for resisting eviction do not turn on the specific section providing for forced eviction, the legality of the eviction under that specific section is irrelevant to the merits of the application. (Para 5)
Facts of the case:
A firm of displaced persons held a lease of salt pans which were evacuee property. The property was put up for sale by public auction. The occupants challenged the sale on the grounds that the property value was low enough to warrant allotment to them. After the auction, highest bidders were declared. The occupants applied for a stay of confirmation of the sale and protection from eviction, claiming statutory immunity from eviction for two years following a transfer of the property to another person. They were subsequently evicted before the sale process was fully completed.
Findings of Court:
The court found that no transfer of property had occurred at the time of eviction because the balance of the purchase money had not been paid and no sale certificate had been issued to the auction purchasers.
Issues: Whether the declaration of the highest bidder at a public auction constitutes a "transfer" of property sufficient to trigger statutory protection against eviction for the existing lawful possessor under the Act.
Ratio Decidendi: Under the rules governing the auction of evacuee property, the process involves distinct stages: declaration of the highest bidder, approval of the bid, payment of the balance purchase price, and the issuance of a sale certificate. While the approval of the bid creates a binding contract for sale, the actual transfer of ownership occurs only when the purchase price is realized in full and the sale certificate is issued. In the absence of such a certificate, no transfer has taken place, and the possessor cannot claim the benefits of statutory protection afforded to tenants of a transferee.
Result: Appeal dismissed.
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2. Whether eviction was illegal under Section 19 or whether statutory immunity from eviction under Section 29 applied following the auction sale of the property. (Para 4 , 7 )
3. The court analyzed auction rules and conditions, finding that transfer of property occurs only upon full payment and issuance of a sale certificate, not upon the auction bid. (Para 5 , 8 , 9 , 10 )
4. A sale by public auction under the Displaced Persons Act is not complete until the bid is approved, purchase price paid, and a sale certificate issued. (Para 10 )
5. Appeal dismissed with costs. (Para 12 )
6. When is a sale by public auction under the Displaced Persons (Compensation and Rehabilitation) Act, 1954, considered a completed transfer?
A transfer is not complete upon the declaration of the highest bidder. It requires the approval of the bid by the Settlement Commissioner, full payment of the purchase price, and the subsequent issuance of a sale certificate by the Managing Officer. (Para 8 , 9 , 10 )
7. Does the statutory immunity from eviction under Section 29 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, apply if the property has not been legally transferred?
No. Section 29 applies only where property is transferred to another person under the Act. If the sale process is incomplete and no legal transfer has occurred, the person in possession cannot claim the benefit of statutory immunity from eviction under this section. (Para 7 , 10 )
8. Does Section 19 of the Displaced Persons (Compensation and Rehabilitation) Act, 1954, apply to evictions where the lease was not terminated by the Managing Officer?
Section 19 provides the power to evict by force specifically when a Managing Officer terminates a lease and the person fails to surrender possession. If the eviction is not based on such termination, Section 19 is not the applicable provision. (Para 4 , 5 )
Judgment
A. K. SARKAR, J. : This appeal by special leave granted by this Court under Art. 136 of the Constitution is from an order passed on 20-4-1956, by the Chief Settlement Commissioner appointed under the Displaced Persons (Compensation and Rehabilitation) Act, 1954. It is principally concerned with that Act.
2. The appellants are a firm of which the partners are displaced persons within the meaning of the Act. There are certain salt pans in Wadala, Bombay, known as Salamati Salt Factory. The salt pans were evacuee property and formed part of the compensation pool constituted under the Act. On 7-11-1950, a lease of the salt pans was granted to the appellants for a period of three years. This lease was renewed from time to time, and on 2-12-1955,it was renewed for a period ending on 13-2-1956. On 23-12-1955, the Regional Settlement Commissioner, an officer appointed under the Act, who is respondent No. 3 in this appeal, advertised that the salt pans should be sold by public auction on 6-1-1956. The appellants moved the High Court at Bombay under Art. 226 of the Constitution challenging the validity of the proposed sale on the ground that the value of the property did not exceed. Rs. 50,000 and consequently it could not, under the provisions of the Act, be sold without first offering it to the appellants in lieu of compensation payable to them under the Act. The High Court stayed the sale pending the hearing of the application. On 2-2-1956, the lease to the appellants was renewed for the last time for a further period ending on 15-4-1956. Thereafter, the application under Art. 226 of the Constitution came up for hearing and was dismissed. The appellants filed an appeal in the same Court from the order of dismissal and again applied for a stay of the sale. The Court however, refused to stay the sale further and only ordered that the sale was not to be confirmed for a week and expedited the hearing of the appeal. On 31-3-1956, the property was put up to auction and Parvatibai Wadhumal and Kakanbai Tulsimal, respondents Nos. 4 and 5 who offered a bid of Rs. 4,40,000 were declared the highest bidder. At the sale the appellants themselves had bid up to Rs. 4,39,000. Thereafter on 6-4-1956 the appellants withdrew the appeal pending in the High Court at Bombay. They state that they did so as it involved disputed or controversial questions of fact as to the value of the property which would not have been decided by the Court in an application under Art. 226. The sale had not till then been confirmed.
3. On 11-4-1956, the appellants made an application to the Chief Settlement Commissioner who is respondent No. 1 in this appeal, for the following orders :
(a) that the confirmation of the sale in pursuance of the auction held on 31-3-1956, be stayed;
(b) that they be given an opportunity to substantiate their case on the merits;
(c) that they be not evicted till the disposal of their case;
(d) that the lease granted to them be extended till end of the working season.
The grounds on which this application was made were two, namely,
(1) Under S.29 of the Act, the appellants who were in lawful possession of the property had statutory immunity from eviction for a period of two years.
(2) That the property was not liable to be sold but should be allotted to the appellants at its value did not exceed Rs. 50,000.
The Chief Settlement Commissioner granted a stay of the confirmation of the sale pending the hearing of the application. On 15-4-1956, the lease expired and thereafter on 20-4-1956, the Chief Settlement Commissioner made an order dismissing the application but giving the appellants 14 days time to remove the salt lying in the pans. The order also stated that the sale to respondents Nos. 4 and 5 was confirmed and possession of the salt pans should be given to them forthwith. On 25-4-1956, the Managing Officer of Evacuee Property, also an officer appointed under the Act, and respondent No. 2 in this appeal, wrote to the appellants that the posses
