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1978 Supreme(All) 334
HIGH COURT OF ALLAHABAD
R.C. SHRIVASTAVA, J.
Seth Hira Lal - Appellant
Versus
State Of Uttar Pradesh Through Its Chief Secretary Secretariate, Lucknow - Respondent
Writ Petition No. 879 of 1974
Decided on : May 08, 1978
N.C. Rajvanshi, V.K. Khanna
The sale of moveable property becomes absolute upon payment of the purchase money and issuance of a receipt, and the Collector has no authority to set aside such a sale without affording an opportunity of hearing to the auction purchasers, as it violates the principles of natural justice.
Headnote:
AUCTION SALE - MOVEABLE PROPERTY - U. P. ZAMINDARI ABOLITION AND LAND REFORMS ACT, 1951 - SECTION 282 - CODE OF CIVIL PROCEDURE, 1908 - ORDER 21 RULE 77 - INTERPRETATION - SALE BECOMES ABSOLUTE ON DEPOSIT OF PURCHASE MONEY - COLLECTOR HAS NO JURISDICTION TO SET ASIDE SALE WITHOUT HEARING AUCTION PURCHASERS - NATURAL JUSTICE - VIOLATION - ORDER SETTING ASIDE SALE NULL AND VOID - CONSTITUTION OF INDIA, 1950 - ARTICLE 226 - CLAUSE (3) - ALTERNATIVE REMEDY - NOT A BAR TO ISSUE OF WRIT FOR ENFORCEMENT OF FUNDAMENTAL RIGHTS - RIGHT TO PROPERTY - ARTICLE 31.
Fact of the Case:
Collector attached and auctioned shares of SETH Banarasi Dass to recover land revenue arrears. Highest bidders, SETH Hira Lal and Shiv Raj Gupta, deposited the entire sale amount and received a receipt. The Collector, however, set aside the sale on the advice of the District Government Counsel, citing irregularities and pending objections by SETH Banarasi Dass. SETH Hira Lal and Shiv Raj Gupta challenged the Collector's order, while SETH Banarasi Dass sought to uphold it.
Finding of the Court:
1. The sale of moveable property becomes absolute upon payment of the purchase money and issuance of a receipt, as per Order 21 Rule 77 of the CPC. 2. The Collector has no authority to set aside an auction sale without affording an opportunity of hearing to the auction purchasers, as it violates the principles of natural justice. 3. The Collector's order setting aside the sale was null and void due to the violation of natural justice. 4. The Collector's subsequent review of his earlier order is irrelevant as the initial order was void. 5. The existence of an alternative remedy does not bar the issuance of a writ under Article 226(1)(a) of the Constitution when a fundamental right, including the right to property, is being violated.
Issues: 1. Whether the Collector had the authority to set aside the auction sale without hearing the auction purchasers. 2. Whether the sale became absolute upon deposit of the purchase money and issuance of a receipt. 3. Whether the Collector's order setting aside the sale violated the principles of natural justice. 4. Whether the existence of an alternative remedy barred the issuance of a writ under Article 226 of the Constitution.
Ratio Decidendi: 1. The provisions of Order 21 Rule 77 of the CPC make it clear that the sale of moveable property becomes absolute upon payment of the purchase money and issuance of a receipt. 2. The Collector's order setting aside the sale was passed without affording an opportunity of hearing to the auction purchasers, which violated the principles of natural justice. 3. The existence of an alternative remedy does not bar the issuance of a writ under Article 226(1)(a) of the Constitution when a fundamental right, including the right to property, is being violated.
Final Decision: The Court allowed the writ petition filed by the auction purchasers (SETH Hira Lal and Shiv Raj Gupta) and dismissed the petition filed by SETH Banarasi Dass. The parties were directed to bear their own costs.
K. N. Singh, J.
1. (FOR self and FOR. R. C. Srivastava, J.) :-These are two petitions which raise common questions of fact and law. We consider it necessary to dispose both these petitions by a common order.
2. SETH Banarasi Dass was the owner of 94,320 equity shares having face value of Rs. 10/- each and 2260 preference shares of the face value of Rs. 100/-each in Messers Jaswant Sugar Mills Limited, Meerut. SETH Banarasi Dass was in arrears of taxes and other dues, a certificate for recovery of the amount due was issued against him. The Collector, Meerut took steps to recover an amount of Rs, 61,48,624.21 as arrears of land revenue from SETH Banarasi Dass. The Collector attached the aforesaid equity and preference shares held by SETH Banarasi Dass and issued sale proclamation for the sale of the said shares and appointed the Sub-Divisional Officer of Meerut as the Sale Officer. Several dates were fixed for the sale of the shares but inspite of due publicity through news papers nobody turned up to purchase the shares. Ultimately the Sale Officer fixed 2nd January, 1974 for the auction sale of the shares. The time, date and place fixed for the sale was duly publicised. The auction sale was conducted by the Sub-Divisional Officer, Meerut on 2-1-1974 and a number of persons participated in the bid. SETH Hira Lal and Shiv Raj Gupta who made bits jointly were the highest . bidders, the amount of their bid was Rs. 2,90,000/-. The Sale Officer accepted their bid and finalised the sale in their favour. SETH Hira Lal and Shiv Raj Gupta desposited a sum of Rs. 75,000/- on 2-1-1974 and a receipt was issued to them which was signed by the Officer concerned. The highest bidders deposited the remaining amount in the sub-treasury of Meerut Tahsil on 7-1-1974 after obtaining the order of the Sale Officer and a receipt was issued to them. SETH Banarasi Dass made an application to the Collector on 11-1-1974 raising objections against the auction sale with a prayer that the auction sale held on 2-1-1974 be set aside. The Collector after obtaining opinion from the District Government Counsel (Civil) set aside the auction sale by his order dated 16th January, 1974 and directed the Sub-Divisional Officer to hold the auction sale afresh. SETH Hira Lal and Shiv Raj Gupta thereupon filed writ petition No. 879 of 1974 ohallenging the order of the Collector dated 16th January, 1974. Under the interim order of this Court impugned order of the Collector was stayed.
During the pendency of the aforesaid writ petition No. 879 of 1974, the Collector appears to have realised the mistake committed by him as he issued notice to Seth Banarasi Dass as well as to auction purchasers, namely, Hira Lal and Shiv Raj Gupta to appear before him on 13-8-1974 for hearing in relation to the auction sale held on 2-1-1974. Both the parties were directed to put up their case before the Collector. The Collector heared the parties on 13th and 20th August, 1974 and he fixed 24th August, 1974 for final orders. But before the Collector could pass orders, Seth Banarasi Dass filed writ petition No. 4963 of 1974 before this Court on 23rd August, 1974 which was admitted and connected with the writ petition No. 879 of 1974 filed by the auction purchasers. This Court issued an interim order on 23-8-1974 restraining the Collector from reviewing or recalling his order dated 16-1-1974.
3. THE learned counsel for the auction purchasers contended that on the deposit of the entire sale money the sale became absolute and the Collector had no jurisdiction to set aside the same. On the conclusion of the sale an interest in the property had accrued in favour of the auction purchasers. The Collector had no authority in law to set aside auction sale without hearing or giving any opportunity to the auction purchasers. The order of the Collector dated 16-1-1974 is null and void as it was passed in voilation of natural justice. We find considerable force in the contention raised on behalf of au
