Supreme Court of India
M/S AL-CAN EXPORT PVT. LTD.versusPRESTIGE H.M. POLYCONTAINERS LTD. & ORS.
- Citation
- 2024 INSC 500
- Decided
- 9 July 2024
- Disposal
- Case Partly allowed
- Bench
- B PARDIWALA
Holding
Order XXI Rule 90 CPC does not govern writ petitions under Article 226, and the Additional Commissioner was duly empowered under Section 247 to hear the appeals, while the auction was illegal but the appellant may retain possession upon depositing Rs 4 crore.
Summary
The case concerned an auction of land owned by Prestige H.M. Polycontainers Ltd., which was mortgaged to a bank and later assigned to ARCIL. The Tahsildar conducted the auction without observing the mandatory 30‑day notice period and issued the sale certificate and possession to the appellant, Al‑Can Export Pvt. Ltd., before the sale was confirmed, violating sections 194, 212 and 208 of the Maharashtra Land Revenue Code. The appellant challenged the legality of the auction and the jurisdiction of the Additional Commissioner to hear appeals under section 247, while the respondents argued that Order XXI Rule 90 of the CPC applied to the writ petition and that the Additional Commissioner lacked jurisdiction. The Supreme Court held that Order XXI Rule 90 does not apply to writ proceedings under Article 226, that the Additional Commissioner was competent to entertain the appeals, and that the auction was illegal but, to avoid undue hardship to the appellant’s industrial unit, allowed the appeals in part subject to a deposit of Rs 4 crore. The court directed the appellant to pay the amount within six months or face fresh auction of the property.
Issues considered
- Whether Order XXI Rule 90 of the Code of Civil Procedure applies to writ proceedings under Article 226 of the Constitution.
- Whether the Additional Commissioner, Konkan Division, Maharashtra had jurisdiction to decide the appeals filed by the respondents under Section 247 of the Maharashtra Land Revenue Code, 1966.
- Whether the auction conducted by the Tahsildar complied with the mandatory provisions of the Maharashtra Land Revenue Code, particularly sections 194, 212 and 208.
Legislation cited
- Code of Civil Procedure, 1908s. 141, s. 9, s. Order XXI Rule 90
- Code of Civil Procedure (Amendment) Act, 1976
- Constitution of Indias. Article 226
- Maharashtra Land Revenue Code, 1966s. 194, s. 195, s. 208, s. 210, s. 212, s. 247
- Maharashtra Realisation of Land Revenue Rules, 1967
- Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
Subjects
Auction proceedings conducted by the TahsildarProvisions of Order XXI r.90 CPCWrit proceedings u/Art.226Auction saleSale certificateIllegality and irregularityJurisdiction of the Additional CommissionerRole of public authoritiesAmenability to judicial reviewHuman values and ethics in public functionariesTest of fairness and justiceAccountabilityPublic efficiency
Judgment
[2024] 7 S.C.R. 474 : 2024 INSC 500
M/s Al-Can Export Pvt. Ltd.
v.
Prestige H.M. Polycontainers Ltd. & Ors.
(Civil Appeal No. 7254 of 2024)
09 July 2024
[J. B. Pardiwala* and Manoj Misra, JJ.]
Issue for Consideration
Matter pertains to the legality, validity and propriety of the auction
proceedings conducted by the Tahsildar of the subject property,
originally owned by the respondent No. 1; whether the provisions of
Order XXI r. 90 CPC would apply to the writ proceedings u/Art. 226
of the Constitution; and whether the Additional Commissioner, had
the jurisdiction to decide the two appeals filed by the respondent
nos. 1 and 6 respectively u/s. 247 of the Maharashtra Land
Revenue Code, 1966.
Headnotes†
Maharashtra Land Revenue Code, 1966 – ss. 194, 195, 212 –
Auction sale – Matter pertaining to auction proceedings
conducted by the Tahsildar of the subject property originally
owned by the respondent No. 1 – Respondent no. 1 mortgaged
its property in favour of the Bank and obtained loan – Bank
assigned the debts due and payable to it in favour of the
respondent no. 6 – Respondent no. 1 was in arrears of land
revenue and despite issuance of demand notices failed to make
the payment and as such the property owned by him was put
to auction under the provisions of the Land Revenue Code –
Appellant declared the successful bidder and sale certificate
issued by the Additional Collector in his favour – Legality,
validity and propriety of the auction proceedings conducted
by Tahsildar of the subject property originally owned by the
respondent No. 1:
Held: There was gross violation of the mandatory provisions of
the Revenue Code as regards the conduct of the auction sale –
Sale of the property took place before the expiry of the mandatory
30 days’ notice, thus, the sale was conducted in breach of the
provisions of s. 194 – Sale certificate was issued on the same day,
* Author
[2024] 7 S.C.R. 475
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
i.e., on the date of the auction itself, much before the confirmation
of sale by the Additional Collector, thus, the sale was conducted
in breach of the provisions of s. 212 – Appellant-purchaser was
put in possession of the property much before the sale came to
be confirmed and that too prior to the cheque being realised, thus,
breach of the provisions of ss. 212 and 208 respectively – Undue
haste was exhibited by the Tahsildar in completing the sale in
favour of the appellant – Tahsildar supressing an important fact
before the Additional Collector as regards the objections received
by him from IFCI itself indicates that there was some collusion
between the Tahsildar and the appellant – Said lapses, cannot be
termed as irregularity – Various illegalities were committed even
in confirming the sale – If all the illegalities taken note of were to
be condoned or overlooked, applying the provisions of Ord. XXI
r. 90 CPC, the same would result in nothing but gross travesty of
justice – No interference warranted with the impugned judgment
of the High Court – Having taken the view that the High Court
committed no error, much less any error of law, the appeals could
have been dismissed – However, the appellant having running an
oxygen cylinder manufacturing plant on the suit property, for almost
15 years after investing a huge amount wherein 200 employees
are working, it is fit to give one opportunity to the appellant to
save its industrial unit set up on the subject land – Appellant to
deposit a sum of Rupees Four Crore Only with the respondent
no. 6 towards full and final settlement of all liabilities – In case
of the failure to deposit the amount, the competent authorities to
take over the possession of the entire unit with the land and put
the same once again for sale by way of fresh auction process.
[Paras 56-64, 66-67, 75-78]
Code of Civil Procedure, 1908 – Ord. XXI r. 90, ss. 141 and
9 – Constitution of India – Art. 226 – Ordinary civil jurisdiction
and extraordinary original jurisdiction – Applicability of the
provisions of Ord. XXI r. 90 to writ proceedings u/Art. 226:
Held: Provisions of the CPC do not apply to writ petitions u/Art. 226
except some of the principles enshrined therein like res judicata,
delay and laches, addition of parties, matters which have not been
specifically dealt with by the writ rules framed by the respective
High Court – As a court of plenary jurisdiction, the writ court while
exercising powers u/Art. 226 is free to adopt its own procedures
and follow them – It cannot be compelled to follow the procedures
476 [2024] 7 S.C.R.
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prescribed in the CPC – This is so for the specific provision made
in its s. 141 explanation – High Court while exercising jurisdiction
u/Art. 226 has jurisdiction to pass appropriate orders – Such power
can neither be controlled nor affected by the provisions of Ord. XXI
r. 90 – It would not be correct to say that the terms of Ord. XXI r.
90 should be mandatorily complied with while exercising jurisdiction
under Article 226 – Proceedings u/Art. 226 stand on a different
footing when compared to the proceedings in suits or appeals
arising therefrom – High Court exercises its writ jurisdiction u/Art.
226, whereas the Civil Courts exercise their jurisdiction in terms
of the provisions of the respective State Civil Courts Acts read
with s. 9 CPC – High Court exercises constitutional function, the
Civil Court exercises a statutory function – High Court exercises a
wide power u/Art. 226 and in a given situation, it can even mould
the reliefs in order to do substantial justice between the parties.
[Paras 39, 48-50]
Code of Civil Procedure, 1908 – Ord. XXI r. 90 – Auction sale
conducted by the State through its authorities – Legality, validity
and propriety of – Auction sale challenged on the ground of
mala fides, undue favour for extraneous considerations and
gross violation of the mandatory provisions of law – Principles
enshrined in Ord. XXI r. 90 CPC, if applicable:
Held: It would be hazardous to apply the principles enshrined in Ord.
XXI r. 90 CPC – Human values and ethics in public functionaries
have degraded to a considerable extent – Corruption is on a
rampage – Having regard to the same and in order to protect
and uphold the rule of law, the courts have a duty to ensure that
the State authorities have conducted public auctions in a fair
and transparent manner and have not done anything by which
public exchequer has suffered – It would be too much to say that
although the writ court may find auction sale conducted by a public
functionary to be in gross violation of the mandatory provisions of
law and the action of such public functionary to be arbitrary, yet
the aggrieved party complaining about the same should be told
to establish the dual conditions stipulated in Ord.XXI r.90 CPC –
First and the foremost aspect that the writ court should look into
is fairness and transparency on the part of the State in conducting
the auction sale so as to be in conformity with Art.14 – Once the
action of the State is found to be unfair and arbitrary, then that is
end of the matter for the writ court. [Para 55]
[2024] 7 S.C.R. 477
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
Maharashtra Land Revenue Code, 1966 – s. 247 – Appeal and
appellate authorities – Matter pertaining to auction proceedings
conducted by the Tahsildar of the subject property originally
owned by the respondent No. 1 – Respondent no. 1 mortgaged
its property in favour of the Bank and obtained loan – Bank
assigned the debts due and payable to it in favour of the
respondent no. 6 – Respondent no. 1 was in arrears of land
revenue and despite issuance of demand notices failed to make
the payment and as such the property owned by the respondent
no. 1 put to auction under the provisions of the Land Revenue
Code and the appellant was declared the successful bidder
and sale certificate issued by the Additional Collector in his
favour – Appeals filed by the original owner and respondent
no. 6 u/s. 247 – Jurisdiction of the Additional Commissioner
to decide the appeals – Plea of the appellant that the appeals
before the Additional Commissioner u/s. 247 not maintainable
as there was remedy available u/s. 210 of the Code:
Held: Under s. 210, an application before the Collector to get the
Sale set aside has to be made within a period of 30 days and it
is after considering the objections the sale is to be confirmed –
Remedy u/s. 210 rendered illusory as the sale was finalised by
the Tahsildar much before the confirmation by the Collector – In
fact, the sale certificate was issued and the possession was also
handed over to the appellant – Confirmation was done by the
Tahsildar much before the expiry of 30 days – There was nothing
left for the Collector to consider and decide u/s. 210 of the Revenue
Code – Once the sale certificate is issued, then the remedy falls
u/s. 247 instead of s. 210 of the Revenue Code – Furthermore, s.
210 may be applicable in case of owner of the property but not to
a lender who has valid subsisting mortgage – Respondent No. 6
does not fall within the category as provided u/s. 210(1) nor has
the respondent No. 6 claimed to be the owner of the property or
has an interest in the property by virtue of the “title acquired” –
Assuming that the Additional Commissioner had no jurisdiction
to adjudicate and decide the two appeals filed by the respondent
No. 1 and respondent No. 6 respectively, yet the common order
passed by the Additional Commissioner allowing the appeals and
remanding the matter back to the authority concerned could not
have been disturbed and the High Court rightly did not disturb
the same – Had the High Court taken the view that the Additional
Commissioner had no jurisdiction and the order passed by it was
478 [2024] 7 S.C.R.
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a nullity, the result would have been the revival of the illegal order
passed by the Additional Collector confirming the sale – Moreso,
the writ court should not quash the order if it revives a wrong or
illegal order. [Paras 69-74]
Auction – Auction sale – Conduct of, by the court in the
execution proceedings initiated by the decree holder under the
provisions of the CPC, and by the State through its revenue
authorities like Tahsildar, etc. under the provisions of different
enactments like Land Revenue Code etc. – Difference between:
Held: There is a fine distinction between the two – Whole object
behind Ord. XXI r. 90 CPC appears to be to discourage the
judgment debtors from filing frivolous application complaining
about the irregularity or fraud in the conduct of the auction sale
– Lot of sanctity is attached to the auction sale conducted by the
executing court under the provisions of the CPC compared to
the auction sale conducted by the State through its authorities –
Execution is the enforcement by the process of the court of its
orders and decrees – This is in furtherance of the inherent power
of the court to carry out its orders or decrees – Order XXI CPC
deals with the elaborate procedure pertaining to the execution of
orders and decrees – Sale is one of the methods employed for
execution – r. 89 of Ord. XXI CPC is the only means by which
a judgment-debtor can escape from a sale that has been validly
carried out – Object of the rule is to provide a last opportunity to
put an end to the dispute at the instance of the judgment debtor
before the sale is confirmed by the court and also to save his
property from dispossession. [Para 38]
Code of Civil Procedure, 1908 – Ord. XXI r. 90 – Nature and
scope of:
Held: R. 90 of Ord. XXI deals with cases of setting aside auction-
sale on the ground of material irregularity or fraud in publishing or
conducting such sale and the applicant proves substantial injury by
reason of such irregularity or fraud – Explanation to r. 90 clarifies
that mere absence of or defect in, attachment of property sold
would be no ground for setting aside sale – Ord. XXI is exhaustive
and in the nature of a complete code as to how the execution
proceedings should take place – This is the second stage after
the success of the party in the civil proceedings – Another legal
battle, more prolonged, starts in execution proceedings defeating
the right of the party which has succeeded in establishing its
[2024] 7 S.C.R. 479
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
claim in civil proceedings – This is the reason why Ord. XXI r. 90
provides that both the conditions enumerated therein should be
fulfilled. [Paras 36, 37]
Public functionaries – Role of – Conduct of auction sale –
Requirement of fairness and non-arbitrariness by the State:
Held: State action must be informed by reason and the action
uninformed by reason is per se arbitrary – Basic requirement of
Art. 14 is fairness in action by the State and non-arbitrariness in
essence and substance is the heartbeat of fair play – These actions
are amenable to the judicial review not only to the extent that the
State must act validly for a discernible reason and not whimsically
for any ulterior purpose – Public authorities are governed by the
“rule of law” – Such authorities are constitutionally obliged in
law to maintain absolute fairness and transparency during the
conduct of the auction sale right from the initiation of the same
till its completion – Judicial audit and scrutiny play a key role in
ensuring that the public authorities do not act in an unreasonable
manner. [Para 55]
Public functionaries – Public efficiency – Maintenance of
balance between accountability and autonomy of action – Test
of justness, fairness, reasonableness:
Held: Accountability is an impediment to efficient discharge of the
duty – There is a distinction between prying into details of day-
to-day administration and of the legitimate actions or resultant
consequences thereof – To enthuse efficiency into administration, a
balance between accountability and autonomy of action should be
carefully maintained – Over-emphasis on either would impinge upon
public efficiency – But undermining the accountability would give
immunity or carte blanche power to deal with the public property
or of the debtor at whim or vagary – Whether the public authority
acted bona fide would be gauged from the impugned action and
attending circumstances – Authority should justify the action
assailed on the touchstone of justness, fairness, reasonableness
and as a reasonable prudent owner – Test of reasonableness is
stricter – 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
480 [2024] 7 S.C.R.
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personal gain or benefit to the person exercising discretion has
been 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. [Para 67]
Words and phrases – Illegality and irregularity – Distinction
between :
Held: Once it is evident that the mandatory provisions as stipulated
under the rules and regulations are not followed or abridged, any
action pursuant to the same could be termed as gross illegality –
There is a fine distinction between illegality and irregularity –
Whereas the former goes to the root of the matter and renders
the action null and void, of no effect whatsoever, the latter does
not ipso facto invalidate the action, unless prejudice is caused to
the person making a complaint. [Para 64]
Case Law Cited
Chilamkurti Bala Subrahmanyam v. Samanthapudi Vijaya Lakshmi
and Another [2017] 3 SCR 826 : (2017) 6 SCC 770; Mahesh
Chandra v. Regional Manager, U.P. Financial Corporation & Ors
[1992] 1 SCR 616 : (1993) 2 SCC 279; M/s Jagan Singh & Co. v.
Ludhiana Improvement Trust & Ors. [2022] 14 SCR 747 : (2024)
3 SCC 308 – relied on.
Mathew Varghese v. M. Amritha Kumar [2014] 2 SCR 736 :
[2014] 5 SCC 610; Saheb Khan v. Mohd. Yousufuddin (2006) 4
SCC 476; Dhirendra Nath Gorai v. Sudhir Chandra Ghosh [1964]
6 SCR 1001 : AIR 1964 SC 1300; Jaswantlal Natvarlal Thakkar
v. Sushilaben Manilal Dangarwala (1991) Supp 2 SCC 691;
Kadiyala Rama Rao v. Gutala Kahna Rao [2000] 1 SCR 1045 :
(2000) 3 SCC 87; State of U.P. v. Vijay Anand [1963] 1 SCR 1:
IR 1963 SC 946; Babubhai Muljibhai Patel v. Nandlal Khodidas
Barot [1975] 2 SCR 71 : (1974) 2 SCC 706; Puran Singh & Ors.
v. State of Punjab & Ors. [1996] 1 SCR 730:(1996) 2 SCC 205;
Tata Cellular v. Union of India [1994] Supp. 2 SCR 122 : (1994)
6 SCC 651; Jagdish Mandal v. State of Orissa and Others [2006]
10 Suppl. SCR 606 : (2007) 14 SCC 517; State of Punjab &
Others v. Mehar Din (2022) 5 SCC 648; Ashutosh v. Behari Lal
(1908) 35 Cal 61; Gadde Venkateswara Rao v. Government of
[2024] 7 S.C.R. 481
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
Andhra Pradesh AIR 1966 SC 828; Maharaja Chintamani Saran
Nath Shahdeo v. State of Bihar [1999] Supp. 3 SCR 518 : (1999)
8 SCC 16 : AIR 1999 SC 3609 : 1999 AIR SCW 3623; M.C.
Mehta v. Union of India [1999] 3) SCR 1173 : (1999) 6 SCC 237:
AIR 1999 SC 2583; Mallikarjuna Mudhagal Nagappa v. State of
Karnataka [2000] Supp. 3 SCR 102 : (2000) 7 SCC 238: AIR
2000 SC 2976 : 2000 AIR SCW 3289; and Chandra Singh v. State
of Rajasthan [2003] Supp. 1 SCR 674 : (2003) 6 SCC 545 : AIR
2003 SC 2889 : 2003 AIR SCW 3518; Raj Kumar Soni v. State
of U.P. [2007] 4 SCR 733 : (2007) 10 SCC 635 – referred to.
Holmes v. Russel (1841) 9 Dowl 487 – referred to
List of Acts
Maharashtra Land Revenue Code, 1966; Securitisation and
Reconstruction of Financial Assets and Enforcement Of Security
Interest Act, 2002; Maharashtra Realisation of Land Revenue Rules,
1967; Code of Civil Procedure (Amendment) Act, 1976; Code of
Civil Procedure, 1908; Constitution of India.
List of Keywords
Auction proceedings conducted by the Tahsildar; Provisions of Order
XXI r. 90 CPC; Writ proceedings u/Art. 226; Auction sale; Sale
certificate; Illegality and irregularity; Jurisdiction of the Additional
Commissioner; Role of public authorities; Amenability to judicial
review; Judicial audit and scrutiny; Human values and ethics in
public functionaries; Test of fairness and justice; Accountability;
Public efficiency.
Case Arising From
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7254 of 2024
From the Judgment and Order dated 09.12.2015 of the High Court
of Judicature at Bombay in WP No. 415 of 2011
With
Civil Appeal No. 7255 of 2024
Appearances for Parties
P.S. Patwalia, Sr. Adv., Abhay Kumar, Janak R. Shah, Shagun Ruhil,
Advs. for the Appellant.
482 [2024] 7 S.C.R.
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K.M. Nataraj, A.S.G., Amar Dave, Sr. Adv., Sachin Patil, Siddharth
Dharmadhikari, Aaditya Aniruddha Pande, Bharat Bagla, Sourav
Singh, Aditya Krishna, Ms. Preet S. Phanse, Adarsh Dubey, Geo
Joseph, Durgesh Gupta, Risvi Muhammed, Mukesh Kumar Maroria,
Adit Khorana, Ms. Nisha Bagchi, Shailesh Madiyal, T.S. Sabarish,
Ishaan Sharma, B.K. Satija, Ms. Amrita Narayan, Mohit D. Ram,
Ashwin Rakesh, Anubhav Sharma, Madhav Sharma, Advs. for the
Respondents.
Judgment / Order of the Supreme Court
Judgment
J. B. Pardiwala, J.
For the convenience of exposition, this judgment is divided into the
following parts:
INDEX*
A. FACTUAL MATRIX 3
B. SUBMISSIONS ON BEHALF OF THE APPELLANT 13
C. SUBMISSIONS ON BEHALF OF THE RESPONDENT 16
NO. 6/Asset Reconstruction Co. (India) Ltd. (ARCIL)
D. ISSUES FOR DETERMINATION 21
E. RELEVANT STATUTORY PROVISIONS OF THE 21
REVENUE CODE
F. ANALYSIS 26
i. Whether the provisions of Order XXI Rule 90 26
of the Code of Civil Procedure would apply to
the writ proceedings under Article 226 of the
Constitution?
a. Difference between the auction sale conducted 36
by the court in the execution proceedings
initiated by the decree holder and the auction
proceedings conducted by the State through its
revenue authorities like Tahsildar, etc.
* Ed. Note: Pagination as per the original Judgment.
[2024] 7 S.C.R. 483
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
ii. Whether the Additional Commissioner, Konkan 52
Division, Maharashtra had the jurisdiction to
decide the two appeals filed by the respondent
nos. 1 and 6 respectively under Section 247 of
the Maharashtra Land Revenue Code, 1966?
G. CONCLUSION 55
1. Leave granted.
2. Since the issues raised in both the captioned appeals are the same;
the subject-matter also being the same; the parties are also same and
the challenge is also to the self-same judgment and order passed by
the High Court, those were taken up for hearing analogously and are
being disposed of by this common judgment and order.
3. The captioned appeals arise from the common judgment and order
passed by the High Court of Judicature at Bombay dated 9.12.2015
in Writ Petition (C) No. 415 of 2011 with Writ Petition (C) No. 418 of
2011 respectively filed by the appellant herein by which the High Court
rejected both the writ petitions and thereby affirmed the common order
dated 18.02.2010 passed by the Additional Commissioner, Konkan
Division, Mumbai setting aside the order of sale passed by the Tahsildar,
Talasari dated 3.12.2008 as affirmed by the Additional Collector, Thane
dated 15.01.2009 passed in favour of the appellant herein.
4. The subject-matter of the present litigation relates to the legality, validity
and propriety of the auction proceedings conducted by the Tahsildar,
Talasari of the subject property which was originally owned by the
respondent No. 1 herein, namely, Prestige H.M. Polycontainers Limited.
5. The subject property owned by the respondent no. 1 herein was put
to auction under the provisions of the Maharashtra Land Revenue
Code, 1966 (hereinafter referred to as “the Revenue Code”). In the
said auction proceedings, the appellant herein was declared as the
successful bidder and ultimately, sale certificate was issued by the
Additional Collector, Thane in favour of the appellant.
A. FACTUAL MATRIX
6. This litigation has a chequered history and therefore, it is necessary
for this Court to look into the events that occurred over a period of
time giving rise to the present two appeals before us:
484 [2024] 7 S.C.R.
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a. The respondent no. 1, M/s Prestige H.M. Polycontainers,
executed necessary loan and security documents in favour
of the State Bank of India thereby mortgaging its property
situated at Village Vadavali, Taluka Talsari, District Thane (Now
District Palaghar), Maharashtra (hereinafter referred to as “the
property”) bearing Survey No. 87/11, admeasuring 13,978 sq.
mts. Subsequently, the State Bank of India by an assignment
agreement assigned the debts due and payable to it in favour
of the respondent no. 6, Asset Reconstruction Company (India)
Ltd. (hereinafter referred to as “ARCIL”) under the provisions
of The Securitisation and Reconstruction of Financial Assets
and Enforcement Of Security Interest Act, 2002 (hereinafter
referred to as the “SARFAESI Act, 2002”).
It is the case of the respondent no. 6 that accordingly it became
legally entitled to recover the debt due and payable from the
respondent no. 1 by way of the sale of the property subject to
the pre-existing mortgage in favour of the respondent no. 6.
b. Two demand notices dated 15.10.2007 and 20.11.2007
respectively of Rs. 29,52,000/- were issued as per Form No.
1 under Section 178 of the Revenue Code and Rule 5(1) of
the Maharashtra Realisation of Land Revenue Rules, 1967
(hereinafter referred to as “the Rules”) to the respondent no.1
by the office of the Tahsildar.
The notices were pasted on the main door of the respondent
no. 1 and also on the office board of the Gram panchayat.
c. The Office of the Circle Officer, Talasari issued a letter dated
27.11.2007 to the Tahsildar, Talasari stating that the demand
notices were sent to the respondent no. 1 as it was in arrears
of land revenue to the tune of Rs. 29,52,000/-. It also noted
that since the company was closed, the notices were affixed
on the gate of respondent no. 1 in the presence of panchas.
d. The respondent no. 4 issued a letter dated 14.08.2008 addressed
to the government certified valuer, Mr. Dilip Sahani of the M/s
Trimurti Industrial Engineering Services, with a request to
calculate the upset price of the property for the purpose of
recovery of the arrears of land revenue, as the respondent no.
1 had failed to make the payment towards penalty.
[2024] 7 S.C.R. 485
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
e. The respondent no. 4 thereafter issued a letter dated 18.08.2008
addressed to the Circle Officer, Talasari informing him about
the facts of the case and requesting him to seize and seal the
premises of the respondent no. 1.
f. The respondent No. 4 also issued a letter dated 21.08.2008
addressed to the Police Inspector, Talasari apprising him of
the necessary facts of the case and further informing that they
would undertake the necessary exercise of determining the
valuation of the property. In view thereof, the respondent no.
4 requested him to provide one police guard.
g. The valuation report of the property dated 21.08.2008 was
issued by Mr. G.W. Sahani of M/s Trimurthi Industrial Engineering
Services with a disposal value of Rs. 69,00,000/- and Distressed
Value of Rs. 51,75,000/-
h. Although it is the case of the respondent No. 4 that the Director
of Respondent No. 1, viz. Mr. P.K. Gupta had issued a No-
Objection Certificate dated 20.10.2008 for conducting the
auction sale of the property, yet the said fact was outrightly
denied by Mr. P.K. Gupta in proceedings before the Additional
Commissioner and the High Court.
i. On 20.10.2008, respondent no. 4 issued a letter to the Sub-
Divisional Officer, Dahanu division, informing him of the valuation
of the property at Rs. 51,75,000/- and requesting him to fix the
upset price.
j. On 07.11.2008, the respondent no. 4 issued a letter to the Sub
Divisional Officer, Dahanu Division stating that No-Objection
Certificate had been received from the Director Mr. P.K. Gupta
of the respondent no. 1 for the auction of the Property.
k. On 17.11.2008, the Sub-Divisional Officer, Dahanu Division
approved the price of the land at Rs. 54,33,750 being a total of
Rs. 51,75,000 (which had been fixed by M/s Trimurti Industries
Eng. Services, Mumbai) + 2,58,750 (+5%) under Rule 13 of
the Rules.
l. Notice dated 18.11.2008 came to be published by the respondent
no. 4 in the newspaper viz. Dahanu Times for public auction
furnishing details of the suit property with the upset price, auction
486 [2024] 7 S.C.R.
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date and time.The notice specified that if the dues towards the
arrears of revenue would not be cleared on or before 03.12.2008,
the Property, free from encumbrances would be put to auction
at the Tahsildar’s office.
m. The Board Officer, Talasari issued a letter dated 19.11.2008 to
the respondent No. 4 informing that they had pasted the copy
of the notice on the gate of the property of the respondent no.
1 as per Namuna 5, Rule 12(2)A of the Rules.
n. Respondent no. 4 issued a letter dated 20.11.2008 to the
Assistant Director, Director of Enforcement requesting to keep
one representative present on their behalf on 03.12.2008 at
11 AM.
o. On 21.11.2008, respondent no. 4 issued a letter addressed to
the Collector, Thane; Additional Collector, Thane H.Q. Jawar;
Sub-Divisional Officer, Dahanu Division; Group Development
Officer, Talsari; Gram Panchayat Vadavli-Bhavane and Talathi
Saja, Vadavli requesting them to display the public notice on
their office notice boards and to provide a publicity report
regarding the public advertisement of the immovable and
movable properties of the respondent no. 1 proposed to be
auctioned on 03.12.2008.
p. Respondent no. 4 issued a letter dated 21.11.2008 to the
respondent no. 1 informing that the auction was fixed on
03.12.2008 at 11 AM at the Office of Tahsildar, Talsari district,
Thane. It was further notified that if the amount toward the
arrears would be paid the auction would be cancelled.
q. Respondent no. 4 issued another public notice on 23.11.2008
in the local newspaper called the Dahanu Times.
r. On 29.11.2008, respondent no. 4 requested the Additional
Collector Thane, Head Office Javar, to accord sanction for the
auction of the Property since the arrears had not been received.
s. On 01.12.2008, the Additional Collector Thane, Head Office,
Jawar accorded its sanction for the auction.
t. Ultimately the public auction was held on 03.12.2008 wherein
the appellant was declared as the highest bidder having offered
Rs. 54,50,000/-.
[2024] 7 S.C.R. 487
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
u. The appellant was issued the Sale Certificate dated 03.12.2008
of the Immovable Property which was sold under liquidation
by the respondent no. 4 according to Specimen 8 as per Rule
14(A) of the Rules.
v. On 04.12.2008, the appellant deposited the entire auction
amount.
w. On 10.12.2008, the IFCI raised its objections with respondent
no. 4 which came to be recorded in its letter dated 19.12.2008.
x. The respondent No. 1 issued a letter dated 16.12.2008 to the
Assistant Director, FEMA stating that they had not received the
Enforcement Order dated 12.08.2003.
y. On 18.12.2008, respondent no. 4 in its letter recorded that
full sale consideration of the property was deposited by the
appellant on 04.12.2008.
z. On 19.12.2008, respondent no. 4 issued a response to the
letter dated 10.12.2008 of the IFCI.
aa. On 26.12.2008, the WP (C) No. 2998 of 2008 (renumbered as
WP 207 of 2009) was preferred by the respondent no. 1 against
the auction and sale dated 03.12.2008 before the Bombay High
Court. Vide the said writ petition the respondent no. 1 sought a
direction to quash and set aside the enforcement order dated
12.08.2003 and all the consequential acts of recovery of penalty
by auction of the properties.
bb. The Bombay High Court by its order dated 31.12.2008 passed
in WP (C) NO. 2998 of 2008 (renumbered as WP 207 of 2009)
directed Union of India, the respondent therein, to provide
photocopies of the relevant documents and to allow inspection.
cc. The Additional Collector, Head Office, Jawar issued a letter
dated 07.10.2009 to respondent no. 4, directing him to submit
a detailed report on whether all the conditions as stipulated
under Section 208 of the Revenue Code had been fulfilled.
dd. Respondent no. 4, vide its letter dated 12.01.2009 addressed to
the Additional Collector, Head Office Jawar, informed that except
for the writ petition pending before the High Court of Bombay,
no objections were received. Thereby all requirements under
488 [2024] 7 S.C.R.
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Section 208 of the Revenue Code had been fulfilled (despite
IFCI raising its objections).
ee. On 15.01.2009, the office of the District Collector, Thane informed
the respondent no. 4 that the auction sale had been approved
and the appellant had been declared and confirmed as the
auction purchaser of the suit property as per the Section 208
of the Revenue Code.
ff. Respondent no. 4 issued a letter dated 16.01.2009 to the
appellant informing that the auction sale was approved and the
appellant was declared and confirmed as successful auction
purchaser of the property by the Additional Collector as per
the Sections 207 and 208 respectively of the Revenue Code.
gg. The Writ Petition No. 207 of 2009 with Chamber Summons No.
49 of 2009 filed by the respondent no. 1 was permitted by the
High Court to be withdrawn.
hh. On 4.04.2009, respondent no. 6 filed the Writ Petition (C) No.
648 of 2009 before the High Court of Judicature at Bombay
challenging legality and validity of the sale of the said property.
ii. A division bench of the High Court, vide its order dated
16.04.2009 passed in WP No. 648 of 2009, recorded that as
the respondent no. 1 had filed an appeal under the Revenue
Code, the respondent no. 6 should also prefer an independent
appeal. Accordingly, the said writ petition was dismissed.
jj. On 09.07.2009 the respondent no. 1 filed an appeal being the
Appeal No. 195 of 2009 under Section 247 of the Revenue
Code before respondent no. 8, the Additional Commissioner,
Konkan Division, Maharashtra.
kk. On 17.11.2009, the appellant filed Writ Petition No. 3444 of
2009 in the High Court of Judicature at Bombay. Vide order
dated 17.11.2009 the High Court directed the respondent no.
4 to release the arrears due to MSEDCL from the balance
auction amount relying on the newspaper auction notice that
mentioned the property was to be free from all encumbrances.
ll. On 18.06.2010 the respondent no. 1 and respondent no. 6 filed
Appeal Nos. 195 and 288 of 2009 respectively under Section
247 of the Revenue Code against the sale of the property.
[2024] 7 S.C.R. 489
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
Both the appeals came to be allowed by respondent no. 8 by a
common order wherein it was held that the order of sale dated
03.12.2008 and the process followed by respondent no. 4 and
affirmed by the Additional Collector, Thane H.Q. Jawar dated
15.01.2009 was illegal and accordingly remanded the entire
proceedings to the Additional Collector, Thane for appropriate
fresh adjudication.
mm. Against the aforesaid order dated 18.06.2010, the appellant
filed WP No. L-1564 of 2010/W.P. No. 415 of 2011 and WP No.
418 of 2011 before the High Court of Judicature at Bombay.
nn. The High Court in WP No. 1564 of 2010 vide its order dated
07.09.2010 stayed the operation of the order dated 18.06.2010
and directed the parties to maintain the status quo.
7. Both the writ petitions filed by the appellant herein, i.e., Writ Petition
(C) No. 415 of 2011 with Writ Petition No. 418 of 2011 ultimately
came to be adjudicated by the High Court and vide its impugned
judgment & order dated 9.12.2014 were rejected. The relevant
observations made by the High Court while rejecting both the writ
petitions are as under:
“33. Heard the learned counsel for the parties at length.
Considering the submissions made by both the counsel
and after going through the pleadings, the issue involved
in the petitions is “whether the Petitioner has made out a
case for setting aside the common order dated 18/02/2010
passed by the Additional Commissioner, Konkan Division
in appeal No.195/2009 and 288/2009”.
34. As per section 192 of the code, for holding an auction,
the Collector, has to issue a proclamation in a prescribed
form with its translation in Marathi of the intended sale
specifying its time and place, along with description of the
immovable property. Such proclamation is required to be
made by beat of drum at the headquarters of Taluka and
in the village in which the immovable property is situated.
As per section 193 of the Code, a written notice of the
intended sale of immovable property and its time and place
is required to be affixed in the office of Collector of District,
office of Tahsildar of the Taluka in which the immovable
490 [2024] 7 S.C.R.
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property is situate and other public building in the Village
in which it is situate and the dwelling place.
35. As per section 195, if the sale is postponed for a
period longer than 30 days, for sufficient reason, a fresh
proclamation and notice is required to be issued unless
defaulter consents for waiver of it.
36. Section 202 to 210 provide a procedure when payment
to be made, when confirmation of auction sale to be done,
how to deal with objections before confirmation etc.
37. In the present proceedings, admittedly, a fresh notice
was issued by the Authority on 08/11/2008 for public
auction in two newspapers i.e. “Nirdhar” and “Dahanu
Times” informing the details of the property and time and
date of auction. The Authority Mandal Adhikari, Talasari
issued letter dated 19/11/2008 to the owner of the property
informing that they have pasted the copy of notice on the
gate of the suit property. The auction was held by the
Tahasildar on 03/12/2008 and same was confirmed on
the same date. This shows that the auction took place
before expiry of 30 days from the date of proclamation
which is contrary to section 193 of the Code. Moreover, the
Tahasildar confirmed the said auction sale in favour of the
Petitioner on the same day and handed over possession
to the suit property receipt executing a possession receipt.
This means, without waiting for 30 days from the date of
proclamation, the Tahasildar held a public auction and
handed over possession to the Petitioner, which was
contrary to law.
38. It is interesting to note that after handing over
possession to the Petitioner, the Collector, by order dated
16/01/2009 confirmed the sale of the suit property in favour
of the Petitioner. That means, before confirmation of the
auction sale in favour of the Petitioner, the Tahasildar on
his own, without any authority, handed over possession to
the Petitioner. This court, in the matter of Shravan Vithoba
Dekate (supra) in paragraph 12 specifically held that the
provisions of the Code in respect of the auction sale to be
strictly followed. The Apex Court, in the matter of Mathew
[2024] 7 S.C.R. 491
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
(supra) categorically held that if the Rules framed for
public auction under the SARFAESI Act are not followed
strictly, the auction sale is required to be set aside. These
facts are considered by the Additional Commissioner at
the time of passing the impugned order. The Additional
Commissioner categorically held that the orders passed
by the Tahasildar as well as the Additional Collector were
contrary to the provisions of the Code. Hence, the Additional
Commissioner Konkan Division set aside both the orders
and the matter was remanded to the Additional Collector
to decide on its own merits.
39. It is to be noted that, allowing the petition amounts to
revival of illegal order and same is not permitted in view
of the Apex Court judgment in the matter of Maharaja
Chintamani (supra).
40. Considering the above mentioned facts that the
Tahasildar as well as the Additional Collector, without
following due process of law as required under the said
Code, passed the order dated 3/12/2008 and 15/01/2009
and handed over possession of the suit property to the
Petitioner and in view of the law declared by the Apex
Court as stated herein above, I am of the opinion that
the Petitioner failed to make out any case for interference
with the well reasoned impugned common order dated
18/02/2010.
41. Hence, following order is passed:
a. Rule stands discharged.
b. Writ Petitions stand dismissed with cost.
42. At this stage, the learned counsel for the Petitioner
submits that the interim protection granted by this court to
continue for a period of 12 weeks to enable the Petitioner
to take chance in higher court.
43. Considering the fact that the Petitioner is in possession
of the subject property for last several years and there
is a running factory, I am of the opinion that the interim
protection granted by this court (Coram : S. J. Kathawalla,
492 [2024] 7 S.C.R.
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J.) on 07/09/2010 shall continue for a period of 12 weeks
from today. Same is granted.”
(Emphasis supplied)
8. It appears from the materials on record that against the above
referred impugned judgment passed by the learned Single Judge
of the High Court two appeals were filed, i.e., (Appeal (L) No. 41
of 2016 in Writ Petition (C) No. 418 of 2011 with Appeal No. 42 of
2016 in Writ Petition (C) No. 415 of 2011). Both these appeals were
not pressed by the appellant before the High Court on the ground
that those were not maintainable in law. Thereafter, on 19.09.2016,
the two special leave petitions came to be filed before this Court.
It appears that although the High Court had ordered the parties
to maintain status quo pending the two writ petitions filed by the
appellant, yet on 13.10.2016, i.e., much after the two writ petitions
came to be rejected by the High Court, the appellant created a
mortgage on the suit property.
9. In such circumstances referred to above, the respondent No. 6 had
to file Contempt Petition No. 81 of 2016 in Writ Petition No. 418 of
2016.
10. We were informed that the said contempt petition is pending as on
date before the High Court. This Court vide its order dated 3.11.2019
directed the Debt Recovery Tribunal – (I) (hereinafter, “DRT”) at
Mumbai to proceed to decide the original application filed by the
respondent no. 6. These proceedings before the DRT were relating
to the Mortgage which came to be created by the appellant herein.
The DRT declared the mortgage over the suit property to be illegal
and allowed the O.A. No. 168 of 2002 against all the defendants
with costs for an amount of Rs. 24,15,20,115.76/- with interest @ 12
per cent per annum from the date of filing of O.A. till such realisation.
11. In such circumstances referred to above, the appellant is here before
this Court with the present appeals.
B. SUBMISSIONS ON BEHALF OF THE APPELLANT
12. Mr. P.S. Patwalia, the learned Senior Counsel appearing for the
appellant, vehemently submitted that the High Court committed an
egregious error in holding that the auction proceeding conducted
by the Tahsildar was a sham and much contrary to the statutory
[2024] 7 S.C.R. 493
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
provisions of the Revenue Code more particularly Sections 193 and
194 respectively of the Revenue Code.
13. The learned Senior Counsel submitted that a written notice of the
intended sale of the suit property with the time and place thereof was
affixed strictly in accordance with the conditions as stipulated under
Section 193 of the Revenue Code. In this regard, our attention was
drawn to the findings recorded by the High court as contained in para
37 of the impugned judgment of the High Court. The learned Senior
Counsel further submitted that the original owner (respondent no. 1)
on his own free will and volition had given his consent on 20.10.2008
to proceed with the auction sale of the suit property.
14. The learned Senior Counsel further submitted that the appellant is
a bona fide purchaser of the suit property in an auction proceeding
duly conducted by the Tahsildar under the provisions of the Revenue
Code. According to the learned Senior Counsel it is not just sufficient
to exhibit some material irregularity or fraud for the purpose of setting
at naught the entire sale. It was argued that the aggrieved party
must go further and establish to the satisfaction of the Court that the
material irregularity or fraud had resulted in substantial injury to it.
15. According to the learned Senior Counsel, even assuming that the
aggrieved party in the present litigation suffered substantial injury
by reason of the sale of the suit property the same would not be
sufficient to set aside the sale unless substantial injury is shown to
have been caused by material irregularity or fraud in publishing or
conducting the sale.
16. With a view to fortify the aforesaid submission strong reliance was
placed on the decision of this Court in the case of Chilamkurti Bala
Subrahmanyam v. Samanthapudi Vijaya Lakshmi and Another
reported in (2017) 6 SCC 770.
17. The learned Senior Counsel, thereafter, proceeded to argue that
the two appeals filed before the Additional Commissioner, Division
Konkan, Maharashtra were, by themselves, not maintainable in law.
Thus, the Additional Commissioner had no jurisdiction to entertain
and decide the two appeals.
18. In this regard, our attention was drawn to the provisions of Section
247 of the Revenue Code read in conjunction with Sections 207
and 210 respectively of the Revenue Code. It was argued that in
494 [2024] 7 S.C.R.
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view of Sections 207 and 210 respectively of the Revenue Code the
appeals filed by the respondent no. 1 and 6 before the Additional
Commissioner were not maintainable under Section 247 of the
Revenue Code.
19. It was submitted that the suit property was purchased by the
appellant in the year 2008 by depositing the amount of Rs. 55 lakhs
in accordance with the valuation report prepared by two government
approved valuers. It was pointed out that thereafter, the appellant
put up a huge industrial unit for the purpose of manufacturing
oxygen cylinders. Various permissions and licences from the Central
Government were obtained for the purpose of setting up the oxygen
cylinder plant. It was also pointed out that as on date more than two
hundred workers are employed in the appellant company.
20. In such circumstances referred to above, Mr. Patwalia, the learned
Senior Counsel submitted that if the appellant is asked to hand
over the possession of the entire suit property at this point of time,
he would incur irreparable injury, which cannot be compensated in
terms of money.
21. It was submitted that ordinarily the court should not disturb the sale
by auction unless it is an evident case of mala fide or a result of
fraud. According to Mr. Patwalia, sometime back his client had also
offered to pay to the lenders the market value of the suit property.
However, such proposal was not entertained by the bankers.
22. In such circumstances referred to above, the learned senior counsel
prayed that there being merit in his appeals, those may be allowed
and an appropriate order may be passed protecting the interests of
all the parties to this litigation.
C. SUBMISSIONS ON BEHALF OF THE RESPONDENT NO. 6/
Asset Reconstruction Co. (India) Ltd. (ARCIL)
23. Mr. Amar Dave, the learned Senior Counsel appearing for the
respondent No. 6 made the following submissions:
a. The entire transaction on the basis of which the suit property
was taken over by the appellant was nothing but absolute fraud
perpetrated in collusion with each other.
b. The entire process initiated by the Tahsildar was by supressing
various critical facts from time to time from the Additional
[2024] 7 S.C.R. 495
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
Collector who under the scheme of the Act was to approve the
process of any such auction and pursuant thereto to confirm
any such sale under the auction.
c. The sequence of events clearly indicate that the Tahsildar did
not disclose to the Additional Collector at the relevant time
that there were objections already received from one of the
banks/financial institution i.e., IFCI and the said objections were
summarily rejected solely on the ground that the sale process
in pursuance of the auction was being undertaken as per law.
In this regard, the provisions of Section 208 of the Revenue
Code are extremely vital in so far as the same contemplates that
even if there is no challenge by any other party, the collector
himself can set aside any such sale or not approve the same
for valid reasons. The said provision clearly indicates the
legislative intent that if there are valid legal objections (which
in the present case was clearly on the record in so far as IFCI
had already raised issues with regard to the mortgage of the
land) and therefore in terms of the said provision the collector
was obliged in law to factor the said objections and could have
examined the issue and not approved the sale. However, it
is apparent that the Tahsildar kept the office of the Additional
Collector in dark about the said objection and hence the entire
process was clearly vitiated.
d. The Tahsildar, with an oblique motive, initiated proceedings
for confirmation of the sale without following the mandatory
process as laid under the scheme of the Act. In fact, the sale
was confirmed on 03.12.2008 even without ensuring whether
the complete payments in respect of the sale proceed had
been fully realised or not. More surprisingly, the perusal of the
affidavit filed by the Tahsildar in the High court (in the first round
of litigation filed by Prestige) clearly indicates that the attempt
was to suppress the fact to the extent that one of the cheques
had been realised after the sale confirmation 03.12.2008. The
cheque was actually realised on 04.12.2008. No public authority
can confirm a sale without even realizing the entire consideration
and any such attempt is clearly indicative of the fraudulent and
collusive nature of the proceedings in question.
e. That the so-called reliance on the letter of ‘No Objection’ being
the entire basis of the starting of the final auction proceeding
496 [2024] 7 S.C.R.
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is clearly indicative of the fraud perpetuated more particularly
when the respondent No. 1 company, i.e., Prestige H.M.
Polycontainers Ltd. clearly declared that no such ‘No Objection’
letter was ever signed by it. Even otherwise the sequence of
events including the newspaper advertisements clearly indicate
that such a plea of taking “no objection” from the owner and
then subsequently asking the owner to make payment before
the due date is indicative of the nature of fraud perpetuated
in the present proceedings.
f. The record reveals that the entire valuation of the immovable
as well as the movable properties were done in a self-serving
manner, and the same was done only to benefit the appellant.
In this regard, the pleadings clearly reflect that the movable
properties itself were almost having a market value of around
Rs. 3 Crore (if not around Rs. 1 crore as per depreciated value
reflected in the books). In spite of such valuation, the valuer had
assigned only around Rs. 75, 000 for the entire machinery and
shown the same as scrap. That apart, even the valuation of the
immovable property was completely incorrect and therefore in
the teeth of these glaring facts, the entire transaction seems to
have been engineered in a fraudulent manner. The appellant
cannot be termed as bona fide purchaser.
g. As per the law laid down in the decision of Mathew Varghese
v. M. Amritha Kumar reported in 2014 (5) SCC 610, it is now
well settled that 30 days’ sale notice is mandatory. The High
Court correctly placed reliance on the said judgment of this
Court to come to the conclusion that sale was conducted in
breach of various provisions of the Revenue Code which are
mandatory in nature.
h. In fact, 30 days’ notice is not just mandatory for the purpose of
giving an opportunity to the defaulter but also to invite maximum
publicity and get maximum offer. Admittedly, no 30 days’ sale
notice was given. Further, no wide publicity was made.
i. There are various illegalities in confirming the sale as well.
In a process of sale, first the sale is to be conducted, then
the proceeds are required to be received. It is only after the
receipt of the proceeds that the sale confirmation is required
[2024] 7 S.C.R. 497
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
to be made by collector and thereafter sale certificate and
possession is to be handed over. In the present case, the
sale was conducted and concluded on the same day i.e.,
03.12.2008. The sale certificate was issued on the same day
without the confirmation from the collector and the possession
was handed over on the very next day.
j. From a bare perusal of Section 212 of the Revenue Code,
it is evident that the purchaser can be put into possession
only after confirmation of sale and the sale certificate being
handed over to the purchaser. However, in the present case,
the appellant was put in possession on 04.12.2008 and the
sale of property was confirmed on 15.01.2009 by the Additional
Collector, which is per se illegal in nature. The haste with which
the proceedings were undertaken speaks for itself.
k. Indisputably, objection was raised by the IFCI on 10.12.2008,
which has been recorded by the Tahsildar in its letter dated
19.12.2008.
l. On 07.01.2009, the Additional Collector, Head Office Jawar
directed respondent no. 4 to submit a detailed report on whether
it had fulfilled all the conditions as stipulated under Section 208
of the Revenue Code. However, vide its letter dated 12.01.2009
addressed to the Additional Collector, Head Office Jawar,
respondent no. 4 informed that except for the WP in the High
Court of Bombay, no other objection was received and thereby
all requirements under Section 208 of the Revenue Code had
been fulfilled, despite IFCI having raised its objections vide a
letter dated 10.12.2008.
24. As regards the offer put forward by the appellant to deposit the
requisite amount as per the market value of the property, Mr. Dave
fairly submitted that sometime back, the appellant had offered to
pay to the lenders but as the lenders found the offered amount to
be very meagre the said proposal was not accepted. According to
Mr. Dave, the market value of the suit property as on date could
be around Rs. 6 to 7 crores.
25. In such circumstances referred to above, the learned Senior Counsel
prayed that there being no merit in the appeals those may be
dismissed with costs.
498 [2024] 7 S.C.R.
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D. ISSUES FOR DETERMINATION
26. Having heard the learned counsel appearing for the parties and
having gone through the materials on record, the following questions
of law fall for our consideration:
a. Whether the provisions of Order XXI Rule 90 of the Code of
Civil Procedure would apply to the writ proceedings under Article
226 of the Constitution?
b. Whether the Additional Commissioner, Konkan Division,
Maharashtra had the jurisdiction to decide the two appeals filed
by the respondent nos. 1 and 6 respectively under Section 247
of the Maharashtra Land Revenue Code, 1966?
E. RELEVANT STATUTORY PROVISIONS OF THE REVENUE
CODE
27. Before adverting to the rival submissions canvassed on either side,
it is necessary for us to look into few relevant provisions of the
Revenue Code:
“S. 69. Settlement of assessment to be made with holder
directly from State Government.—The settlement of the
assessment of each portion of land, or survey number,
to land revenue, shall be made with the person who is
primarily responsible to the State Government for the same.
xxx xxx xxx
S. 169. Claims of State Government to have precedence
over all others.—(1) The arrears of land revenue due on
account of land shall be a paramount charge on the land and
on every part thereof and shall have precedence over any
other debt, demand or claim whatsoever, whether in respect
of mortgage, judgment-decree, execution or attachment, or
otherwise howsoever, against any land or the holder thereof.
(2) The claim of the State Government to any monies
other than arrears of land revenue, but recoverable as
a revenue demand under the provisions of this Chapter,
shall have priority over all unsecured claims against any
land or holder thereof.
xxx xxx xxx
[2024] 7 S.C.R. 499
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
S. 178. When notice of demand may issue.—(1) A notice
of demand may be issued on or after the day following
that on which the arrear accrues.
(2) The Commissioner may from time to time make orders
for the issue of such notices, and with the sanction of the
State Government shall fix the costs recoverable from
the defaulter as an arrear of revenue, and direct by what
officer such notices shall be issued.
S. 179. Occupancy or alienated holding for which arrear
is due may be forfeited.—The Collector may declare the
occupancy or alienated holding in respect of which an
arrear of land revenue is due, to be forfeited to the State
Government, and subject to rules made in this behalf, sell
or otherwise dispose of the same under the provisions of
section 72 or 73 and credit the proceeds, if any, to the
defaulter’s accounts :
Provided that, the Collector shall not declare any such
occupancy or alienated holding to be forfeited–
(a) unless previously thereto he shall have issued a
proclamation and written notices of the intended declaration
in the manner provided by sections 192 and 193 for sales
of immovable property, and
(b) until after the expiration of at least fifteen days from
the latest date on which any of the said notices shall have
been affixed as required by section 193.
xxx xxx xxx
S. 192. Procedure in effecting sales.—(1) When any sale
of either movable or immovable property is ordered under
the provisions of this Chapter, the Collector shall issue a
proclamation in the prescribed form with its translation
in Marathi of the intended sale, specifying the time and
place of sale, and in the case of movable property whether
the sale is subject to confirmation or, not and when land
paying revenue to the State Government is to be sold,
the revenue assessed upon it, together with any other
particulars he may think necessary.
500 [2024] 7 S.C.R.
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(2) Such proclamation shall be made by beat of drum
at the headquarters of the taluka and in the village in
which the immovable property is situate if the sale be
of immovable property ; and if the sale be of movable
property, the proclamation shall be made in the village in
which such property was seized, and in such other places
as the Collector may direct.
(3) A copy of the proclamation issued under this section
where it relates to the sale of any holding shall be sent
to the Co-operative Bank or the Land Development Bank
or both operating within the area in which the holding is
situated.
S. 193. Notification of sales.—(1) A written notice of the
intended sale of immovable property, and of the time and
place thereof, shall be affixed in each of the following
places, namely :–
(a) the office of the Collector of the district,
(b) the office of the Tahsildar of the taluka in which the
immovable property is situate,
(c) the Chavdi, or some other public building in the village
in which it is situate, and
(d) the defaulter’s dwelling place.
(2) In the case of movable property, the written notice shall
be affixed in the Tahsildar’s office, and in the Chavdi, or
some other public building in the village in which such
property was seized.
(3) The Collector may also cause notice of any sale,
whether of movable or immovable property, to be published
in any other manner that he may deem fit.
(4) A notice referred to in this section shall be in such form
as may be prescribed.
S. 194. Sale by whom to be made ; time of sale, etc.—(1)
Sales shall be made by auction by such persons as the
Collector may direct.
[2024] 7 S.C.R. 501
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
(2) No such sale shall take place on a Sunday or other
general holiday recognized by the State Government,
nor until after the expiration of at least thirty days in the
case of immovable property, or seven days in the case
of movable property, from the latest date on which any of
the said notices shall have been affixed as required by
section 193.
S. 195. Postponement of sale.—The sale may from time
to time be postponed for any sufficient reason : Provided
that, when the sale is postponed for a period longer than
thirty days a fresh proclamation and notice shall be issued
unless the defaulter consents to waive it.
S. 196. Sale of perishable articles.—Nothing in sections
192, 193, 194 and 195 applies to the sale of perishable
articles. Such articles shall be sold by auction with the
least possible delay, in accordance with such orders as
may from time to time be made by the Collector either
generally or especially in that behalf.
S. 197. When sale may be stayed.—If the defaulter or any
person on his behalf, pays the arrear in respect of which
the property is to be sold and all other charges legally due
by him at any time before the property is knocked down,
to the person prescribed under section 170 to receive
payment of the land revenue due, or to the officer appointed
to conduct the sale or if furnishes security under section
191, the sale shall be stayed.
xxx xxx xxx
S. 200. Mode of payment when sale is subject to
confirmation.—(1) When sale is subject to confirmation,
the party who is declared to be the purchaser shall be
required to deposit immediately twenty-five per centum of
the amount of his bid, and in default of such deposit, the
property shall forthwith be again put up and sold.
(2) The full amount of purchase money shall be paid by
the purchaser before the sunset of the third day after he
is informed of the sale having been confirmed, or if the
said third days be a Sunday or other authorized holiday,
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then before sunset of the first office day after such day.
On payment of such full amount of the purchase money,
the purchaser shall be granted, a receipt for the same,
and the sale shall become absolute as against all persons
whomsoever 2[after the expiry of a period of seven days
from the date of sale, if no application is made under
section 206, or if made, after it is rejected.]
xxx xxx xxx
S. 207. Application to set aside sale of immovables.—(1)
At any time within thirty days from the date of sale of
immoveable property an application may be made to the
Collector to set aside the sale on the ground of some
material irregularity, or mistake, or fraud, in publishing
or conducting it, but, except as is otherwise provided in
sections 208, 209 and 210, no sale shall be set aside on
the ground of any such irregularity or mistake, unless the
applicant proves to the satisfaction of the Collector that
he has sustained substantial injury by reason thereof :
[Provided that, such application may be made by a defaulter
who is a person belonging to a Scheduled Tribe or any
person on his behalf, within one hundred and eighty days
from such date.]
(2) If the application be allowed, the Collector shall set
aside the sale, and direct fresh one.
xxx xxx xxx
S. 208. Order confirming or setting aside sale.—On the
expiration of thirty days or, as the case may be, one
hundred and eighty days] from the date of the sale, if no
such application as is mentioned in section 207 has been
made, or if such application has been made and rejected
the Collector shall make an order confirming the sale :
Provided that, if he has reason to think that the sale ought
to be set aside notwithstanding that no such application
has been made, or on ground other than those alleged
in any application which has been rejected, he may, after
recording his reasons in writing, set aside the sale.
[2024] 7 S.C.R. 503
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
S. 209. Purchaser may apply to set aside sale under
certain circumstances.—Except in a case, where land has
been sold for arrears which form a charge on the land, the
purchaser may, at any time within thirty days from the date
of sale, apply to the Collector to set aside the sale on the
ground that the defaulter had no saleable interest in the
property sold; and the Collector shall, after due enquiry,
pass such order on such application as he deems fit.
S. 210. Application to set aside sale by person owning
to holding interest in property.—(1) Where immoveable
property has been sold under this code, any person either
owning such property or holding an interest therein by
virtue of a title acquired before such sale may, at any
time within thirty days from the date of sale, apply to the
Collector to have the sale set aside on his depositing—
(a) for payment to the purchaser a sum equal to five per
cent of the purchase money;
(b) for payment on account of the arrear, the amounts
specified in the proclamation of sale as that for the recovery
of which the sale was ordered, less any amount which may
have been paid since the date of sale on that account ; and
(c) the cost of the sale :
[Provided that, such application may be made by any such
person belonging to a Scheduled Tribe within one hundred
and eighty days from the date of sale.]
(2) If such deposit is made within thirty days, 2[or as the
case may be, one hundred and eighty days] from the
date of sale, the Collector shall pass an order setting
aside the sale.
xxx xxx xxx
S. 247. Appeal and appellate authorities.—(1) In the
absence of any express provisions of the Code, or of any
law for the time being in force to the contrary, an appeal
shall lie from any decision or order passed by a revenue
or survey officer specified in column 1 of the Schedule
E under this Code or any other law for the time being in
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force to the officer specified in column 2 of that Schedule
whether or not such decision or order may itself have been
passed on appeal from the decision of order of the officer
specified in column 1 of the said Schedule :
Provided that, in no case the number of appeals shall
exceed two.
(2) When on account of promotion of change of designation
an appeal against any decision or order lies under this
section to the same officer who has passed the decision or
order appealed against, the appeal shall lie to such other
officer competent to decide the appeal to whom it may be
transferred under the provisions of this Code.
xxx xxx xxx
S. 250. Periods within which appeals must be brought.—No
appeal shall be brought after the expiration of sixty days if
the decision or order complained of have been passed by
an officer inferior in rank to a Collector or a Superintendent
of Land Records in their respective departments ; nor after
the expiration of ninety days in any other case. The period
of sixty and ninety days shall be counted from the date on
which the decision or order is received by the appellant. In
computing the above periods, the time required to obtain
a copy of the decision or order appealed against shall be
excluded.
S. 251. Admission of appeal after period of limitation.—Any
appeal or an application for review under this Chapter may
be admitted after the period of limitation prescribed therefor
when the appellant or the applicant, as the case may be,
satisfies the officer or the State Government to whom or to
which he appeals or applies, that he had sufficient cause
for not presenting the appeal or application, as the case
may be, within such period.”
F. ANALYSIS
i. Whether the provisions of Order XXI Rule 90 of the
Code of Civil Procedure would apply to the writ
proceedings under Article 226 of the Constitution?
[2024] 7 S.C.R. 505
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
28. We shall now proceed to record our findings on the submissions
canvassed on either side. We start with the decision of this Court
in the case of Chilamkurti (supra) as strong reliance has been
placed on the same on behalf of the appellant. This judgment has
been relied upon to make good the contention that the provisions
of Order XXI Rule 90 of the Code of Civil Procedure (hereinafter,
“CPC”) should be made applicable to the present litigation or in
other words even in the writ proceedings under Article 226 of the
Constitution. This decision is relied upon to fortify the submission that
merely establishing a material irregularity or fraud is not sufficient
to set aside the auction sale. It is necessary for the party aggrieved
to go further and establish to the satisfaction of the court that the
material irregularity or fraud in the conduct of the auction has resulted
in substantial injury to the said party. Conversely, even if the party
aggrieved has suffered substantial injury by reason of the sale, the
same would not be sufficient to set aside the auction sale unless
substantial injury has been shown to have been caused by a material
irregularity or fraud in publishing or conducting the sale.
29. In Chilamkurti (supra), the respondent no. 2 before this Court was the
State Bank of India. The State Bank of India was the plaintiff decree
holder, whereas the respondent No. 1 was the defendant judgment
debtor. The State Bank of India obtained a money decree against the
judgment debtor in a suit. As the judgment debtor failed to satisfy the
decree, the State Bank of India filed execution application and brought
the scheduled property owned by the judgment debtor to auction
sale through the process server of the Court of Senior Civil Judge,
Kovvur in the execution proceedings for the realisation of decretal
dues. The suit scheduled property was accordingly attached by the
executing court under a warrant. The property was ultimately put to
auction sale. The appellant before this Court in the said proceedings
was the highest bidder. The judgment debtor being dissatisfied with
the auction conducted under the supervision of the executing court
filed an application under Order XXI Rule 90 of the CPC seeking
setting aside of the sale on the ground that the proclamation did not
give clear 15 days’ notice and the same was illegal.
30. The Senior Civil Court, Kovvur found no merit in any of the objections
raised by the judgment debtor and accordingly dismissed the
application. The judgment debtor thereafter preferred an appeal
before the High Court. The High Court allowed the appeal and set
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aside the order of the executing court inter alia holding that if the
judgment debtor deposits a sum of Rs. 7,15,000/- (Rs. Seven Lakh
Fifteen Thousand Only) being the price fetched at the public auction
within a period of three weeks from the date of the receipt of a copy
of the judgment, the sale held would not be given effect to.
31. Aggrieved by the aforesaid, the auction purchaser preferred appeal
before this Court. A Division Bench of this Court in Chilamkurti
(supra) relying on the decision of this Court in Saheb Khan v. Mohd.
Yousufuddin reported in (2006) 4 SCC 476, allowed the appeal filed
by the successful auction purchaser holding as under: -
“14. The law which governs the controversy involved in
this appeal is laid down by this Court in Saheb Khan v.
Mohd. Yousufuddin [Saheb Khan v. Mohd. Yousufuddin,
(2006) 4 SCC 476] (a three-Judge Bench). While examining
the scope of Order 21 Rule 90 of the Code, Ruma Pal, J.
speaking for the Bench held as under: (SCC pp. 480-81,
paras 12-14)
“12. We are unable to sustain the reasoning of the High
Court. Order 21 Rule 90 of the Code of Civil Procedure
allows, inter alia, any person whose interests are affected
by the sale to apply to the court to set aside a sale of
immovable property sold in execution of a decree on the
ground of “a material irregularity or fraud in publishing or
conducting” the sale. Sub-rule (2) of Order 21 Rule 90
however places a further condition on the setting aside
of a court sale in the following language:
‘90. (2) No sale shall be set aside on the ground
of irregularity or fraud in publishing or conducting it
unless, upon the facts proved, the court is satisfied
that the applicant has sustained substantial injury by
reason of such irregularity or fraud.’
13. Therefore before the sale can be set aside merely
establishing a material irregularity or fraud will not do. The
applicant must go further and establish to the satisfaction of
the court that the material irregularity or fraud has resulted
in substantial injury to the applicant. Conversely even if
the applicant has suffered substantial injury by reason of
[2024] 7 S.C.R. 507
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
the sale, this would not be sufficient to set the sale aside
unless substantial injury has been occasioned by a material
irregularity or fraud in publishing or conducting the sale.
(See Dhirendra Nath Gorai v. Sudhir Chandra Ghosh
[Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, (1964)
6 SCR 1001 : AIR 1964 SC 1300] , Jaswantlal Natvarlal
Thakkar v. Sushilaben Manilal Dangarwala [Jaswantlal
Natvarlal Thakkar v. Sushilaben Manilal Dangarwala, 1991
Supp (2) SCC 691] and Kadiyala Rama Rao v. Gutala
Kahna Rao [Kadiyala Rama Rao v. Gutala Kahna Rao,
(2000) 3 SCC 87] .)
14. A charge of fraud or material irregularity under Order
21 Rule 90 must be specifically made with sufficient
particulars. Bald allegations would not do. The facts must
be established which could reasonably sustain such a
charge. In the case before us, no such particulars have
been given by the respondent of the alleged collusion
between the other respondents and the auction-purchaser.
There is also no material irregularity in publishing or
conducting the sale. There was sufficient compliance
with Order 21 Rule 67(1) read with Order 21 Rule 54(2).
No doubt, the trial court has said that the sale should be
given wide publicity but that does not necessarily mean
by publication in the newspapers. The provisions of Order
21 Rule 67 clearly provide if the sale is to be advertised
in the local newspaper, there must be specific direction of
the court to that effect. In the absence of such direction,
the proclamation of sale has to be made under Order 21
Rule 67(1) “as nearly as may be, in the manner prescribed
by Rule 54 sub-rule (2)”. Rule 54 sub-rule (2) provides for
the method of publication of notice and reads as follows:
‘54. (2) The order shall be proclaimed at some place
on or adjacent to such property by beat of drum or
other customary mode, and a copy of the order shall
be affixed on a conspicuous part of the property and
then upon a conspicuous part of the courthouse, and
also, where the property is land paying revenue to
the Government, in the office of the Collector of the
district in which the land is situate and, where the
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property is land situate in a village, also in the office
of the Gram Panchayat, if any, having jurisdiction
over that village.’”
15. After examining the facts of this case in the light of
the law laid down in Saheb Khan [Saheb Khan v. Mohd.
Yousufuddin, (2006) 4 SCC 476], we are of the considered
opinion that the reasoning and the conclusion arrived at
by the executing court deserves to be restored as against
that of the High Court in the impugned order. In other
words, no case was made out by the judgment-debtor for
setting aside of the sale of the property in question on the
ground of committing any material irregularity or fraud in
publishing or in conducting the sale so as to enable the
Court to invoke its powers under Order 21 Rule 90(2) of
the Code.
16. It is noticed that Respondent 1, in her application for
setting aside the sale, had mainly raised four objections.
Firstly, clear 15 days’ notice was not given for sale of the
properties as required under the Rules. Secondly, the
valuation of the property was not properly mentioned in
the documents concerned so as to enable the parties to
know its proper valuation prevailing on the date of sale.
Thirdly, the market value of the property on the date of
auction was more than the price actually fetched in the
auction, and fourthly, no proper publication including
beating of drum was made before the date of auction
due to which there was less participation of the bidders
in the auction-sale.
17. The executing court dealt with all the four objections
with reference to the record of the proceedings and found
as a fact that none of the objections had any merit. The
High Court, however, found fault in the same though not
in all but essentially in the matter relating to giving of clear
15 days’ notice and the manner in which it was issued
and finding merit in the objection, set aside the sale on
imposing certain conditions enumerated above.
18. In our considered opinion, as mentioned above, the
executing court was justified in overruling the objections
[2024] 7 S.C.R. 509
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
and we concur with the reasoning and the conclusion of
the executing court.
xxx xxx xxx
24. The law on the question involved herein is clear. It
is not the material irregularity that alone is sufficient for
setting aside of the sale. The judgment-debtor has to go
further and establish to the satisfaction of the Court that
the material irregularity or fraud, as the case may be, has
resulted in causing substantial injury to the judgment-
debtor in conducting the sale. It is only then the sale so
conducted could be set aside under Order 21 Rule 90(2)
of the Code. Such is not the case here.”
32. Thus, the dictum as laid by this Court in Chilamkurti (supra) relying upon
Saheb Khan (supra) is that a charge of fraud or material irregularity
in Order XXI Rule 90 CPC must be specifically made with sufficient
particulars. Mere bald allegation would not be sufficient. The fact must
be established which could reasonably sustain such charge. The dictum
as further laid is that the sale conducted by the court in the execution
proceedings should not ordinarily be set aside merely on the basis
of some material irregularity or fraud. The party concerned must go
further and establish to the satisfaction of the court that the material
irregularity or fraud has resulted in substantial injury to such party.
33. Order XXI Rule 90 of the CPC reads as under: -
“90. Application to set aside sale on ground of
irregularity or fraud. (1) Where any immovable property
has been sold in execution of a decree, the decree-holder,
or the purchaser, or any person entitled to share in a
rateable distribution of assets, or whose interests are
affected by the sale, may apply to the Court to set aside
the sale on the ground of a material irregularity or fraud
in publishing or conducting it.
(2) No sale shall be set aside on the ground of irregularity
or fraud in publishing or conducting it unless, upon the
facts proved, the Court is satisfied that the applicant has
sustained substantial injury by reason of such irregularity
or fraud.
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(3) No application to set aside a sale under this rule shall
be entertained upon any ground which could have been
taken on or before the date on which the proclamation of
sale was drawn up.
Explanation.-The mere absence of, or defect in, attachment
of the property sold shall not, by itself, be a ground for
setting aside a sale under this rule.”
34. Legislative changes: By the Code of Civil Procedure (Amendment)
Act, 1976, the following changes have been effected in Rule 90:
(i) In sub-rule (1), the words “or the purchaser” and “other” were
inserted after the words “the decree-holder” and “or any”
respectively;
(ii) The proviso to old sub-rule has been renumbered as sub-rule
(2) with necessary changes in phraseology and with addition
of the words “in publishing or conducting it” after the words
“irregularity or fraud”;
(iii) Sub-rule (3) has been inserted;
(iv) Explanation to the rule has been added.
35. Object of Amendment: Rule 90, as originally enacted, reads thus:
“90.(1) Where any immovable property has been sold in
execution of a decree, the decree-holder, or any other
person entitled to share in a rateable distribution of assets,
or whose interests are affected by the sale; may apply to
the Court to set aside the sale on the ground of a material
irregularity or fraud in publishing or conducting it.
Provided that no sale shall be set aside on the ground of
irregularity or fraud unless upon the facts proved the Court
is satisfied that the applicant has sustained substantial
injury by reason of such irregularity or fraud.”
The Law Commission in its Fourteenth Report, Vol. 1, pp. 454-55
considered the provision and recommended change by stating: -
“51. Under Rule 90 a sale of immovable property in
execution of a decree can be set aside on the ground of
material irregularity or fraud in publishing or conducting
[2024] 7 S.C.R. 511
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
the sale. The right to apply under this rule is given to
the decree-holder or to any person entitled to a share in
a rateable distribution of assets or whose interests are
affected by the sale. It is generally accepted that a large
percentage of application made by the judgment-debtors to
set aside sales under this Rule are frivolous and are filed
with the object of delaying the delivery of possession. It
is therefore necessary to make an amendment to Rule 90
by providing that no sale shall be set aside on the ground
of delay in the proclamation of sale at the instance of any
person who did not attend though given notice to appear
at the drawing up of the proclamation or of any person, in
whose presence the proclamation was drawn up, unless
an objection was taken by him before the sale was held.”
(Emphasis supplied)
The Law Commission again considered the question as to irregularity
in attachment and in its Twenty-seventh Report stated:-
“The question whether absence of, or irregularity in
attachment is, a defect in the “publication or conduct of
the sale” has been discussed in several decisions. At
one extreme is the view that attachment is not necessary
at all before sale. At the other extreme stands the view
that sale without attachment is void. A third view is, that
attachment is an irregularity, but not in publishing or
conducting the sale. According to the fourth view, a sale
is not a nullity because of a defect in the attachment or
want thereof, but if it causes “substantial injury”, it can
be set aside under Rule 90. The last view seems to be
the correct one. The object of attachment is to bring the
property under the control of the court, and in the case
of immovable property one of the requirements is that
the order of attachment should be publicly proclaimed.
The main object of the proclamation is to give publicity
to the fact that the sale of the proclaimed property is in
contemplation. The publication of the attachment is thus
a step leading up to the proclamation of the sale.
The question whether it is necessary to insert a provision to
clarify the position on the subject, has been considered. In
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the draft Report which had been circulated, an Explanation
had been proposed to Rule 90 to the effect that absence of
or defect in attachment shall be regarded as an irregularity
under this rule. After some consideration, it has been
decided that no such provision need be inserted.”
In its Fifty-fourth Report, the Law Commission ordered:
“The Commission noted that the question whether the
absence of, or irregularity in, attachment is, a defect in
the “publication or conduct of the sale” within Order 21,
Rule 90 had been discussed in several decisions. At one
extreme was the view that attachment is not necessary at
all before sale. At the other extreme stood the view that
sale without attachment is void. A third view was that want
of attachment is an “irregularity” but it is not an illegality in
publishing or conducting the sale.”
In the Notes on Clauses, Gazette of India dated 8.4.1974, Pt. II S.2,
Extra, p. 325, the State of Objects and Reasons, it was stated:
“Clause 75, sub-clause (xxxi).-There is a conflict of decisions
as to whether an auction-purchaser can apply to set aside
a sale under Rule 90. The words “or the purchaser” have
been inserted in the rule to make it clear that the auction-
purchaser can also apply to set aside the sale.
The rule is also being amended to provide that a sale shall
not be set aside on the ground of an irregularity or fraud
unless the applicant has sustained a substantial injury by
reason of such irregularity or fraud.
It is further being provided that no application to set aside
the sale shall be entertained on any ground which the
applicant could have taken on or before the date on which
the proclamation of sale was drawn up.
In view of the divergence of opinion as to whether absence
of, or irregularity in, attachment is a defect in the publication
or the conduct of sale, an Explanation is being added to
the effect that mere absence of or defect in the attachment
of the property sold shall not, by itself, be a ground for
setting the sale.”
[2024] 7 S.C.R. 513
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
36. Nature and Scope: Rule 90 of Order XXI deals with cases of setting
aside auction-sale on the ground of material irregularity or fraud in
publishing or conducting such sale. Sub-rule (1) states that where
any immovable property has been sold in execution of a decree, any
person adversely affected may apply to the court for setting aside
sale on the ground of material irregularity or fraud in publishing
or conducting the sale. Sub-rule (2) is in the nature of proviso to
sub-rule (1) and declares that no sale shall be set aside unless the
applicant proves substantial injury by reason of such irregularity or
fraud. Sub-rule (3) bars the court from entertaining an application
for setting aside sale on any ground which the applicant could have
taken on or before the date of proclamation of sale. The Explanation
to Rule 90 clarifies that mere absence of or defect in, attachment of
property sold would be no ground for setting aside sale.
37. Order XXI of the CPC is exhaustive and in the nature of a complete
code as to how the execution proceedings should take place. This is
the second stage after the success of the party in the civil proceedings.
This Court in many of its decisions has said that this is the second
stage after the success of the party in the civil proceedings. It is
often said in our country that another legal battle, more prolonged,
starts in execution proceedings defeating the right of the party which
has succeeded in establishing its claim in civil proceedings. This is
the reason why Order XXI Rule 90 provides that both the conditions
enumerated therein should be fulfilled. (See: M/s Jagan Singh &
Co. v. Ludhiana Improvement Trust & Ors. reported in (2024) 3
SCC 308)
a. Difference between the auction sale conducted by the
court in the execution proceedings initiated by the decree
holder and the auction proceedings conducted by the State
through its revenue authorities like Tahsildar, etc.
38. There is a fine distinction between the auction sale conducted by the
executing court under the provisions of the CPC and the auction sale
conducted by the State under the provisions of different enactments
like Land Revenue Code etc. The whole object behind Order XXI Rule
90 of the CPC appears to be to discourage the judgment debtors
from filing frivolous application complaining about the irregularity or
fraud in the conduct of the auction sale. A lot of sanctity is attached
to the auction sale conducted by the executing court under the
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provisions of the CPC compared to the auction sale conducted by
the State through its authorities. Execution is the enforcement by the
process of the court of its orders and decrees. This is in furtherance
of the inherent power of the court to carry out its orders or decrees.
Order XXI CPC deals with the elaborate procedure pertaining to
the execution of orders and decrees. Sale is one of the methods
employed for execution. Rule 89 of Order XXI of the CPC is the only
means by which a judgment-debtor can escape from a sale that
has been validly carried out. The object of the rule is to provide a
last opportunity to put an end to the dispute at the instance of the
judgment-debtor before the sale is confirmed by the court and also
to save his property from dispossession.
39. We are of the view that even otherwise the provisions of the CPC
do not apply to writ petitions under Article 226 of the Constitution
of India except some of the principles enshrined therein like res
judicata, delay and laches, addition of parties, matters which have
not been specifically dealt with by the writ rules framed by the
respective High Court.
Position Prior to 1976
40. Before the Code of Civil Procedure (Amendment) Act, 1976, Section
141 of the Code of Civil Procedure, 1908 read as under:
“Miscellaneous proceedings.- The procedure provided in
this Code in regard to suits shall be followed, as far as it
can be made applicable, in all proceedings in any court
of civil jurisdiction.”
41. There was cleavage of opinion on the question whether the provisions
of the Code would apply to writ proceedings under the Constitution.
Some High Court had held that writ petitions could be said to be
proceedings in ‘any court of civil jurisdiction’ within the meaning of
Section 141 of the CPC. According to other High Courts, however,
writ proceedings, being special in nature, were not covered by
Section 141 and the provisions of the Code were not applicable to
writ petitions.
42. In State of U.P. v. Vijay Anand reported in AIR 1963 SC 946, drawing
the distinction between ordinary civil jurisdiction and extraordinary
civil jurisdiction, a Constitution Bench of this Court stated:-
[2024] 7 S.C.R. 515
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
“It is, therefore, clear from the nature of the power
conferred under Article 226 of the Constitution and the
decisions on the subject that the High Court in exercise
of its power under Article 226 of the Constitution exercises
original jurisdiction, though the said jurisdiction shall not
be confused with the ordinary civil jurisdiction of the High
Court. This jurisdiction, though original in character as
contrasted with its appellate and revisional jurisdiction, is
exercisable throughout the territories in relation to which
it exercises jurisdiction and may, for convenience, be
described as extraordinary original jurisdiction.”
(Emphasis supplied)
43. Again, in Babubhai Muljibhai Patel v. Nandlal Khodidas Barot
reported in (1974) 2 SCC 706, construing the words ‘as far as it can
be made applicable’ in Section 141 of the CPC (prior to Amendment
of 1976), this Court observed:
“10. It is not necessary for this case to express an opinion
on the point as to whether the various provisions of the
Code of Civil Procedure apply to petitions under Article
226 of the Constitution. Section 141 of the Code, to
which reference has been made, makes it clear that the
provisions of the Code in regard to suits shall be followed
in all proceedings in any court of civil jurisdiction as far
as it can be made applicable. The words “as far as it
can be made applicable” make it clear that, in applying
the various provisions of the Code to proceedings other
than those of a suit, the court must take into account the
nature of those proceedings and the relief sought. The
object of Article 226 is to provide a quick and inexpensive
remedy to aggrieved parties. Power has consequently
been vested in the High Courts to issue to any person or
authority, including in appropriate cases any government,
within the jurisdiction of the High Court, orders or writs,
including writs in the nature of habeas corpus, mandamus,
prohibition, quo warranto and certiorari. It is plain that
if the procedure of a suit had also to be adhered to in
the case of writ petitions, the entire purpose of having a
quick and inexpensive remedy would be defeated. A writ
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petition under Article 226, it needs to be emphasised, is
essentially different from a suit and it would be incorrect
to assimilate and incorporate the procedure of a suit into
the proceedings of a petition under Article 226.”
(Emphasis supplied)
Position After 1976
44. By the Code of Civil Procedure (Amendment) Act, 1976, Explanation
to Section 141 came to be inserted. It reads thus:
“Explanation.-In this section, the expression “proceedings”
includes proceedings under Order IX, but does not include
any proceeding under Article 226 of the Constitution.”
45. In the Statement of Objects and Reasons, it has been stated:
“The question of whether an application under Article
226 of the Constitution is a ‘proceeding in any court of
civil jurisdiction’ within the meaning of Section 141 has
been the subject matter of controversy. While the Andhra
Pradesh High Court holds that Section 141 applies to such
proceedings, the Allahabad, Calcutta, Madras and Punjab
High Court have held that Section 141 does not apply to
such proceedings and in the circumstances, it is being
clarified that Section 141 does not apply to proceedings
under Article 226 of the Constitution.”
46. In view of the Explanation to Section 141 of the CPC, now it can no
longer be contended that the provisions of CPC would apply to the
proceedings under Article 226 of the Constitution.
47. This Court in Puran Singh & Ors. v. State of Punjab & Ors.
reported in (1996) 2 SCC 205, in paras 9, 10 and 11 respectively
has held as under:-
“9. In the case of Ram Kala v. Asstt. Director, Consolidation
of Holdings [AIR 1977 P&H 87 : 79 Punj LR 100] , a Full
Bench of three Judges held that Article 137 of the Schedule
to the Limitation Act does not apply to an application for
adding or substituting a party to a petition under Article
226 of the Constitution. It was also held that Section 141
of the Code cannot be pressed into service for applying
[2024] 7 S.C.R. 517
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
the provisions including Order 22 of the Code in a petition
under Article 226 of the Constitution. Later a Full Bench of
five Judges of the same Court in the case of Teja Singh v.
Union Territory of Chandigarh [AIR 1982 P&H 169; (1981)
1 SLR 274 : 84 Punj LR 160] held that in view of Rule 32
of the Writ Rules framed by the High Court under Article
225 of the Constitution which provided that in all matters
in which no provision had been made by those Rules, the
provisions of Civil Procedure Code shall apply mutatis
mutandis insofar as they were not inconsistent with those
Rules the explanation which had been added to Section
141 of the Code by the aforesaid Amending Act, did not
in any way nullify the effect of Rule 32 of the Writ Rules.
Rule 32 of the Writ Rules is as follows:
“32. In all matters for which no provision is made
in these rules, the provisions of the Code of Civil
Procedure, 1908, shall apply mutatis mutandis insofar
as they are not inconsistent with these rules.”
10. On a plain reading, Section 141 of the Code provides
that the procedure provided in the said Code in regard to
suits shall be followed “as far as it can be made applicable,
in all proceedings”. In other words, it is open to make the
procedure provided in the said Code in regard to suits
applicable to any other proceeding in any court of civil
jurisdiction. The explanation which was added is more or
less in the nature of proviso, saying that the expression
‘proceedings’ shall not include any proceeding under
Article 226 of the Constitution. The necessary corollary
thereof shall be that it shall be open to make applicable
the procedure provided in the Code to any proceeding in
any court of civil jurisdiction except to proceedings under
Article 226 of the Constitution. Once the proceeding under
Article 226 of the Constitution has been excluded from
the expression ‘proceedings’ occurring in Section 141 of
the Code by the explanation, how on basis of Section
141 of the Code any procedure provided in the Code can
be made applicable to a proceeding under Article 226
of the Constitution? In this background, how merely on
basis of Writ Rule 32 the provisions of the Code shall be
518 [2024] 7 S.C.R.
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applicable to writ proceedings? Apart from that, Section
141 of the Code even in respect of other proceedings
contemplates that the procedure provided in the Code in
regard to suits shall be followed “as far as it can be made
applicable”. Rule 32 of Writ Rules does not specifically
make provisions of Code applicable to petitions under
Articles 226 and 227 of the Constitution. It simply says
that in matters for which no provision has been made by
those rules, the provisions of the Code shall apply mutatis
mutandis insofar as they are not inconsistent with those
rules. In the case of Rokyayabi v. Ismail Khan [AIR 1984
Kant 234 : (1984) 2 Kant LC 114] in view of Rule 39 of the
writ proceedings rules as framed by the Karnataka High
Court making the provisions of Code of Civil Procedure
applicable to writ proceedings and writ appeals, it was
held that the provisions of the Code were applicable to
writ proceedings and writ appeals.
11. We have not been able to appreciate the anxiety
on the part of the different courts in judgments referred
to above to apply the provisions of the Code to writ
proceedings on the basis of Section 141 of the Code.
When the Constitution has vested extraordinary power in
the High Court under Articles 226 and 227 to issue any
order, writ or direction and the power of superintendence
over all courts and tribunals throughout the territories in
relation to which such High Court is exercising jurisdiction,
the procedure for exercising such power and jurisdiction
have to be traced and found in Articles 226 and 227 itself.
No useful purpose will be served by limiting the power of
the High Court by procedural provisions prescribed in the
Code. Of course, on many questions, the provisions and
procedures prescribed under the Code can be taken up
as guide while exercising the power, for granting relief to
persons, who have invoked the jurisdiction of the High
Court. It need not be impressed that different provisions and
procedures under the Code are based on well-recognised
principles for exercise of discretionary power, and they are
reasonable and rational. But at the same time, it cannot
be disputed that many procedures prescribed in the said
[2024] 7 S.C.R. 519
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
Code are responsible for delaying the delivery of justice
and causing delay in securing the remedy available to a
person who pursues such remedies. The High Court should
be left to adopt its own procedure for granting relief to the
persons concerned. The High Court is expected to adopt
a procedure which can be held to be not only reasonable
but also expeditious.”
(Emphasis supplied)
48. As a court of plenary jurisdiction, the writ court while exercising
powers under Article 226 of the Constitution is free to adopt its own
procedures and follow them. It cannot be compelled to follow the
procedures prescribed in the CPC. This is so for the specific provision
made in its Section 141.
49. The High Court while exercising jurisdiction under Article 226 of
the Constitution has jurisdiction to pass appropriate orders. Such
power can neither be controlled nor affected by the provisions of
Order XXI Rule 90 of the CPC. It would not be correct to say that
the terms of Order XXI Rule 90 should be mandatorily complied with
while exercising jurisdiction under Article 226 of the Constitution.
Proceedings under Article 226 of the Constitution stand on a different
footing when compared to the proceedings in suits or appeals arising
therefrom.
50. The High Court exercises its writ jurisdiction under Article 226 of
the Constitution of India, whereas the Civil Courts exercise their
jurisdiction in terms of the provisions of the respective State Civil
Courts Acts read with Section 9 of the CPC. The High Court exercises
constitutional function, the Civil Court exercises a statutory function.
The High Court exercises a wide power under Article 226 of the
Constitution of India and in a given situation, it can even mould the
reliefs in order to do substantial justice between the parties.
51. Where a particular mode is prescribed for doing an act and there is
no impediment in adopting the procedure, the deviation to act in a
different manner which does not disclose any discernible principle
which is reasonable itself is liable to be labelled as arbitrary. The
State action must be informed by reason and it follows that the action
uninformed by reason is per se arbitrary. The basic requirement of
Article 14 is fairness in action by the State and non-arbitrariness in
520 [2024] 7 S.C.R.
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essence and substance is the heartbeat of fair play. These actions
are amenable to the judicial review not only to the extent that the
State must act validly for a discernible reason and not whimsically
for any ulterior purpose. The public authorities are governed by the
“rule of law”. Such authorities are constitutionally obliged in law to
maintain absolute fairness and transparency during the conduct of
the auction sale right from the initiation of the same till its completion.
Judicial audit and scrutiny play a key role in ensuring that the public
authorities do not act in an unreasonable manner.
52. The dictum as laid by this Court in Tata Cellular v. Union of India
reported in (1994) 6 SCC 651 is that the judicial power of review
is exercised to rein in any unbridled executive functioning. It was
observed that the restraint has two contemporary manifestations
viz. one is ambit of judicial intervention and the other covers the
scope of the court’s ability to quash an administrative decision on
its merits. These restraints bear the hallmarks of judicial control
over administrative action. It was held that the principle of judicial
review is concerned with reviewing not the merits of the decision in
support of which the application for judicial review is made, but the
decision-making process itself. It was held that the principle of judicial
review would apply to the exercise of contractual powers by the
Government bodies in order to prevent arbitrariness or favouritism. It
was held that the duty of the court is to confine itself to the question
of legality and its concern should be whether a decision-making
authority exceeded its powers; whether it committed an error of
law or committed a breach of the rules of natural justice or reached
a decision which no reasonable tribunal would have reached or,
abused its powers. The grounds upon which an administrative
action can be subjected to judicial review are classified as illegality,
irrationality and procedural impropriety. In that very decision, while
deducing the principles from various cases referred, it was held
that the modern trend points to judicial restraint in administrative
action; that the Court does not sit as a court of appeal but merely
reviews the manner in which the decision was made; that the court
does not have the expertise to correct the administrative decision
and if a review of the administrative decision is permitted, it will be
substituting its own decision, without the necessary expertise which
itself may be fallible; that the terms of the invitation to tender cannot
be open to judicial scrutiny because the invitation to tender is in the
[2024] 7 S.C.R. 521
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
realm of contract; and, that the government must have freedom of
contract, i.e. a free-play in the joints is a necessary concomitant for
an administrative body functioning in an administrative sphere or
quasi-administrative sphere. However, the decision must not only be
tested by the application of Wednesbury principle of reasonableness,
but must be free from arbitrariness not affected by bias or actuated
by mala fides. Moreover, quashing decisions may impose heavy
administrative burden on the administration and lead to increased
and unbudgeted expenditure.
53. In Jagdish Mandal v. State of Orissa and Others reported in (2007)
14 SCC 517, this Court observed as under:
“22. Judicial review of administrative action is intended to
prevent arbitrariness, irrationality, unreasonableness, bias
and mala fides. Its purpose is to check whether choice
or decision is made “lawfully” and not to check whether
choice or decision is “sound”. When the power of judicial
review is invoked in matters relating to tenders or award
of contracts, certain special features should be borne in
mind. A contract is a commercial transaction. Evaluating
tenders and awarding contracts are essentially commercial
functions. Principles of equity and natural justice stay at
a distance. If the decision relating to award of contract
is bona fide and is in public interest, courts will not, in
exercise of power of judicial review, interfere even if a
procedural aberration or error in assessment or prejudice
to a tenderer, is made out. The power of judicial review will
not be permitted to be invoked to protect private interest at
the cost of public interest, or to decide contractual disputes.
The tenderer or contractor with a grievance can always
seek damages in a civil court. Attempts by unsuccessful
tenderers with imaginary grievances, wounded pride and
business rivalry, to make mountains out of molehills of
some technical/procedural violation or some prejudice to
self, and persuade courts to interfere by exercising power
of judicial review, should be resisted. Such interferences,
either interim or final, may hold up public works for years,
or delay relief and succour to thousands and millions and
may increase the project cost manifold.”
(Emphasis supplied)
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54. This Court in State of Punjab & Others v. Mehar Din reported in
(2022) 5 SCC 648, after referring to both the aforesaid decisions
held as under:
“20. The scope of judicial review in the matters of tenders/
public auction has been explored in depth by this Court
in a catena of cases. Plausible decisions need not be
overturned and, at the same time, latitude ought to be
granted to the State in exercise of its executive power.
However, allegations of illegality, irrationality and procedural
impropriety would be enough grounds for courts to assume
jurisdiction and remedy such ills.”
(Emphasis supplied)
55. We are of the view that in cases such as the one at hand wherein
the legality, validity and propriety of the auction sale conducted by
the State through its authorities is questioned on the ground of mala
fides, undue favour for extraneous considerations and gross violation
of the mandatory provisions of law, it would be hazardous to apply
the principles enshrined in Order XXI Rule 90 of the CPC. Times
have changed. Human values and ethics in public functionaries have
degraded to a considerable extent. Corruption is on a rampage. Having
regard to the same and in order to protect and uphold the rule of
law, the courts have a duty to ensure that the State authorities have
conducted public auctions in a fair and transparent manner and have
not done anything by which public exchequer has suffered. It would
be too much to say that although the writ court may find an auction
sale conducted by a public functionary to be in gross violation of the
mandatory provisions of law and the action of such public functionary
to be arbitrary, yet the aggrieved party complaining about the same
should be told to establish the dual conditions stipulated in Order
XXI Rule 90 of the CPC. Once the action of the State is found to
be unfair and arbitrary, then that is the end of the matter so far as
a writ court is concerned. The first and the foremost aspect that the
writ court should look into is fairness and transparency on the part
of the State in conducting the auction sale so as to be in conformity
with Article 14 of the Constitution.
56. The litigation at hand is one of gross violation of the mandatory
provisions of the Revenue Code in so far as conduct of the auction
sale is concerned. In terms of Section 194 of the Revenue Code, no
[2024] 7 S.C.R. 523
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
sale shall take place until after the expiration of at least 30 days from
the latest date on which any of the notice shall have been affixed
as required by Section 193 of the Revenue Code. The materials on
record reveal that the auction of the property was conducted before
the expiry of 30 days’ time as prescribed under Section 194 of the
Revenue Code. At the cost of repetition, Section 194 of the Revenue
Code is reproduced hereunder:-
“Section 194: (1) Sale shall be made by auction by such
persons as the Collector may direct.
(2) No such sale shall take place on a Sunday or other
general holiday recognised by the State Government¸
nor until after the expiration of at least thirty days in the
case of immovable property, or seven days in the case
of movable property, from the latest date on which any of
the said notices shall have been affixed as required by
section 193.”
57. Further, in terms of Section 195 of the Revenue Code, a fresh notice
is required to be issued if the sale is postponed for any reason beyond
30 days and a fresh proclamation and notice has to be issued unless
the defaulter consents to waive it. In this regard, it is relevant to note
that a fresh proclamation was made on 23.11.2008 in furtherance of
Section 195 of the Revenue Code. At the cost of repetition, Section
195 of the Revenue Code is reproduced hereunder:-
“Section 195. Postponement of sale.─The sale may
from time to time be postponed for any sufficient reason:
Provided that, when the sale is postponed for a period
longer than thirty days a fresh proclamation and notice
shall be issued unless the defaulter consents to waive it.”
58. Various illegalities were committed even in confirming the sale. In a
process of sale, first the sale is to be conducted, then the proceeds
are required to be received. It is only after the receipt of the proceeds
that sale confirmation is required to be made by the collector and
thereafter sale certificate and possession is to be handed over. In the
present case, the sale was conducted and concluded on the same
day i.e., 03.12.2008. The sale certificate was issued on the same
day and that too without the confirmation from the collector and the
possession was also handed over on the very next day.
524 [2024] 7 S.C.R.
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59. From a bare perusal of Section 212 of the Revenue Code, it is
evident that the purchaser can be put into possession only after
confirmation of sale and the sale certificate being handed over to
the purchaser. However, in the present case, the appellant was put
in possession on 04.12.2008 and the sale of property was confirmed
on 15.01.2009 by the Additional Collector, which is per se illegal in
nature. Again at the cost of repetition, Section 212 of the Revenue
Code is reproduced hereunder:-
“Section 212. On confirmation of sale, purchaser to
be put in possession. Certificate of purchase.— After
a sale of any occupancy or alienated holding has been
confirmed in the manner aforesaid, the Collector shall put
the person declared to be the purchaser into possession
of the land and shall cause his name to be entered in the
land records as occupant or holder in lieu of that of the
defaulter and shall grant him a certificate to the effect that
he has purchased the land to which the certificate refers.”
60. Indisputably, although a specific objection was raised by the IFCI on
10.12.2008, as recorded by the Tahsildar in its letter dated 19.12.2008,
yet the objection was suppressed from the Additional Collector.
61. On 07.01.2009, the Additional Collector, Head Office Jawar directed
the respondent no. 4 to submit a detailed report on whether it had
fulfilled all the conditions as stipulated under Section 208 of the
Revenue Code. At the cost of repetition, Section 208 of the Revenue
Code is reproduced hereunder:-
“Section 208: Order confirming or setting aside sale.—
On the expiration of thirty days or, as the case may be, one
hundred and eighty days from the date of the sale, if no
such application as is mentioned in section 207 has been
made, or if such application has been made and rejected,
the Collector shall make an order confirming the sale:”
62. However, respondent no. 4, vide its letter dated 12.01.2009 addressed
to the Additional Collector, Head Office Jawar, misinformed that
except for the writ petition pending before the High Court of Bombay,
no other objection was received and thereby all requirements under
Section 208 of the Revenue Code had been fulfilled, despite IFCI
raising its objections.
[2024] 7 S.C.R. 525
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
63. From the aforesaid, the following inescapable conclusions are
discernible:
a. The sale of the Property took place before the expiry of the
mandatory 30 days’ notice. This clearly shows that the sale
was conducted in breach of the provisions of Section 194 of
the Revenue Code. The notice was issued on 19.11.2008 and
the auction came to be conducted on 03.12.2008.
b. The sale certificate was issued on the same day, i.e., on the
date of the auction itself, much before the confirmation of sale
by the Additional Collector. This clearly shows that the sale
was conducted in breach of the provisions of Section 212 of
the Revenue Code.
c. The purchaser, that is, the appellant was put in possession
of the property much before the sale came to be confirmed
i.e. on 15.01.2009 and that too prior to the cheque being
realised. This clearly shows that the sale was conducted in
breach of the provisions of Sections 212 and 208 respectively
of the Revenue Code.
d. The undue haste exhibited by the Tahsildar in completing
the sale in favour of the appellant speaks for itself. Why did
the Tahsildar supress an important fact before the Additional
Collector as regards the objections received by him from IFCI?
This itself indicates that there was some collusion between the
Tahsildar and the appellant.
64. The aforesaid lapses, in our opinion, cannot be termed as irregularity.
Once it is evident that the mandatory provisions as stipulated under
the rules and regulations are not followed or abridged, any action
pursuant to the same could be termed as gross illegality. There is a
fine distinction between illegality and irregularity. Whereas the former
goes to the root of the matter and renders the action null and void,
of no effect whatsoever, the latter does not ipso facto invalidate the
action, unless prejudice is caused to the person making a complaint,
even if, for the purposes of Order XXI Rule 90 of the CPC the lapses
we have taken note of could be termed as material irregularities
going to the root of the matter.
526 [2024] 7 S.C.R.
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65. Almost a century back, in Ashutosh v. Behari Lal (1908) 35 Cal 61,
drawing the distinction between ‘nullity’ and ‘irregularity’, Mookerjee,
J. stated;
“No hard and fast line can be drawn before a nullity and
irregularity; but this much is clear, that an irregularity is
a deviation from a rule of law which does not take away
the foundation of authority for the proceeding, or apply to
its whole operation, whereas a nullity is a proceeding that
is taken without any foundation for it or is so essentially
defective as to be of no avail or effect whatever, or is void
and incapable of being validated”.
66. Whether a provision falls under one category or other is not of
easy discernment, and in the ultimate analysis it depends upon the
nature, scope and object of a particular provision. A workable test,
however, has been laid down in Holmes v. Russel (1841) 9 Dowl
487, wherein it was held thus:
“It is difficult sometimes to distinguish between an
irregularity and a nullity, but the safest rule to determine
what is an irregularity and what is a nullity is to see whether
the party can waive the objection; if he can waive it, it
amounts to an irregularity; if he cannot, it is a nullity.” [see
Dhirendra Nath v. Sudhir Chandra]
(Emphasis supplied)
67. If we were to condone or overlook all the illegalities we have taken
note of in para 63 of this judgment, applying the provisions of
Order XXI Rule 90 of the CPC, the same would result in nothing
but gross travesty of justice. Bureaucracy feels that accountability
is an impediment to efficient discharge of the duty. Accountability
is no more and no less than, the concept of accountability of a
private concern to their shareholders. There is a distinction between
prying into details of day-to-day administration and of the legitimate
actions or resultant consequences thereof. To enthuse efficiency into
administration, a balance between accountability and autonomy of
action should be carefully maintained. Over-emphasis on either would
impinge upon public efficiency. But undermining the accountability
would give immunity or carte blanche power to deal with the public
property or of the debtor at whim or vagary. Whether the public
[2024] 7 S.C.R. 527
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
authority acted bona fide would be gauged from the impugned action
and attending circumstances. The authority should justify the action
assailed on the touchstone of justness, fairness, reasonableness and
as a reasonable prudent owner. Test of reasonableness is stricter.
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 has been 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. [See: Mahesh Chandra v. Regional Manager,
U.P. Financial Corporation & Ors : (1993) 2 SCC 279]
ii. Whether the Additional Commissioner, Konkan Division,
Maharashtra had the jurisdiction to decide the two appeals
filed by the respondent nos. 1 and 6 respectively under
Section 247 of the Maharashtra Land Revenue Code, 1966?
68. We shall now proceed to deal with the contention canvassed on
behalf of the appellant that the Additional Commissioner, Konkan
Division, State of Maharashtra had no jurisdiction to adjudicate the
two appeals filed by the respondent no. 1 and respondent no. 6
herein respectively. It was argued that the appeals filed before the
Additional Commissioner under Section 247 of the Revenue Code
were not maintainable as there was a remedy available under Section
210 of the same code.
69. Application before the Collector to get the Sale set aside has to be
made within a period of 30 days. It is after considering the objections
that the sale is to be confirmed. Section 210 of the Revenue Code
reads:
“Section 210. Application to set aside sale by person
owning to holding interest in property.— (1) Where
immovable property has been sold under this Code, any
person either owning such property or holding an interest
therein by virtue of a title acquired before such sale may,
528 [2024] 7 S.C.R.
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at any time within thirty days from the date of sale, apply
to the Collector to have the sale set aside on his holding
depositing-
(a) For payment to the purchaser a sum equal to five
per cent of the purchase money
(b) For payment on account of the arrear, the amounts
specified in the proclamation of sale as that for the
recovery of which the sale was ordered, less any
amount which may have been paid since the date
of sale on that account; and
(c) The cost of the sale:
Provided that, such application may be made by such
person belonging to a Schedule Tribe within one hundred
and eighty days from the date of sale.
(2) If such deposit is made within thirty days or, as the
case may be, one hundred and eighty days from the date
of sale, the Collector shall pass an order setting aside
the sale.”
70. As rightly argued by Mr. Dave, the said remedy was rendered
illusory as the sale was finalised by the Tahsildar much before
the confirmation by the Collector. In fact, the sale certificate was
issued & the possession was also handed over to the appellant.
The confirmation was done by the Tahsildar much before the expiry
of 30 days. There was nothing left for the Collector to consider and
decide under Section 210 of the Revenue Code. It is further pertinent
to note that the provision may be applicable in case of owner of
the property but not to a lender who has valid subsisting mortgage.
The argument that lender is not required to make deposit before
challenging the sale is not something which is borne on plain reading
of the language of Section 210.
71. Section 210(1) of the Revenue Code provides that an application
can be made where an immovable property has been sold under the
Revenue Code by i) owner of the property; and ii) holding interest
therein by virtue of a title acquired before such sale. It would be
relevant to state that the respondent No. 6 does not fall within the
category as provided under Section 210(1) of the Revenue Code nor
[2024] 7 S.C.R. 529
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
has the respondent No. 6 claimed to be the owner of the property
or has an interest in the property by virtue of the “title acquired”.
72. The confirmation of the sale had no bearing after the issuance of sale
certificate. Therefore, the remedy under Section 210 was rendered
illusory and not a remedy actually available as the certificate of sale
was already issued. Further, once the sale certificate is issued, then
the remedy falls under Section 247 instead of Section 210 of the
Revenue Code. At the cost of repetition, Section 247 of the Revenue
Code is reproduced hereunder:
“Section 247: Appeal and appellate authorities.—(1)
In the absence of any express provisions of the Code,
or of any law for the time being in force to the contrary,
an appeal shall lie from any decision or order passed by
a revenue or survey officer specified in column 1 of the
Schedule E under this Code or any other law for the time
being in force to the officer specified in column 2 of that
Schedule whether or not such decision or order may itself
have been passed on appeal from the decision or order
of the officer specified in column 1 of the said Schedule:
Provided that, in no case the number of appeals shall
exceed two.
(2) When on account of promotion or change of designation
an appeal against any decision or order lies under this
section to the same officer who has passed the decision
or order appealed against, the appeal shall lie to such
other officer competent to decide the appeal to whom it
may be transferred under the provisions of this Code.”
73. Assuming for the moment that the Additional Commissioner had no
jurisdiction to adjudicate and decide the two appeals filed by the
respondent No. 1 and respondent No. 6 respectively, yet the common
order passed by the Additional Commissioner allowing the appeals
and remanding the matter back to the authority concerned could
not have been disturbed and the High Court rightly did not disturb
the same. Had the High Court taken the view that the Additional
Commissioner had no jurisdiction and the order passed by it was
a nullity, the result would have been the revival of the illegal order
passed by the Additional Collector confirming the sale.
530 [2024] 7 S.C.R.
Digital Supreme Court Reports
74. It is well settled principle in law that issuance of a writ or quashing/
setting aside of an order if revives another pernicious or wrong or
illegal order then in that eventuality the writ court should not interfere
in the matter and should refuse to exercise its discretionary power
conferred upon it under Article 226 of the Constitution of India. The
writ court should not quash the order if it revives a wrong or illegal
order. Vide : Gadde Venkateswara Rao v. Government of Andhra
Pradesh, AIR 1966 SC 828; Maharaja Chintamani Saran Nath
Shahdeo v. State of Bihar, (1999) 8 SCC 16: AIR 1999 SC 3609:
1999 AIR SCW 3623; M.C. Mehta v. Union of India, (1999) 6 SCC
237: AIR 1999 SC 2583; Mallikarjuna Mudhagal Nagappa v. State
of Karnataka, (2000) 7 SCC 238: AIR 2000 SC 2976: 2000 AIR
SCW 3289; and Chandra Singh v. State of Rajasthan, (2003) 6
SCC 545: AIR 2003 SC 2889: 2003 AIR SCW 3518 and Raj Kumar
Soni v. State of U.P., (2007) 10 SCC 635.
G. CONCLUSION
75. In view of the foregoing discussion, we are of the view that no
interference is warranted with the impugned judgment of the High
Court. However, the facts and circumstances of this case have left us
with an uphill task to mould the final order necessary to be passed
in order to do substantial justice with the parties to this litigation.
76. Having taken the view that the High Court committed no error, much
less any error of law, we could have dismissed both the appeals and
closed this litigation. However, doing the same will put the appellant in
immense difficulties. As noted in the earlier part of this judgment, the
appellant has set up an oxygen cylinder manufacturing plant on the
suit property. It has invested a huge amount in setting up this plant
and has been running this plant for almost 15 years. Approximately
200 employees are working in the said plant. If the possession of the
suit property is taken over, then the plant will have to be dismantled
unless in any fresh auction proceedings some person is interested
in taking over the entire plant with the land. In such circumstances,
we deem fit to give one opportunity to the appellant to save its
industrial unit set up on the subject land. If the appellant wants to
save the industrial unit and the land, it must deposit a sum of Rs.
4,00,00,000/- (Rupees Four Crore Only) with the respondent no.
6-ARCIL towards full and final settlement of all liabilities. No other
lender or financial institution shall thereafter put forward any further
[2024] 7 S.C.R. 531
M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.
claim, even if any. It is for the respondent no. 6-ARCIL to deal with
such a situation.
77. In view of the aforesaid, both the appeals are allowed in part. While
affirming the impugned judgment and order passed by the High
Court, we direct the appellant to deposit a sum of Rs. 4,00,00,000/-
(Rupees Four Crore Only) with the respondent no. 6-ARCIL within
a period of six months from today, failing which we shall proceed to
pass further orders.
78. Let this matter be notified once again before this Bench to report
whether the appellant has deposited the amount of Rs. 4,00,00,000/-
(Rupees Four Crore Only) with ARCIL or not. We clarify that if the
appellant fails to deposit the amount, we shall direct the competent
authorities to take over the possession of the entire unit with the
land in question and put the same once again for sale by way of
fresh auction process.
79. We may further clarify that if the appellant deposits the requisite
amount within the stipulated period, then the contempt proceedings
pending before the High Court of Bombay shall also stand terminated.
80. There shall be no order as to costs.
81. Pending applications if any shall stand disposed of.
Result of the case: Appeals partly allowed.
†
Headnotes prepared by: Nidhi Jain
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