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Doctrine of Public Trust – Sale of property by public or private – Cachar Tea Farming and Industrial Cooperative Society-Ex- Officio liquidator issued a notice inviting tenders for the sale of Chincoorie Tea Estate owned by Cachar Tea Farming and Industrial Cooperative Society Ltd. The concerned tea estate measured 9951 bighas.- tender of the sale of the concerned land was floated without the prior approval of the government – Tender Notification was cancelled – challenged – High court allowed the writ and directed to execute a registered sale deed – Apex court held that in the light of the legal principle laid down by this Court with regard to Public Trust Doctrine in Mahesh Chandra’s case (supra) and the cases mentioned supra, we are inclined to observe that the liquidator did not act fairly and reasonably in the best interest of the public of the State whose interest he is required to uphold. As per the material evidence put on record, the liquidator and the concerned authority did not take any step to improve the condition of the land and sell it at reasonable andstandard price prevalent at the time of sale of the property in question. Hence, we hold that the tender process initiated by the appellants is not legal and is liable to be set aside. We direct the concerned authority to issue fresh notice of tender for selling the land. The notice shall be made available in government websites and other local and national newspapers so as to encourage and invite more bidders. In the meanwhile, the authority shall take all necessary steps to improve and restore the condition of the land so as to make the purchase of the land free from legal encumbrances.= STATE OF ASSAM & ORS. ………APPELLANTS VS. SUSRITA HOLDINGS PVT. LTD. ……RESPONDENT= 2014 ( April.Part ) judis.nic.in/supremecourt/filename=41462

  Doctrine of Public Trust – Sale of property by public or private – Cachar  Tea  Farming  and

Industrial Cooperative Society-Ex- Officio liquidator issued a notice inviting tenders for the sale  of  Chincoorie Tea Estate owned by Cachar Tea Farming and  Industrial  Cooperative  Society

Ltd. The concerned tea estate measured 9951 bighas.- tender of  the  sale  of  the  concerned

land was floated without the prior approval of the  government – Tender Notification was cancelled – challenged – High court allowed the writ and directed to execute a registered sale deed – Apex court held that in the light of the legal principle laid down by  this  Court with regard to Public Trust Doctrine in Mahesh Chandra’s  case  (supra)  and the cases mentioned supra, we are inclined to observe  that  the  liquidator did not act fairly and reasonably in the best interest of the public of  the State whose interest he is required to uphold. As per the material  evidence

put on record, the liquidator and the concerned authority did not  take  any step to improve the condition of the land and  sell  it  at  reasonable  andstandard price prevalent at the time of sale of the property in question. Hence, we hold that the tender process initiated by  the  appellants  is

not legal and is liable to be set aside. We direct the  concerned  authority to issue fresh notice of tender for selling the land. The  notice  shall  be made  available  in  government  websites  and  other  local  and   national newspapers so as to encourage and invite more  bidders.  In  the  meanwhile, the authority shall take all necessary steps  to  improve  and  restore  the condition of the land so as to make the  purchase  of  the  land  free  from legal encumbrances.=

 

whether the appellants lawfully cancelled the tender process in relation  to

the property in question in view of the discrepancies crept in  the  process

of transfer of the land in favour of the respondent.=

 

 It is an undisputed fact that in the present  times  consideration  of

Rs.1.11 crores for 9000 bighas of land does not reflect the  correct  market

value prevalent at the relevant point of time and  not  even  to  the  civil

valuer’s report without either factual or legal basis. 

As per the report  of

the Joint Registrar of Co-operative Societies dated 31.02.2006, the  updated

registered value of the concerned tea garden stands at  Rs.4,24,72,124/-  as

opined by Sri. M.P. Gindora, Tea  Consultant  and  Registered  Valuer.  This

report however, carried a qualifier along with  it.  I

t  is  stated  in  the

report on the assumption that it is hardly  expected  that  any  party  will

come forward to purchase an existing tea garden with huge  encroachment.  As

per the facts put on record,  the  total  area  of  the  estate  is  1247.29

Hectares out of which 70% is encroached. 

However, this  alone  cannot  be  a

ground for the Joint Registrar of Co-operative Societies to  opine  that  it

would not fetch the value of the property as indicated by the valuer in  the

report. 

Therefore, there was no justification for  the  appellants  to  sell

the property at an  extremely  low  price  without  any  effort  of  issuing

eviction notice to the alleged encroachers to evict them  by  following  the

due process of law. 

There will not be any impediment for the  appellants  to

evict trespassers from the land in question without  considering  the  above

relevant aspects of the case. 

The High Court granted the  relief  in  favour

of the respondent in its writ petition by quashing the order  of  cancelling

the tender process by the  officer  of  the  appellant  No.  1  and  further

directing the appellants to execute the sale deed  accepting  the  offer  of

the respondent.

 

30. Further, according to the material placed on record, the land  concerned

involves significant amount of public  money.  Therefore,  its  transfer  in

favour of the respondent attracts the greatest amount of responsibility  and

caution. The competent valuer had already determined  the  registered  value

of land at       Rs.4,24,72,124/-. Therefore, it was the  responsibility  of

the  concerned  authority  to  ensure  all  steps  which  should  have  been

undertaken to sell the land at a minimum cost of Rs.4,24,72,124/-  or  above

instead of its attempt to sell the same at  a  lower  price  merely  on  the

pretext that no one would come up to  purchase  the  land  at  the  valuer’s

price or that since the land is an  encroached  land,  the  lower  price  is

justified cannot be accepted.

 

              Therefore, in the light of the legal principle laid down by  this  Court

with regard to Public Trust Doctrine in Mahesh Chandra’s  case  (supra)  and

the cases mentioned supra, we are inclined to observe  that  the  liquidator

did not act fairly and reasonably in the best interest of the public of  the

State whose interest he is required to uphold. As per the material  evidence

put on record, the liquidator and the concerned authority did not  take  any

step to improve the condition of the land and  sell  it  at  reasonable  and

standard price prevalent at the time of sale of the property in question.

 

33. Hence, we hold that the tender process initiated by  the  appellants  is

not legal and is liable to be set aside. We direct the  concerned  authority

to issue fresh notice of tender for selling the land. The  notice  shall  be

made  available  in  government  websites  and  other  local  and   national

newspapers so as to encourage and invite more  bidders.  In  the  meanwhile,

the authority shall take all necessary steps  to  improve  and  restore  the

condition of the land so as to make the  purchase  of  the  land  free  from

legal encumbrances.

 

34. Since, the respondent had paid up the entire bid amount, it is  entitled

to refund of the entire amount. Further, since it is also  proved  that  the

amount paid by the  respondent  has  been  used  to  pay  the  arrears,  the

respondent is entitled to interest for the amount paid  @7%  p.a.  from  the

date of payment till the date of refund.

 

35. Accordingly, we set aside the order dated 2.2.2012 passed  by  the  High

Court of Guwahati in M.C. No.5 of 2012 in Writ Appeal Sl. No.168339 of  2011

after condoning the delay and consequently  we  allow  the  writ  appeal  by

allowing this Civil Appeal.

2014 ( April.Part ) judis.nic.in/supremecourt/filename=41462
GYAN SUDHA MISRA, V. GOPALA GOWDA

NON-REPORTABLE

 
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4849 OF 2014
(ARISING OUT OF SLP(C) 14843 OF 2012)

 

 

 
STATE OF ASSAM & ORS. ………APPELLANTS

VS.

SUSRITA HOLDINGS PVT. LTD. ……RESPONDENT

 
J U D G M E N T

 

V. GOPALA GOWDA, J.
Leave granted.

2. This appeal is filed by the appellants questioning the correctness of
the impugned judgment and final Order dated 2.2.2012 passed by the High
Court of Guwahati, Assam, in M.C. No. 5 of 2012 in Writ Appeal Sl.
No.168339 of 2011, urging various facts and legal contentions in
justification of their claim.

3. Necessary relevant facts are stated hereunder to appreciate the case of
the appellants and also to find out whether the appellants are entitled for
the relief as prayed in this appeal.

4. The Government of Assam issued instructions in respect of alienation of
tea garden land from time to time, particularly, letter no. RSS 573/94/25
dated 26.3.2001 of the Government of Assam, Revenue (Settlement) Department
requiring prior approval of the Government.

5. On 30.10.2006, following the dissolution of Cachar Tea Farming and
Industrial Cooperative Society, the Cachar Ex- Officio liquidator, Cachar
Tea Farming and Industrial Cooperaive Society Ltd, (in short the
‘Liquidator’), issued a notice inviting tenders for the sale of Chincoorie
Tea Estate owned by Cachar Tea Farming and Industrial Cooperative Society
Ltd. The concerned tea estate measured 9951 bighas.

6. As on 5.1.2007, no tender had been cast in response to the tender notice
issued. Therefore, a fresh tender notice dated 5.1.2007, was issued by the
liquidator with minor modifications made on the previous tender notice. The
land mentioned in the modified notice admeasured 9000 bighas. The last date
for submission of tenders was fixed at 29.1.2007 which was further extended
to 26.2.2007 upto 2 p.m. by another modified tender notice dated 28.1.2007.
7. It is pertinent to note that the tender of the sale of the concerned
land was floated without the prior approval of the government as required
by instructions issued in respect of alienation of tea garden land from
time to time, particularly, letter no. RSS 573/94/25 dated 26.3.2001 of the
Government of Assam Revenue (Settlement) Department. The other codal
formalities for tender process were not followed either.

8. On 26.2.2007, two tender bids were received. The respondent herein made
a bid for Rs.1.11 crore. Another party, M/s Luxmi Township made a bid for
Rs.1.05 crore. However, since the respondent had submitted his tender
document by hand at 3:45 p.m., the same was objected by the other
contender. The respondent was still considered the only valid bidder.

9. The Liquidator subsequently, vide Order dated 21.4.2007, cancelled the
tender process by observing that the price quoted by the parties for the
9000 bighas of land is not at all justifiable. Further, M/s Luxmi Township
Pvt. Ltd. had intimated that the entire stamp duty for the transfer of
land, in case of a valid sale, has to be borne by the Ex- Officio
Liquidator of CTFICS Ltd. The bid value is based on this condition which
the liquidator did not agree.

10. The respondent thereafter, filed a Writ Petition (C)No. 1928/2007
before the Guwahati High Court after the tender process had been cancelled
vide Order dated 21.4.2007. In the Writ Petition, the respondent sought
directions for the Official respondents therein to issue final Order of
award in favour of the respondent herein. The respondent further sought
restrain order from cancelling the tender process and initiation of fresh
tender process. The High Court, vide Order dated 27.4.2007, restrained the
Official respondents therein from initiating fresh process for the disposal
of the land involved. The Order further clarified that it shall not be a
bar to issue Order in favour of the respondent herein.

11. The Liquidator, on 9.5.2007, issued notice in a local daily- The Assam
Tribune, declaring that the tender process had been cancelled vide Order
dated 21.4.2007. The respondent thereafter, filed another Writ Petition (C)
No. 2416/2007 before the Guwahati High Court impugning the notice dated
9.5.2007. The High Court, vide Order dated 23.5.2007, issued notice and
directed that the notice dated 9.5.2007 shall not be given effect till the
returnable date.

12. The Respondent next filed a Writ Petition (C) No. 2971/2007
challenging the cancellation Order by the liquidator dated 21.4.2007. In
the meantime, the Joint Registrar of the Co-operative Societies forwarded a
report to the Registrar of the Co-operative Societies by issuing letter to
him.

13. The Deputy Registrar who had cancelled the sale of the tea garden was
transferred by that time. His successor vide letter dated 2.7.2009, sought
permission/approval of the Registrar of the Co-operative
Societies to dispose of the land in question in favour of the respondent
herein in the light of the Order of the High Court dated 27.4.2007 in W.P.
(c) No. 1928/ 2007.

14. Thereafter, vide Order dated 23.7.2009, the Registrar of the Co-
operative Societies, permitted the Liquidator to dispose of the property
involved in favour of the respondent herein.

15. The Deputy Registrar issued an award letter dated 27.8.2009 and
thereafter, signed the agreement for sale of the tea garden land on
2.9.2009 and sent a draft copy of the Deed of Agreement for the sale of the
land in question. The respondent was required to make an initial deposition
of 25% of the total bid initially within a week of issuance thereof, as per
the terms laid in Clause 3 of the Deed of Agreement. The remaining 75% of
the total consideration amount was required to be paid by the respondent at
the time of execution of the sale deed, subject however, to the withdrawal
of W.P. (C) No. 1928/2007 by the respondent. The Writ Petition was closed
subsequently since it was not pursued.

16. The sub-Registrar (Registration), Silchar was approached by the
liquidator on 9.12.2009 for registration of the sale deed. The sub-
Registrar asked the liquidator to produce permission/approval from the
Revenue Department for registration of the sale deed. The liquidator on
10.12.2009, wrote to the Registrar of the Co-operative Societies seeking
instruction on the same. The Liquidator however, could not produce the
government permission for execution of the sale deed in respect of the land
in question. Therefore, the sale deed could not be executed in favour of
the respondent.

Therefore, vide Communication dated 20.1.2010 from the Secretary, Co-
operation Department to the Deputy Commissioner, Cachar, he was directed to
refrain from registering the sale deed in respect of the property in
question without the clearance from the Co-operation Department.

17. Aggrieved by the same, the respondent filed another Writ Petition (C)
No. 4147/2010 before the High Court seeking a direction to the appellant
for execution of the sale deed in its favour and also to quash the
communication dated 20.1.2010 of the Secretary of the Co-operation
Department which gave direction to the Deputy Commissioner, Cachar, to
refrain him from registering the sale deed without the clearance of the Co-
operation Department.

18. The High Court held that since the amount has already been paid by the
respondent to the Department, there is no question of taking further
approval from the government. Therefore, the High Court directed the Deputy
Registrar of the Co-operative Societies to follow up the execution of the
sale deed in respect of the property and its registration.

19. The said order was forwarded to the higher authority. However, the sale
deed did not get registered subsequently which was followed by a Contempt
Case No. 443/2010 initiated by the respondent.

20. The appellants filed a Review Petition No. 112/ 2010 before the High
Court seeking review of its Order dated 6.8.2010 passed in W.P. (c) No.
4147/2010. In the meanwhile, the Deputy Commissioner, Cachar vide letter
dated 13.10.2010 to Secretary, Revenue, sought approval of the government
for alienation of the garden land. In response to the letter mentioned
above, the Deputy Secretary, Revenue and Disaster Management wrote a letter
dated 29.11.2010 to the Deputy Secretary, Co-operation Department
to submit a report in order to accord approval for alienation of the land.
Another letter was issued to the Deputy Commissioner, Cachar to submit
proposal as per Government land policy and guidelines for alienation of
garden land.

21. The Review Petition No. 112/2010 filed by the appellant was dismissed
by the High Court on 2.2.2011.

On 29.6.2011, the letter dated 24.5.2011 was put up before the
Principal Secretary. The Principal Secretary in turn, forwarded the
proposal to the Minister, Revenue and Disaster Management Department for
obtaining necessary approval from the Chief Minister of Assam State on the
condition that the land under transfer will be used only for the purpose of
tea cultivation and no bona fide worker or the erstwhile Co-operative
Society should be adversely affected by the transfer of ownership.

22. The Chief Minister of the State observed that there are various
discrepancies in the proposal forwarded to him and therefore, directed the
Revenue Department to examine the matter and to consult the Legal
Remembrancer for further course of action in case discrepancies are found.
The Legal Remambrancer observed that since loss of huge amount of public
money to the tune of several crores is involved in the matter, the
government might prefer an appeal before the Division Bench in wider public
interest along with petition for condonation of delay. Accordingly, an
appeal was filed by the appellants against the Order dated 6.8.2010 passed
by the High Court in W.P. (C) No. 4147/2010. The High Court however, vide
Order dated 2.2.2012, rejected the application for condonation of delay
being M.C. No. 5/ 2011 in WA Sl. No. 168339/2011.

23. The High Court opined that the time lag between 2.2.2011 and 22.11.2011
has not at all been convincingly explained by the appellants. Though the
State is in shackle by unavoidable official formalities to streamline its
decision, however, the explanation offered by the appellants towards
justification of the delay in filing the appeal is insufficient and it has
dismissed the condonation of delay application and consequently dismissed
the writ appeal.

24. The appellants have come in appeal before this Court mainly on two
grounds:

Firstly, the impugned Order is violative of the principles of natural
justice. The appellants in the writ proceedings, have not been afforded an
opportunity to file their affidavits on merits. Also, the Order in this
perspective is unsafe to be acted upon since enormous amount of public
revenue is involved in the matter.

Secondly, the appellants claim that the transaction sought to be completed
squarely within the realm of a contract. Therefore, no direction in the
nature of mandamus could have been issued to the appellants as the same is
not permissible in law, and rendered the impugned decision void ab initio.

25. The impugned Order passed by the High Court stated that the appeal
brought before it by the appellants has been dismissed on the ground of
delay. Though, submissions were made by both the parties explaining the
cause for delay. However, instead of deciding this issue on merit which was
required in this case as it involved substantial question of law and public
interest, the Court dismissed the case on the ground of delay after hearing
the submissions of the parties.

26. We are of the opinion that the High Court erred in dismissing the
appeal of the appellants on the ground of delay since this appeal requires
to be heard on merit. There is no qualm on the fact that there has been a
delay of 9 months in filing the Review Petition. The appellants contended
that the delay was due to unavoidable government procedure involved.

27. It has been held by this Court in the case of G. Ramegowda, Major and
Ors. v. Special Land Acquisition Officer, Bangalore[1] that:

“15. In litigations to which Government is a party there is yet
another aspect which, perhaps, cannot be ignored. If appeals
brought by Government are lost for such defaults, no person is
individually affected; but what, in the ultimate analysis, suffers
is public interest. The decisions of Government are collective and
institutional decisions and do not share the characteristics of
decisions of private individuals.

 
XXX XXX XXX

 
17. Therefore, in assessing what, in a particular case, constitutes
“sufficient cause” for purposes of Section 5, it might, perhaps, be
somewhat unrealistic to exclude from the considerations that go
into the judicial verdict, these factors which are peculiar to and
characteristic of the functioning of the government. Governmental
decisions are proverbially slow encumbered, as they are, by a
considerable degree of procedural red tape in the process of their
making.”

 
Therefore, regarding the matter of delay in this case, we are inclined to
observe that the malfunctioning of the State Government regarding the
unpardonable lackadaisical attitude towards pursuing matter in the court of
law cannot be the reason for loss of public property, which involves public
money and causes loss to the public exchequer. Therefore, we feel that it
is a fit case to exercise our discretionary power to condone the delay in
filing the writ appeal in the interest of public at large as the High Court
has failed to do so. We therefore, condone the delay in filing the Review
Petition by the appellants before the High Court in the larger interest of
public. However, this case should not set a precedent to justify inordinate
delays on the part of the State Government to file appeals or any other
legal proceedings required to be filed within the period of limitation
prescribed in law.

28. The only legal issue before us for our consideration is therefore,
whether the appellants lawfully cancelled the tender process in relation to
the property in question in view of the discrepancies crept in the process
of transfer of the land in favour of the respondent.

29. It is an undisputed fact that in the present times consideration of
Rs.1.11 crores for 9000 bighas of land does not reflect the correct market
value prevalent at the relevant point of time and not even to the civil
valuer’s report without either factual or legal basis. As per the report of
the Joint Registrar of Co-operative Societies dated 31.02.2006, the updated
registered value of the concerned tea garden stands at Rs.4,24,72,124/- as
opined by Sri. M.P. Gindora, Tea Consultant and Registered Valuer. This
report however, carried a qualifier along with it. It is stated in the
report on the assumption that it is hardly expected that any party will
come forward to purchase an existing tea garden with huge encroachment. As
per the facts put on record, the total area of the estate is 1247.29
Hectares out of which 70% is encroached. However, this alone cannot be a
ground for the Joint Registrar of Co-operative Societies to opine that it
would not fetch the value of the property as indicated by the valuer in the
report. Therefore, there was no justification for the appellants to sell
the property at an extremely low price without any effort of issuing
eviction notice to the alleged encroachers to evict them by following the
due process of law. There will not be any impediment for the appellants to
evict trespassers from the land in question without considering the above
relevant aspects of the case. The High Court granted the relief in favour
of the respondent in its writ petition by quashing the order of cancelling
the tender process by the officer of the appellant No. 1 and further
directing the appellants to execute the sale deed accepting the offer of
the respondent.

30. Further, according to the material placed on record, the land concerned
involves significant amount of public money. Therefore, its transfer in
favour of the respondent attracts the greatest amount of responsibility and
caution. The competent valuer had already determined the registered value
of land at Rs.4,24,72,124/-. Therefore, it was the responsibility of
the concerned authority to ensure all steps which should have been
undertaken to sell the land at a minimum cost of Rs.4,24,72,124/- or above
instead of its attempt to sell the same at a lower price merely on the
pretext that no one would come up to purchase the land at the valuer’s
price or that since the land is an encroached land, the lower price is
justified cannot be accepted. The strong reliance placed by the learned
senior counsel, Mr. Mehta on the report of the Joint Registrar of Co-
operative Societies, is the basis for the High Court for grant of relief in
favour of the respondent is wholly untenable in law and therefore, the same
cannot be accepted by this Court. The High Court should have noticed the
above relevant aspects of the case in passing the impugned order which
would certainly affect the public interest.

31. With regard to the procedure to be followed while selling the property,
this Court, in the case of Mahesh Chandra v. Regl. Manager, U.P.F.C.[2],
has held :-

“15. …..  Every wide power, the exercise of which has far reaching
repercussion, has inherent limitation on it. It should be
exercised to effectuate the purpose of the Act. In legislations
enacted for general benefit and common good the responsibility is
far graver. It demands purposeful approach. The exercise of
discretion should be objective. Test of reasonableness is more
strict. The public functionaries should be duty conscious rather
than power charged. Its actions and decisions which touch the
common man have to be tested on the touchstone of fairness and
justice. That which is not fair and just is unreasonable. And
what is unreasonable is arbitrary. An arbitrary action is ultra
vires. It does not become bona fide and in good faith merely
because no personal gain or benefit to the person exercising
discretion should be established. An action is mala fide if it is
contrary to the purpose for which it was authorised to be
exercised. Dishonesty in discharge of duty vitiates the action
without anything more. An action is bad even without proof of
motive of dishonesty, if the authority is found to have acted
contrary to reason.……..
16. ……It saddles the Corporation or the officer concerned with
inbuilt duties, responsibilities and obligations towards the
debtor in dealing with the property and entails him to act as a
prudent and reasonable man standing in the shoes of the owner.
According to Prof. Issac, a noted author on Trusts, trusteeship
has become a readily available tool for everyday purpose of
organisation financing, risk shifting, credit operations, settling
disputes and liquidation of business affairs. Maitland, the other
renowned writer on Equity, observed that one of the exploits of
equity; the largest and the most important, is the innovation and
development of the trust. Thus, trust has been and is being
applied for all purposes mentioned by Prof. Issac and many others
as device to accomplish different purposes. Trusteeship is an
institution of elasticity and generality. The broad base of the
concept of property or its management vested in one person and
obligation imposed for its enjoyment by others is accepted in
Hindu jurisprudence. Therefore, when the property of the debtor
stands transferred to the Corporation for management or possession
thereof which includes right to sell or further mortgage etc., the
Corporation or its officers or employees stands in the shoes of
the debtor as trustee and the property caste que trust. In N.
Swyanarayan Iyer’s Indian Trust Act, Third Edition, 1987 at page
275 in Section 37 it is stated that, “Where the trustee is
empowered to sell any trust property…by public auction or
private contract and either at one time or at several times…”
the duty of trustee is to obtain the best price. He should,
therefore, use reasonable diligence in inviting competition to
that end. Where a contract of sale has been entered into bona fide
by a trustee the court will not allow it to be rescinded or
invalidated because another purchaser conies forward with a higher
price. It would, however, be improper for the trustee to contract
in circumstances of haste and improvidence. Where in a trust for
sale and payment of creditors the trustee sold at a gross under
valuation showing a preference to one of the creditors, he was
held guilty, of breach of trust. If the purchaser is privy of the
fraud the property itself can be recovered from him.”
17. The sale may be either by public auction or private contract.
In either case the trustee has to keep in mind that he must obtain
the most advantageous price. Kerr on Receivers 17th Edition, at
page 208 stated that “a receiver, however, is not expected any
more than a trustee or an executor to take more care of their
property entrusted

 
to him than he would have as a reasonably prudent man of
business”. In Halsbury’s Law of England, 4th Edition, Vol. 39, at
para 919 it is stated that the “receiver will be compelled to show
that he has acted with perfect regularity and has used such degree
of prudence as would be expected from a private individual in
relation to his own affairs”. The trustee or a receiver is,
therefore, duty bound to protect and preserve the property in his
possession and the standard of conduct expected of him, in dealing
with the property or sale thereof, is as a prudent owner would
exercise in dealing with his own property or estate. The degree of
care expected of him in handling property taken possession of is
measured by the degree of care expected of a person acting as
trustee, executors or assignees. The object and endeavour should
also be to secure maximum advantage or price in a sale of the
property in lots or as whole, as exigencies warrant.”

 

 

Though, this case was subsequently overruled by this Court by a three judge
bench decision in the case of Haryana Financial Corporation and Anr. v.
Jagdamba Oil Mills and Anr.[3] on the point of guiding principles laid
down to sell mortgaged property by the Financial Corporation under Section
29 of the State Financial Corporations Act, 1951 (in short ‘SFC Act’).
However, keeping in view the facts and circumstances of that case and as
per Section 29 of the SFC Act, the guidelines laid down in the case of
Mahesh Chandra were found fault with to sell the property mortgaged with
Financial Corporations. However, the principle of Public Trust Doctrine
referred to in Mahesh Chandra’s case (supra) shall be applied to fact
situation at hand as the public interest has adversely affected in this
case. Notwithstanding the aforesaid decision in Jagdamba Oil Mills’s case
(supra) in overruling guidelines laid down in Mahesh Chandra’s case keeping
in view the reasonableness and fairness in action shall be adhered by the
state and its instrumentalities is the ratio laid down by this court to
pass the test of Article 14 reiterated after referring to three Judge Bench
decisions in case of Ramana Dayaram Shetty v.
International Airport Authority of India & Ors.[4] M/s Kasturi Lal Lakshmi
Reddy & Ors. v. State of Jammu and Kashmir & Anr.[5] and other catena of
cases which were mentioned in the case of Akhil Bhartiya Upbhokta Congress
v. State of Madhya Pradesh & Ors.[6] are aptly applicable to the fact
situation of the case on hand.

32. Therefore, in the light of the legal principle laid down by this Court
with regard to Public Trust Doctrine in Mahesh Chandra’s case (supra) and
the cases mentioned supra, we are inclined to observe that the liquidator
did not act fairly and reasonably in the best interest of the public of the
State whose interest he is required to uphold. As per the material evidence
put on record, the liquidator and the concerned authority did not take any
step to improve the condition of the land and sell it at reasonable and
standard price prevalent at the time of sale of the property in question.

33. Hence, we hold that the tender process initiated by the appellants is
not legal and is liable to be set aside. We direct the concerned authority
to issue fresh notice of tender for selling the land. The notice shall be
made available in government websites and other local and national
newspapers so as to encourage and invite more bidders. In the meanwhile,
the authority shall take all necessary steps to improve and restore the
condition of the land so as to make the purchase of the land free from
legal encumbrances.

34. Since, the respondent had paid up the entire bid amount, it is entitled
to refund of the entire amount. Further, since it is also proved that the
amount paid by the respondent has been used to pay the arrears, the
respondent is entitled to interest for the amount paid @7% p.a. from the
date of payment till the date of refund.

35. Accordingly, we set aside the order dated 2.2.2012 passed by the High
Court of Guwahati in M.C. No.5 of 2012 in Writ Appeal Sl. No.168339 of 2011
after condoning the delay and consequently we allow the writ appeal by
allowing this Civil Appeal.
………………………………………………………………………J.
[GYAN SUDHA MISRA]

 

 

………………………………………………………………………J.
[V. GOPALA GOWDA]
New Delhi,
April 23, 2014.
———————–
[1] (1988) 2 SCC 142

[2] (1993) 2 SCC 279

[3] (2002) 3 SCC 496

[4] (1979) 3 SCC 489
[5] (1980) 4 SCC 1
[6] (2011) 5 SCC 29
———————–
25

 

 

 

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