1. The petitioners claim to be the owners of a land, Gat No. 129, admeasuring 28 acres situate at village Jalochi near Baramati in the Poona District. In execution of an award which had been passed against the first petitioner & in favour of a co-operative Society, this land was put up for sale under the provisions of the Bombay Land Revenue Code. The auction sale was held on 26th February 1965. The first respondent, who was then a minor, gave the highest bid for Rs. 15,100 and this bid was accepted by the officer conducting the sale. The petitioners applied within the prescribed time to the Deputy Collector under S. 178 of the Bombay Land Revenue Code for setting aside the sale. The application was rejected by the Deputy Collector. An appeal taken by the petitioners to the Collector and a further appeal taken by them to the Commissioner were dismissed. The petitioners have now approached this Court under Article 227 of the Constitution to challenge the legality of the decision of the Deputy Collector, the Collector and the Commissioner and to have the sale set aside.
2. One of the grounds on which the sale was sought to be set aside by the petitioners was that the proclamation of sale omitted to mention that there were two wells by which the land was irrigated. The Commissioner has observed in his judgment that the omission to mention that there were two wells in the proclamation was not a material irregularity, and Mr. Bhasme who appears on behalf of the petitioners argued that this view of the Commissioner was wrong. It appears to us that if the two wells in the land were capable of irrigating the land or a substantial part thereof, the omission of the two wells from the description of the land in the proclamation amounted to a material irregularity. The Commissioner, however, has further held that the land was sold at the auction for an adequate price and that no substantial loss was caused to the petitioners. Mr. Bhasme has challenged this finding of the Commissioner, but Mr. Bhasme could not show that this finding was vitiated by any error of law. The sale, therefore, cannot be set aside on the ground of the said irregularity.
3. Another ground on which the sale was challenged before the Commissioner was that it was held in contravention of Section 31 of the Bombay Prevention of Fragmentation and Consolidation of Holdings Act, 1947. Mr. Bhasme drew our attention to clause (a) of section 31 of the said Act which provides that, notwithstanding anything contained in any law for the time being in force, no holding allotted under this Act, nor any part thereof, shall be transferred, whether by way of sale (including sale in execution of a decree of a Civil Court or for recovery of arrears of land revenue or for sums recoverable as arrears of land revenue) or by way of gift, exchange, or lease, or otherwise, except in accordance with such conditions that the auction sale was in contravention of this provision, the Commissioner observed that the sale can be regularised by payment of penalty under Section 31AA of the said Act. The Commissioner, therefore, directed that the Collector should take steps to recover penalty of Rs. 100 under S. 31AA of the said Act. Now, S. 31AA provides, inter alia, that the transfers of any land in contravention of the provisions of this Act made before the 15th day of November 1965 shall not be deemed void merely on the ground of the contravention of any of the provisions of this Act, if the person 'in possession of the land at the aforesaid date' by virtue of any transfers or purported transfers pays to the State Government within the prescribed period a penalty equal to one per cent of the consideration of the land transferred, or Rs. 100 whichever is less. Mr. Bhasme argued that the auction sale in the present case cannot be regularised under S.31AA because the first respondent has not yet been put in possession of the land and he is, therefore, not a person 'in possession of the land at the aforesaid date' i.e. 15th November 1965. We are of the view that S. 31AA has no application to the present case, not only because the first respondent is not in possession of the land, but also because a completed transfer of the Land has not yet taken place. It is clear from the provisions of the Bombay Land Revenue Code that, after the auction sale of an immovable property under S. 165, an application to set aside the sale can be filed under S. 178. If no application for setting aside the sale is made under S. 178, or if such an application is made and rejected, the Collector may confirm the sale under S. 179. After the sale is confirmed, the Collector puts the person declared to be the purchaser into possession of the land and grants him a sale certificate under S. 181. No transfer of the property takes place till the sale is confirmed and a sale certificate is granted to the person declared to be the purchaser of the land.
4. Since a transfer has not been completed in the present case, the auction sale cannot be said to have contravened section 31(a) of the Bombay prevention of Fragmentation and Consolidation of Holdings Act, 1947. As mentioned above, S. 31(a) provides inter alia that a holding allotted under the said Act shall not be transferred except in accordance with such conditions as may be prescribed. Rule 27(i) of the Bombay Prevention of Fragmentation and Consolidation of Holdings Rules, 1959, lays down that no consolidated holding shall be transferred as provided by clause (a) of S. 31 except with the permission of the Collector after making an application to him in that behalf. It is possible to have the necessary permission of the Collector for the proposed transfer of the land in the present case before the auction sale is confirmed and a sale certificate is granted to the first respondent. We are accordingly of the view that no contravention of Section 31(a) of the said Act is involved in the auction sale.
5. Another and more substantial ground on which the auction sale is challenged by the petitioners is that the first respondent was a minor when he made the highest bid at the auction and that the acceptance of a minor's bid was an illegality which vitiated the sale. In our view this objection is sound and must be upheld. As mentioned above the mere acceptance of the highest bid at an auction does not result in a completed sale under the provisions of the Bombay Land Revenue Code. As a result of the acceptance of the highest bid the bidder acquires certain rights and incurs certain obligations. Under S. 173 of the Bombay Land Revenue Code the bidder has to deposit 25 per cent of the amount of his bid immediately after he is declared to be the purchaser. Under S. 174 the remaining amount of the purchase money is to be paid before sunset of the fifteenth day from that on which the sale took place. Section 175 lays down that, in default of payment within the prescribed period of the full amount of purchase money, the deposit (i.e. 25 per cent. of the amount of the bid), after defraying therefrom the expenses of the sale, shall be forfeited to the State Government and that the property shall be resold. Section 176 provides that, if the proceeds of the resale are less than the price bid by the defaulting purchaser, the difference shall be recoverable from him as an arrear of land revenue. It appears to us that since a minor is incapable of entering into a valid agreement he is not bound, in case his bid is accepted. to make payments of the purchase price as provided by Sections 173 and 174, to suffer the amount deposited by him to be forfeited to the State Government under S. 175, and to make good any loss occasioned by the resale under Section 176. Since he does not incur these liabilities, he also does not acquire the rights of having the sale confirmed under Section 179 and of being placed in possession of the land and given a sale certificate under S. 181.
6. Considerable support to the above view is derived from a judgment of Mr. Justice K. K. Desai in Mohanlal Keshavji Kothari v. Mrs. Rose Theresa Gonsalves 1965 Mh LJ 170=AIR 1965 Born 139. In that case a land was sold in auction, on the original side of this Court, on the basis of 'particulars and conditions of sale' in which the land had been described as being available for building purposes. The auction purchaser subsequently discovered that a substantial portion of the land was included in the development plan of the Municipal Corporation and was not available for building construction. The auction purchaser applied for setting aside the sale but his application was opposed on the ground that an auction sale was not a contract and could not be set aside on a ground on which a contract can be rescinded. The learned Judge held that publication of the terms and conditions of a sale by auction amounts to an offer and that acceptance of a purchaser's bid results in a contract.. We are, with respect, in agreement with this view.
7. On behalf of the first respondent Mr. Nargolkar argued, in the first place, that an auction sale is a sale and not a contract and that the sale is not invalid because a minor can be a lawful purchaser of immovable property.
8. Section 6(h) of the Transfer of Property Act provides. inter alia, that no transfer can be made 'to a person legally disqualified to be transferee'. Under Section 7 of the Transfer of Property Act, every person competent to contract is competent to transfer property to the extent and in the manner allowed and prescribed by any law for the time being in force. The result is that a minor can be a transferee but not a transferor of immovable property. The position is thus described in Mulla's Transfer of Property Act, 5th Edition, page 81:
'A minor is in English law disqualified to be a transferee of a legal estate in land but not of an equitable interest in land or other property, but in India although a minor's contract is void, yet a minor is not disqualified to be a transferee, and a minor may be a purchaser or a mortgagee. But neither the guardian of a minor nor his manager is competent to bind the minor or his estate by a contract for the purchase of immovable property but a lease to a minor is void, as a lease imports a covenant by the minor to pay rent and other reciprocal obligations. This was so decided before the Amending Act 20 of 1929 and the present section 107 makes it clear that a lease to a minor must be void because it must be executed both by the lessor and the lessee.'
If an auction sale were a completed transfer of property, as urged by Mr. Nargolkar, there might have been some substance in his contention that the sale is not vitiated on account of the minority of the auction purchaser. As pointed out above the acceptance of a bid at an auction sale does not result in an immediate transfer of title to the bidder but creates certain rights and obligations. These obligations cannot be voluntarily incurred by a minor and he is, therefore, not entitled to the rights of an auction purchaser.
9. It was next urged by Mr. Nargolkar, that if an auction sale does not amount to a completed transfer, it amounts to a completed contract and is, therefore, not vitiated on account of the minority of the highest bidder. The only reason advanced by Mr. Nargolkar to show that an auction sale results in a completed contract was that under Section 173 of the Bombay Land Revenue Code a bidder who is declared to be a purchaser is required to deposit immediately 25 per cent of the amount of his bid. Obviously a contract arising on account of the acceptance of the bid does not cease to be an executory contract simply because 25 per cent. of the purchase price is to be deposited immediately after the bid is accepted.
10. A more substantial argument advanced by Mr. Nargolkar was that the rights acquired and obligations incurred by a successful bidder in an auction sale held under Section 165 of the Bombay Land Revenue Code are statutory and not contractual, and that a minor is not precluded from acquiring the statutory rights and incurring the statutory obligations. The answer to this argument is that when a minor bids at an auction sale, he does so voluntarily and not by virtue of any statute. Certain rights and obligations have been attached by the Bombay Land Revenue Code to the contract which emerges when a bid is accepted at an auction sale. The incompetence of a minor to enter into that contract is not cured by the fact that certain rights and obligations have been attached thereto by statute.
11. In the result the impugned orders of the Deputy Collector, the Collector and the Commissioner are quashed and the auction sale is also set aside.
12. In the circumstances of the case there will be no order as to costs.
13. Order accordingly.