1. The ultimate question of law on the decision of which the fate of this case depends, on which question no direct judgment of any Court has been cited before me by either side, is whether a competent authority is or is not, bound to support with reasons his order refusing to accept the highest bid given at a public auction of any acquired evacuee property. This question has arisen in regard to property No. B II.551 situate in Nawanshahr of which the reserve price was Rs. 945/-. At a public auction of that property held on August 4, 1962, highest bid of Rs.1,300/- was given by Gobind Ram Batra petitioner. Having paid Rs.130/- on account of one tenth of the amount of the bid, the petition did not hear anything further in connection with the approval of the bid and was ultimately forced to make an application for approval of the bid to the Regional Settlement Commissioner on April 17, 1963. Certain developments had in the meantime taken place of which the petitioner was obviously not aware. Objections against the sale of acquired evacuee property by public auction can be filed within seven days of the acceptance of the bid under Rule 99(2)(a) of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955 (hereinafter called the Compensation Rules). The bid of the petitioner not having been accepted, cause of action for filing any such objections had not yet properly arisen, when respondents 5 and 6 filed objections against the sale between the 6th and 11th of August, 1962. After recording the evidence of the objectors during September and October, 1962, the Managing Officer on November 6, 1962, sent for and later obtained the report of the Assistant Verification Officer.
2. To resume the thread of the petitioner's story the office of the Regional Settlement Commissioner could not trace the file of auction, and, therefore, issued an order on the petitioner's application for confirmation dated April 17, 1963, to reconstruct the file. On the reconstructed file, order dated May 2, 1963, was passed accepting the petitioner's bid. In consequence of that order, the petitioner paid the balance of the price. Possession of the property was given to the petitioner on September 27, 1963, and the sale certificate in respect thereof was granted to him on January 9, 1964.
3. Utter lack of co-ordination in the office of the Rehabilitation Authorities resulted in another complication. On the one hand proceedings for confirmation and completion of petitioner's sale were going on in the reconstructed file; on the other side the Regional Settlement Commissioner is stated to have issued letter dated September 11, 1963, to the petitioner informing him that the sale had not been confirmed, on the basis of orders passed by him on the original file which had since been traced out. Petitioner denies the receipt of any such letter and the respondents have not pressed that communication into service during the course of arguments. Not only this, but the property as put to reauction on September 18, 1963, and the highest bid for the same was given by Shrimati Durga Devi respondent No. 7. It is unnecessary to give the details of that auction as the same has been finally set aside, and neither the setting aside of that auction is any more in dispute, nor Durga Devi has taken any interest in the writ proceedings.
4. The situation which prevailed after January 9, 1964, was that though the petitioner was the owner in possession of the property in dispute and the title thereof vested in him by virtue of the sale certificate, Durga Devi respondent No. 7 was its auction purchaser at the reauction held in September, 1963, awaiting to get the property. This situation was taken notice of by the Managing Officer concerned who made a reference to the Chief Settlement Commissioner for cancelling the sale of the property. The reference was disposed of by the order of O. N. Vohra, Chief Settlement Commissioner, dated April 27, 1965 (Annexure 'A'). He specifically set aside the order of acceptance of petitioner's bid, dated May 2, 1963, as well as the order of rejection of his bid, dated September 11, 1963, as also the subsequent sale in favour of respondent No. 7 and remitted the case to the Regional Settlement Commissioner (or such officer as might have been authorised by him) to determine the objections of respondents 5 and 6 against the sale, dated August 4, 1962, and to take such further measures with regard to the disposal of the property as might be necessary. Though the objections of respondents 5 and 6 were accepted by the order of Shri R. L. Gupta, Managing Officer dated December 20, 1965 (Annexure 'B'), the said decision was reversed on February 11, 1966, on petitioner's appeal, and the objections of respondents 5 and 6 were dismissed. A copy of that order is Annexure 'L' to the petition (filed today). Shri Pritam Singh, Settlement Officer, with delegated powers of Settlement Commissioner, Jullundur, accepted the petitioner's appeal with the direction that the objections of respondents 5 and 6 having already been dismissed by Shri R. L. Gupta 'steps shall be taken by the concerned officer with regard to acceptance of the bid of the appellant in respect of the 'property in question' as under rules.'
5. Respondents 5 and 6 went up to the Chief Settlement Commissioner for getting the order of the Settlement Commissioner, dated February 11, 1966, revised. Before Shri O. N. Vohra (exercising powers of the Chief Settlement Commissioner) an argument was advanced on behalf of the present petitioner that the revision petition of respondents 5 and 6 was misconceived in as much as the petitioner's bid had not been accepted and all that had been observed by the Chief Settlement Commissioner was that steps should be taken by the concerned officer in regard to the acceptance of the bid of the petitioner in respect of the property in question under the rules. It was further argued on behalf of the writ petitioner that the previous acceptance and rejection of the bid having been quashed by the Chief Settlement Commissioner, and the objections against the sale filed by respondents 5 and 6 having been dismissed, Regional Settlement Commissioner had yet to take steps for the acceptance or rejection of the bid in accordance with the rules, and, therefore, the grievance of respondents 5 and 6 was not well founded. These arguments of the present petitioner (who was respondent No. 2 before the Chief Settlement Commissioner in those proceedings) were accepted by Mr. Vohra and the revision petition of respondents 5 and 6 was accordingly dismissed as misconceived and without any merit.
6. In pursuance of the order of the Settlement Commissioner, dated February 11, 1966, as clarified by the Chief Settlement Commissioner in his order, dated August 6, 1966, the case went back to the Managing Officer for taking steps in regard to the acceptance (or otherwise) of the bid of the petitioner. It is at that stage that the first order of which the petitioner is now aggrieved was passed on January 12, 1967 by Shri M. S. Kapoor, Managing Officer, (Sales). A copy of that order in Annexure 'D' to the writ petition. After referring to the history of the case in substantial detail, the Managing Officer held that the objections against the sale having been rejected 'the only question which requires decision is the acceptance or otherwise of the bid of Rs.1,300/- offered by Shri. Gobind Ram Batra.' He answered that question in the operative part of impugned order in the following words:--
'The bid is above the reserve price, but I feel that the property would fetch a better price if put to resale. Accordingly the bid is rejected. The property shall be included in the next sale programme.'
7. The petitioner was naturally dissatisfied with this order and went up in appeal against it to the Assistant Settlement Commissioner. A copy of the grounds of appeal dated March 9, 1967 is Annexure 'D' to the petition. Durga Devi respondent No. 7 also preferred an appeal against the same order. Both those appeals were dismissed by the order of the Assistant Settlement Commissioner, dated March 31, 1967 (Annexure 'F'). It was held that Durga Devi had absolutely no case because she had not produced any fresh material which would warrant different finding in her favour. Petitioner's appeal was dismissed on the ground that the order of the earlier acceptance of his bid having been set aside, the Department was justified in refusing to accept the same bid again in view of the fact that the objectors had offered to pay more for the property. Petition for revision (Annexure 'G' dated April 11, 1967) filed against that order was dismissed by the order of Shri. K. L. Wason, Chief Settlement Commissioner, dated August 31, 1967 (Annexure 'H') on the ground that it was within the discretion of the Department to accept or not to accept the bid of the petitioner, and that the Managing Officer had taken a correct view of the case. It was observed that the Settlement Commissioner or any officer appointed by him in that behalf was competent to reject the bid without disclosing any reason. It is this part of the order of the Chief Settlement Commissioner which has been vehemently attacked by Mr. Nand Lal Dhingra. According to learned counsel, the Settlement Commissioner or any officer appointed by him cannot reject the bid without disclosing any reason, for doing so, and if he chooses to reject the highest bid of an auction bidder despite objections against that sale having been dismissed, he must support his order with valid reasons.
8. Having been unsuccessful before the Central Government in proceedings under Section 33 of the Displaced Persons (Compensation and Rehabilitation) Act (44 of 1954) (hereinafter called the Act), initiated by petitioner, dated December 3, 1967 (Annexure 'I'), and aggrieved by the decision of the authority under the provision (Annexure 'J' dated December 26, 1967), the petitioner invoked the extraordinary jurisdiction of this Court to have the orders Annexures 'D', 'F', 'H' & 'J' quashed. Though it was not mentioned in the writ petition that the property was being resold, it was represented in a miscellaneous application that the reauction had been fixed for March 7, 1968. At the motion hearing on March 7, 1968, therefore, the confirmation of the sale was stayed ad interim while admitting the writ petition. Tilak Raj who gave the highest bid of Rs.1,750/- at the time of the third auction on March 7, 1968 has subsequently been impleaded as respondent No. 8 on his own application.
9. Respondents 1 to 4 have filed a joint written statement. The material facts have not been denied therein. It has been submitted in paragraph 17 of the return that there had been a material irregularity in the process of the sale which necessitated the cancellation of the sale under Rule 92 of the Compensation Rules. That plea is, however, absolutely irrelevant for purposes of deciding this petition as none of the parties before me is aggrieved by the order setting aside the original sale in favour of the petitioner as well as in favour of Durga Devi.
10. The legal position in regard to such sales does not admit of any doubt. Procedure for sale of property from the compensation pool by public auction is laid down in rule 90 of the Compensation Rules. Sub-rules (1) to (4) of R. 90 deal with the pre-auction procedure relating to the publicity of the intended sale. Sub-rule (5) provides that every such auction has to be conducted subject to a reserve price fixed for the property though such reserve price may not be disclosed. Sub-rules (6) and (7) deal with adjournment of the auction proceedings or withholding of any property from sale. Sub-section (8) enjoins on the highest bidder of such property a duty to pay immediately on the fall of the hammer amount of the initial deposit. Sub-rule (10) states that the bid in respect of which the initial deposit has been accepted shall be subject to the approval of the Settlement Commissioner or an officer appointed by him for the purpose. The proviso to that sub-rule prohibits the approval of any bid until after the expiry of a period of seven days from the date of the auction. Intimation of the approval or rejection of the bid is required to be given to the highest bidder by sub-rule (11). The manner of payment of the balance of the purchase-money is prescribed by the sub-rules (12) & (13). Sub-rule (14) deals with default on the part of the highest bidder in making up the balance of the purchase price. Sub-rule (15) of R. 90 then reads:
'When the purchase price has been realised in full from the auction purchaser, the Managing Officer shall issue to him a sale certificate in the form specified in Appendix XXXII or XXXIII, as the case may be. A certified copy of the sale certificate shall be sent by him to the Registering officer within the local limits of whose jurisdiction the whole or any part of the property to which the certificate relates is situated. If the auction purchaser is a displaced person and has associated with himself any other displaced person having a verified claim whose net compensation is to be adjusted in whole or in part against the purchase price, the sale certificate shall be made out jointly in the name of all such persons and shall specify the extent of interest of each in the property.'
11. Rule 92 is the only provision in the compensation Rules dealing with procedure for setting aside a sale. In the case of a sale by public auction an application for setting aside the sale can be made within seven days from the date of the acceptance of the bid (Rule 92 (2)(a)). A sale can be set aside under that provision only if the officer to whom the application under Rule 92 is made, is satisfied (i) that any material irregularity or fraud has been committed in the publication or conduct of the sale; and (ii) the objector has sustained substantial injury by reason of the irregularity or the fraud. Sub-rule (4) of R. 92 vests in the Settlement Commissioner the jurisdiction to set aside any sale effected under Chapter XIV of the Compensation Rules suo motu if he is satisfied about the existence of the two conditions precedent referred to above.
12. At this point of time, we are concerned with only two sales, namely (i) the sale resulting from the auction held on August 4, 1962 at which the highest bid of Rs.1,300/- was given by the petitioner; and (ii) the sale held on the 7th of March, 1968, at which respondent No. 8 gave the highest bid of Rs.1,750/-. The bid of respondent No. 8 has admittedly not been accepted so far. The final order of the sale of the property in favour of the petitioner as well as the order, dated May 2, 1963, approving of his bid, as also the order of September 11, 1963, disapproving of his bid were all admittedly set aside. After the passing of the order, dated February 11, 1966 (Annexure 'L') the petitioner was the only auction bidder for the property in the field, whose bid had either to be accepted or rejected in accordance with the rules.
13. The first contention of Mr. Dhingra is that by the order Annexure 'L' itself the bid of the petitioner had been approved. There is no doubt that the patent impediment in the way of the approval of the petitioner's bid had been removed by order Annexure 'L' by dismissing the only objections that had been raised against the sale. The proceedings under Rule 92 came to an end with that order and no objection against the sale in favour of the petitioner survived that order. All the same the order of approval of his bid having also been set aside by the original order of the Chief Settlement Commissioner, dated April 27, 1965, the petitioner stood relegated to the stage referred to in sub-r. (10) of R. 90. At that stage it was open to the Settlement Commissioner to accept the bid himself while passing the order Annexure 'L'. This is so because Shri Pritam Singh, Settlement Officer, who passed that order was exercising the delegated powers of the Settlement Commissioner. (This is clear from the order itself). He had also the power to reject the bid. It is, however, clear to me that he neither accepted the bid himself, nor rejected it, in as much as he specifically directed 'the concerned officer' to take steps under the rules 'with regard to the acceptance of the bid' of the petitioner. The concerned officer could be any officer appointed by the Settlement Commissioner for the purpose of approving or rejecting the bid.
Though Mr. Dhingra sought to argue at one stage that there is nothing on the record to show that Shri. M. S. Kapoor, Managing Officer, was such an authorised officer, I did not permit him to urge the point as it had not been specifically taken up in the writ petition. He wanted me to spell out his ground from the phraseology of sub-paragraph (iv) of paragraph 17 of the writ petition. This is what is stated there:--
'There was no power with the Managing Officer to reject the bid of the petitioner on the flimsy ground that this property if reauctioned would fetch more price.'
I think it was not the competence of the Managing Officer to approve or reject the bid of the petitioner which was being questioned in the above quoted ground, but what was being questioned was his competence to reject the bid on the ground that the property would fetch more price if put to reauction. That allegation was specifically denied in the corresponding paragraph of the return. Once it is established that the Settlement Commissioner did not himself exercise the power vested in him under sub-rule (10) of R. 90, and neither rejected nor accepted the bid, it has then to be decided whether the order of the Managing Officer, dated January 12, 1967 (Annexure 'D') expressly refusing to accept the bid is a valid and legal order or not. The Compensation Rules do not indicate any ground on which the competent authority may reject the highest bid.
The provision for conducting any sale by public auction subject to a reserve price contained in Rule 90(5) does indicate that one of the grounds on which the highest bid offered at an auction may be rejected may be that such bid was for an amount lesser than the reserve price. In the present case the petitioner's bid was admittedly above the reserve price. This fact was specifically noticed in the impugned order (Annexure 'D'). Though the Rules do not provide for an order rejecting a bid being supported by reasons, I am inclined to think that if the highest bid given at an auction conducted under Rule 90 which is substantially above the reserve price is rejected by the competent authority, he must support his order with reasons. This is so because an order ejecting or not approving a bid is subject to appeal and is likely to affect the Civil rights of the highest bidder. In the present case the solitary reason given was that in the opinion of the Managing Officer this property would fetch a better price if put to resale. At that time the record before the Managing Officer showed that at the resale held on September 18, 1963, the highest bid of Rs.3,525/- had been given by Durga Devi respondent No. 7 though the sale in her favour had also been subsequently set aside. In M/s. Bombay Salt and Chemical Industries v. L. J. Johnson, AIR 1958 SC 289, it was observed by their Lordships of the Supreme Court that 'the fact that the bid has to be approved by the Settlement Commissioner (under R. 90(10)) shows that till such approval which the Commissioner is not bound to give, the auction-purchaser has no right at all.' The original order of acceptance of the petitioner's bid having been set aside, the petitioner had no right at all to the property till his bid was accepted again. This is also clear from the further observation of the Supreme Court in the same paragraph of their Lordships' judgment in the Bombay Salt and Chemical Industries' case (supra) to the following effect:--
'The correct position is that on the approval of the bid by the Settlement Commissioner, a binding contract for the sale of the property to the auction-purchaser comes into existence.'
It is not for this Court to control the discretion of the competent authority to approve or reject a particular bid. At the same time the Court will not hesitate to quash an order rejecting a bid if the reason given in support of such an order is extraneous or not at all germane to the question of the sale of property, or to the question of the price which it has to fetch for the compensation pool. Though ultimately the highest bid offered for the property at the time of the auction held in March, 1968 is only insignificantly higher than the bid given by the petitioner six years earlier, it cannot be said that the Managing Officer went off the track in considering the probability of a higher price being fetched in the case of resale of the property in January, 1967, when three years earlier, the highest bid of rs.3,525/- had been given for the same property. I shall, therefore, hold that the Settlement Commissioner had not accepted the bid himself, but had left the matter of acceptance or rejection of the bid to the authorized Managing Officer, that the Managing Officer rejected the bid by his order, dated January 12, 1967, and his said order is supported by a reason which was not invalid in the circumstances of this case.
14. Mr. Dhingra then contended that the Rehabilitation Authorities have no jurisdiction to refuse to approve of the highest bid of an auction-purchaser after he has already paid the full sale price of the property, and objections against the sale, if any, have already been dismissed. He has firstly referred to my judgment in Joginder Pal v. State of Punjab, 1968-70 Pun LR 129. In that case it has no doubt been held that when purchase price has been realised in full from the auction purchaser, the Managing Officer has to issue a sale certificate and that after the issue of such a certificate, the sale can be set aside only under Rule 92 or by the Chief Settlement Commissioner in exercise of his powers under Section 24 of the Act. In the present case the sale as well as the order of acceptance of the bid had been expressly set aside. In Joginder Pal's case it has been expressly noticed by me in the course of the judgment that the Managing Officer had proceeded to confirm the highest bid as no irregularity had been found in the conduct of the sale in Joginder Pal's favour. If the order, dated May 2, 1963, confirming or approving of the bid of the petitioner had not been set aside, there would have been no obstacle in the way of the petitioner. As things, however, stand, I am unable to issue any mandamus to the Rehabilitation Authorities to approve of the petitioner's bid. Doing so would be sitting in appeal over the orders of the competent authorities which have been passed within their jurisdiction.
15. Reference was then made to the judgment of Gurdev Singh. J., in Harkishan Singh v. State of Punjab, 1966-68 Pun LR (Supp) 317. The question of the effect of non-acceptance of the bid and the scope of the authority vested in the Settlement Commissioner under sub-rule (10) of Rule 90 did not come up for consideration before the Court in that case. The sale in favour of the petitioner has not been set aside under Rule 92. Transfer of the house to him has been refused to him on solitary ground that the authorities have refused to accept his bid and have directed the property to be resold.
16. Though it is a matter of regret that the petitioner who paid the full price of Rs.1,300/- about nine years ago, and has spent a good deal of money thereafter on litigation, is being deprived of the property to which he would have been entitled as a matter of right if his bid had been approved by the Settlement Commissioner and the matter had not been left to the whim of the Managing Officer, and ultimately the price which the has fetched at the reauction in favour of respondent No. 8 is only insignificantly higher than the price offered by the petitioner, I have not been able to see my way to interfere in this case because the impugned orders have been passed by the competent authorities and have been found to be technically within their jurisdiction. The petition accordingly fails and is dismissed.
17. In view of the fact that the main points urged by the learned counsel for the petitioner, and decided by me in this case, were res integra, and were not free from difficulty, I leave the parties to bear their own costs.
18. Petition dismissed.