The court established that bidders in an 'as is where is' auction bear the responsibility to conduct due diligence, while policies allow unauthorized occupants to seek lease restoration despite prior ownership claims.

JUDGMENT

Yashwant Varma, J. These writ petitions have been preferred with the petitioners' asserting competing rights and interests in property bearing No. 217/B, Okhla Industrial Estate, Phase-III, New Delhi. Vipul Logistic claims rights over the said property by virtue of being the successful auction purchaser in proceedings which were conducted by the custodian under the Provisions of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 [1992 Act]. Raven Services, the petitioner in the connected matter, claims rights on the basis of an asserted sale made in its favour by Killick Nixon, the judgment debtor on 26 October 2003.

2. In order to evaluate and adjudge the rights of the respective petitioners which are claimed in these two writ petitions, it would be appropriate to briefly advert to the following background facts. On 14 July 1980, the Commissioner of Industries, Delhi is stated to have leased the said property to M/s Lalita Dolls, a partnership firm. The original allottee is stated to have executed an agreement to sell in favour of one M/s Killick Nixon on or about September 1990. The respondent Corporation, which is the successor entity of the Commissioner of Industries, asserts that the said transfer was in violation of clause 5(a) of the lease deed. It is contended that clause 5 clearly injuncted the lessee from transferring, selling, assigning or otherwise parting with the possession of the whole of or any part of the industrial plot except with the previous consent of the lessor. The record further reflects that since no such consent had been obtained by the original lessee, the lease deed came to be determined by an order of 2 March 1993. Killick Nixon to whom the property had been conveyed by the original lessee is stated to have preferred an appeal before the Lt. Governor. The aforesaid appeal was dismissed on 27 August 1998. Despite the cancellation of the lease, the respondent Corporation did not obtain possession of the leased premises.

3. From the facts placed on the record by the Custodian, it further transpires that one M/s Dhanraj Mills Pvt. Ltd. was declared as a notified party under the provisions of the 1992 Act on 5 August 1992. Consequent thereto all the properties of that notified party came to be attached in pursuance of the provisions made in Section 3 of the 1992 Act. Killick Nixon was recognised as the judgment debtor of M/s Dhanraj Mills Pvt. Ltd. Post attachment of the property in question under Section 3 of the 1992 Act, the Special Court proceeded to take steps for the auction of the attached properties. The sale of the attached properties of the judgment debtor which included the leased premises in question was notified for sale by way of a public notice which came to be published on 17 November 2005. Vipul Logistics participated in the auction proceedings and emerged as the highest bidder. Its bid which stood at Rs. 3.55 crores came to be accepted by the Special Court in terms of its order of 21 December 2005. From the proceedings of that date, it further transpires that Raven Services also filed objections. This appears to have been prompted in light of the transfer of the leased premises by M/s Killick Nixon in its favour on 26 August 2003. While noticing the objection which had been preferred at its behest, the