Allowed

Mr N Harish v. the State of Karnataka

Karnataka HC26 Nov 2024WP/24704/2022

Case brief

AI extract

What is this about?

Highest bidder at MUDA auction challenged cancellation of his offer for failure to deposit the balance price within time. The Court held the revisional authority ignored peculiar circumstances including timely deposits made per interim orders, quashed both cancellation orders and directed execution of conveyance deed within three months.

What did the court decide?

Orders dated 14.09.2016 and 30.09.2022 quashed; MUDA directed to execute Conveyance Deed in terms of the 1991 Rules within three months.

Mr N Harish Vs the State of Karnataka — Public Procurement and Tenders | Karnataka HC (2024)

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 26^TH DAY OF NOVEMBER, 2024 BEFORE

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THE HON'BLE MR JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 24704 OF 2022 (LB-RES)

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BETWEEN:

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MR. N HARISH AGED ABOUT 50 YEARS, S/O K. NARAYANAPPA, NO.4515, 17^TH MAIN ROAD, NEAR K.D.CIRCLE, VIJAYANAGAR 2^ND STAGE, MYSURU-570017.

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…PETITIONER

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(BY SRI. B S NAGARAJ.,ADVOCATE)

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AND:

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Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

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THE STATE OF KARNATAKA REP. BY ITS PRINCIPAL SECRETARY, DEPARTMENT OF URBAN DEVELOPMENT, VIKASA SOUDHA, BENGALURU-560001.

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THE MYSURU URBAN DEVELOPMENT AUTHORITY REPRESENTED BY ITS COMMISSIONER, J.L.B. ROAD, MYSURU 570001.

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…RESPONDENTS

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(BY SMT.CHANDINI S., HCGP FOR R1;

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SRI. T.P. VIVEKANANDA, ADVOCATE FOR R2)

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 30.09.2022, PASSED BY THE R1, SECRETARY, WHEREIN DISMISSED THE REVISION PETITION AND CONFIRMED THE ORDER DATED 14.09.2016, PASSED BY THE R2 THE TRUE COPY OF THE SAID ORDER IS SUBMITTED AT ANNEXURE-A AND EXPARTE ORDER DATED 14.09.2016, PASSED BY THE R2, MUDA, WHEREIN CANCELLED THE ALLOTMENT OF THE SITE BEARING NO. 4438. THE TRUE COPY OF THE SAID ORDER IS SUBMITTED AT ANNEXURE-D; DIRECT THE R2 MUDA TO ACCEPT THE FULL SALE CONSIDERATION DEPOSITED BY THE PETITIONER AS PER THE DIRECTION OF THIS HONBLE COURT AS PER ANNEXURE-F AND TO EXECUTE THE SALE DEED IN FAVOUR OF THE PETITIONER.

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THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE B M SHYAM PRASAD

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ORAL ORDER

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The petitioner who is successful in the auction for sale of the site bearing No.4438 measuring 4.40 Mts. X 9.00 Mts. [ approximately 15 ft. x 30 ft. ] in Vijayanagar II Stage, Mysuru [ the subject property ], is aggrieved by the decision to cancel his offer and the confirmation of such decision. The second respondent's decision to cancel the Petitioner’s offer is dated 14.09.2016 [ Annexure-

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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D ] and the confirmation thereof in revision by the

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first respondent is dated 30.09.2022 [ Annexure-A ].

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The petitioner in offering

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Rs.19,60,000/- has offered the highest bid to purchase the subject property. The petitioner is issued with Confirmation Certificate dated 02.02.2016 stipulating that he has deposited 25% of the amount offered and that he must deposit the remaining 75% [ Rs. 14,70,000/- ] within a certain timeline. The petitioner is issued with the Confirmation Certificate calling upon to deposit 75% of the price offered subject to the following stipulations.

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[a] The petitioner must deposit this amount

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[ Rs. 14,70,000/- ] within 45 days from the

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date of receipt of the Confirmation

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Certificate.

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[b] If the petitioner cannot deposit within 45

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days, he can make the deposit in the next

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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90 days, but upon paying interest at 18%

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p.a.

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[c] If the petitioner does not deposit with interest even within 90 days, he can deposit the amount along with interest at 21% over the next 30 days.

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The petitioner has applied on

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30.08.2016, which is definitely beyond the initial 45 days and the next 120 days contemplated under the Confirmation Certificate, for leave to deposit Rs.14,70,000/-. On 14.09.2016, the petitioner is informed that his highest offer is refused and that the deposit of 25% of the bid amount is forfeited. The petitioner has called in question the order dated 14.09.2016 in W.P. No.54560/2016. This Court, on 21.11.2016, has permitted the petitioner to deposit 75% of the amount [ Rs.14,70,000/- ] along with interest at 21% per annum for 90 days from 02.02.2016 while reserving liberty to the second

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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respondent to encash the draft deposited and to file a Statement of Objections to show cause why the impugned order should not be quashed. This Court's interim order dated 21.11.2016 reads as follows: -

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“If the petitioner deposits the balance amount of Rs.14,70,000/- with interest in terms of the aforesaid Rules and further interest at the rate of 21% per annum after 90 days from 02.02.2016 by way of demand draft in favour of the respondent-MUDA within a period of one week from today and produces the acknowledgement to this effect, then, the operation of the impugned order Annexure-A dated 14.09.2016 cancelling the said allotment of site in favour of the petitioner upon highest bid being given by him for Rs.19,60,000/- shall remain stayed and the site in question shall not be allotted to any third party without leave of this Court.

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The respondent-MUDA shall be at liberty to encash the demand draft and deposit the said amount in its own account and file statement of objections before this Court to show cause as to why the impugned order be not quashed and allotment in favour of the petitioner be not confirmed"

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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The petitioner, in accord with the permission as aforesaid, has deposited both interest and the remaining amount of Rs.14,70,000/-.

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This Court has ultimately disposed of this writ petition in W.P. No.54560/2016 on 20.11.2019 permitting the petitioner to avail remedy under Section 63 of the Karnataka Urban Development Authorities Act, 1987 [ the Act ] observing that the Authority [the first respondent] must also consider that the MUDA has received the amount deposited by the petitioner within the time allowed in the writ petition. This Court has also observed that the second respondent will not create any third-party interest in the subject property. After this disposal, the petitioner has filed revision petition with the first respondent in No.UDD.01. MUDA/2019.

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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The petitioner has filed writ petition in W.P. No.13632/2021 because the hearing of the revision petition is not concluded in an expedited manner as is required by this Court's order dated 20.11.2019. This petition is disposed of on 13.08.2021 directing the second respondent to dispose of the revision petition within three months and ordering costs to be paid to the petitioner in a sum of Rs.10,000/-. The first respondent, after this order dated 13.08.2021, has passed the impugned order confirming the cancellation of the bid offered by the petitioner.

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The first respondent, in confirming the cancellation of the offer, has opined that Rule 6 of the Karnataka Urban Development Authorities [Disposal of Corner Sites and Commercial Sites] Rules, 1991 [for short, the ' 1991 Rules '] is mandatory and that because the petitioner has failed to deposit Rs.14,70,000/- within the initial period of 45 days

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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and to even apply for the extension of time to deposit this amount with permissible interest, within the next period of 120 days, the second respondent’s decision vide order dated 14.09.2016 [ Annexure-D ] to cancel the offer is justified.

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Mr. B.S. Nagaraj, the learned

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counsel for the petitioner, submits that the first respondent has failed to consider this Court’s direction in W.P. No.54560/2016 to consider the petitioner's grievance as against the second respondent's order dated 14.09.2016 keeping in mind the fact that he has deposited Rs.14,70,000/- [with interest] in compliance with the interim orders in such petition. The learned counsel also argues that the petitioner is diligent in both applying for the extension of time and in depositing the amount as permitted by this Court, and that the respondents could not have ignored the fact that the second respondent has had the use of Rs.14,70,000/-, which

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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is tendered along with interest at 21% per annum, from 02.02.2016.

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Mr. T.P. Vivekananda, the learned

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counsel for the second respondent, who is supported by Ms. Chandini S, the learned High Court Government Pleader for the first respondent, submits that an Urban Development Authority, because of Rule 6 of the 1991 Rules, must forfeit 25% of the amount if there is a default in depositing 75% within 120 days after the initial period of 45 days and resell the property in public auction. The learned counsels also argue that admittedly the petitioner has neither deposited Rs.14,70,000/- within the first 45 days nor applied for leave within the next 120 days to deposit this amount, and therefore, the decisions to cancel the offer and confirm the same are justified.

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It is seen from Rule 6 of the 1991

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Rules that an auction purchaser whose bid is accepted must at once [on the spot] pay 25% of the

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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bid amount and if there is default, the initial amount paid shall be forfeited and the property shall be reauctioned with the defaulting purchaser being denied the opportunity to take part in re-auction. This Court from this must opine that default in paying 25% visits consequences immediately with the property being re-auctioned. However, the auction purchaser is permitted 45 days [from the date of receipt of intimation in Form No.1] to deposit the balance 75% of the amount, and if there is default [despite the further 120 days], an Urban Development Authority will forfeit 25% of the amount paid and resell the property in public auction and the purchaser will be liable to make good any loss that is suffered by the Authority on account of resale.

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Crucially, Rule 6(3)(d) of the 1991

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Rules inheres in the Commissioner, Urban Development Authority the power to extend the period of 45 days by a period not exceeding 90 days

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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but on the condition that the auction purchaser shall apply for extension of time and pay interest at 12% per annum on the balance amount for the extended period. Next, the Board is invested with the jurisdiction to extend time for payment by a further period not exceeding 30 days provided the auction purchaser pays the additional interest at 21% per annum for this extended period. The Board, only if the auction purchaser does not deposit the balance amount with interest as aforesaid, shall be entitled to forfeit the 25% of the amount and auction the property with the auction purchaser being liable to make good the loss suffered by the authority on account of the resale.

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The petitioner has not deposited the 75% of

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the amount offered either within the first 45 days or the next 120 days, but he has applied on 30.08.2016 for extension of time, which is acknowledged. However, the second respondent, without reference to this

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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application, has cancelled the petitioner’s offer by the order dated 14.09.2016. These could be one set of circumstances that is peculiar to the present case, and the other circumstances which must definitely be peculiar to this case are these.

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[a] The petitioner has offered a bid for the purchase of a site which only measures 4.40 Mtrs. x 9.00 Mtrs and has deposited 25% of the offer as is required.

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[b] The petitioner has approached this Court immediately after receipt of the Cancellation Order dated 14.09.2016 in W.P. No.54560/2016, and this Court has reserved liberty to the petitioner to deposit the balance amount with interest at 21% per annum while also reserving liberty to the second respondent to show cause against the cancellation of the offer.

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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[c] The petitioner has deposited this amount with interest.

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[d] This Court has disposed of this writ petition in WP No.54560/2016 observing that the first respondent [the revisional authority] shall consider whether there must be cancellation of the offer despite the petitioner depositing the next 75% with interest in terms of this liberty reserved by this Court in W.P. No.54560/2016.

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[e] The subject property is covered by an interim order right through which is to ensure that this property is not re-auctioned.

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The first respondent has rejected the review petition without considering these peculiar circumstances, and especially the fact that the petitioner has offered the bid to purchase a site which only measures approximately 15 ft. x 30 ft. This Court is of the considered opinion that the first

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NC: 2024:KHC:48676 WP No. 24704 of 2022

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respondent's order confirming the cancellation without considering the peculiarities is both unjust and unreasonable.

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Hence, specifying that the relief in this case is because of the peculiarities, the petition is allowed quashing both the orders dated 14.09.2016 [ Annexure-D ] and 30.09.2022 [ Annexure-A ] directing the second respondent to execute Conveyance Deed in terms of the 1991 Rules within three months from the date of receipt of a certified copy of this order. The petitioner will be at liberty to file a certified copy of this order within four weeks from the date of receipt thereof.

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Sd/(B M SHYAM PRASAD) JUDGE

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Mr N Harish v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

Mr N Harish v. the State of Karnataka

Case brief

What is this about?

What did the court decide?

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