IMPORTANT POINT
Important Point : The court established that auction terms can create a contract contrary to the obligations under Section 55(1)(a) of the Transfer of Property Act, emphasizing buyer diligence.

JUDGMENT :

(M.M. Sathaye, J.) :

1. Heard the learned Counsel for the appearing parties. Perused the record.

2. By this Petition under Article 226 of the Constitution of India, the Petitioner - a private limited company registered and incorporated under the Companies Act, 1956, is praying for quashing and setting aside the auction process in respect of sale of the subject property bearing No. 193/1, Village – Devali, Mehrauli, New Delhi (popularly known as ‘Sainik Farm Area’). The Petitioner is also challenging the auction in which the Petitioner itself is declared as successful auction purchaser. The challenge is on the ground of alleged suppression of material facts in contravention of section 55(1)(a) of the Transfer Of Property Act, 1882. The Petitioner is further seeking directions to the Respondent Nos. 2 and 3 / State to pay damages of Rs.5,00,00,000/- to the Petitioner for making the Petitioner participate in the auction process. The Petitioner is further seeking refund of the entire amount of purchase price of Rs.8,13,60,000/- paid by it alongwith interest @ 18% p.a. The Petitioner is also praying for restraining the Respondent No. 3-State from parting with or disposing of the amount paid by the Petitioner.

3. Apart from the prayers indicated above, there are certain other omnibus prayers made by the Petitioner, which are reproduced below:

“a(ii) this Hon'ble Court may be pleased to direct the Respondent No.3 not to embark upon to auction any property in future having defects of inability to execute documents such as conveyance /sale deed, effecting transfer in revenue records of auction purchaser, giving full and complete disclosure regarding defects, if any, in the auctioned property in compliance with the mandate of section 55 (1) (a) of Transfer of Property Act;

a(iii) that this Hon'ble Court may therefore be pleased to direct the Respondent No.2 and/or such other administrative authority to take action on the administrative side against the Respondent No.3 for embarking upon to auction the property not having clear and marketable title, giving complete disclosure regarding defects in the property in the auction notice as contemplated u/s. 55 (1) (a) of Transfer of Property Act concerning property bearing No. 193/1 village Devali, Mehrauli, New Delhi, admeasuring 2200sq. Yards;”

4. At the outset, Mr. Jha, learned Counsel for the Petitioner, submitted on instructions, that the Petitioner is not pressing the above prayer clauses a(ii) & a(iii). Accordingly, we proceed to consider the petition.

CASE

5. The case of the Petitioner, shorn of unnecessary details, is as under. Respondent No. 3 - the Deputy Collector and the Competent Authority u/s. 5 of Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 (for short “the MPID Act”) had preferred an application in Sessions Court, Mumbai seeking permission to proceed with the sale of certain properties, which were attached and permission was granted to proceed with the sale of the 7 properties including the subject property. Respondent No. 6 – Quikr Realty Limited was appointed as an agency for conducting the auction. The Petitioner participated in the said auction process and paid a sum of Rs.81,36,000/- as Earnest Money Deposit (EMD). The Petitioner was declared as successful bidder. This took place on 24.10.2018. The Petitioner thereafter paid a sum of Rs.1,22,04,000/- being the first installment towards completion of the sale transaction. The Petitioner thereafter made a payment of Rs.2,03,40,000/- as second installment. The Petitioner thereafter paid 3rd installment of sum of Rs.2,03,40,000/- on 30.11.2018. Upon coming to know that the subject property is under attachment of Respondent No. 4 – Enforcement Directorate (“ED” for short) and the Respondent No. 5 - Economic Offences Wing (EOW), the Petitioner deputed two Advocates from Delhi, who met the Competent Authority for obtaining necessary information. It is alleged that the Competent Auth