Dismissed

S.S. Harbhagwan High School v. Financial Commissioner Revenue and Ors.

Punjab & Haryana HC31 Mar 2009CWP/11823/2006

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging the cancellation of a concessional land allotment to a school. The court held the school had made a false representation at allotment by claiming land was for a playground while intending to sell it for personal gain, justifying cancellation under Section 10(2) of the Punjab Package Deal Properties (Disposal) Act.

What did the court decide?

Writ petition dismissed; petitioner to pay costs of Rs.10,000/- to respondents.

S.S. Harbhagwan High School Vs Financial… — Land Acquisition | Punjab & Haryana HC (2009)

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Civil Writ Petition No.11823 of 2006 (O&M) : 1 :

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I N THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

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DATE OF DECISION: MARCH 31, 2009

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S.S.Harbhagwan High School, Samana, District Patiala

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.....Petitioner

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VERSUS

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Financial Commissioner, Revenue, Punjab & others

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....Respondents

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CORAM:- HON'BLE MR.JUSTICE RANJIT SINGH

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Whether Reporters of local papers may be allowed to see the judgement?

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To be referred to the Reporters or not?

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Whether the judgment should be reported in the Digest?

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PRESENT: Mr.A.K.Chopra, Senior Advocate with Mr.Harminder Singh, Advocate, for the petitioner.

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Mr.Praveen Chander Goyal, Addl.A.G.Punjab, for respondent Nos.1 to 3.

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Comrade Sham Lal, respondent No.4 in person. ****

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RANJIT SINGH, J.

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An educational institution has been used to advance personal interest by a person controlling management of a school. A plot measuring approximately an acre of evacuee land got allotted at concessional rate from the Government has been sold to make personal gain. Justification offered is that money was needed to get repairs of the school building. Cancellation of the allotment followed, which is under challenge.

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S.S . Harbhagwan High School, Samana, District Patiala has filed this writ petition challenging the order cancelling the land

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Civil Writ Petition No.11823 of 2006 (O&M) : 2 :

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allotted to the school for playground. The school was allotted land measuring 4700 sq.yards on 1.2.1994. This land was just adjoining the petitioner's school. On request made by school, Rehabilitation Department had decided to sell this urban evacuee property bearing No.34-A at Samana at concessional price. The terms and conditions of sale were mentioned in detail. The total price of the land allotted was Rs.1,04,600/-, which was settled after negotiations. Upon payment of this amount, the conveyance deed was executed in favour of the petitioner school. The petitioner school would, thus, claim that it is an absolute owner of this property.

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Immediately after allotment, the petitioner school appears to have started looking for buyers to sell some part of the plot. This plot was allotted on 1.2.1994. Soon after buying this land, the school suddenly seems to have suffered shortage of funds. On 6.2.1994, school management considered the issue of shortage of funds for constructing a school building which had become dilapidated and dangerous. The management unanimously passed a resolution that part of the school land meant for playground be sold to raise funds. Secretary was authorised to sell part of the land and the management authorised him to carry out necessary proceedings in this regard. It is claimed that the management had decided to construct a modern building keeping in view the requirement, which was not possible because of paucity and shortage of funds and hence this novel method to create funds. Why would the school think of modern building if it did not have funds?. A question also would be to see if the funds could be generated like this or were these funds so generated used for such purpose?.

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Civil Writ Petition No.11823 of 2006 (O&M) : 3 :

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The managing committee, thus, proceeded to sell some part of the property in question. The management states to have first approached Tehsildar-cum-Managing Officer, Samana to know if it could sell the part of evacuee property given to the school at a concessional rate. Reference is made to a communication dated 14.6.1994 by Deputy Commissioner, Patiala, who mentioned that there was no condition or restraint on the school against the sale of the property in question. The petitioner-Management of the school accordingly had sold part of this land which was allotted to it at a concessional rate. It seems that somebody made a complaint against this action of the school management. The management had written a letter to Tehsildar-cum-Managing Officer, Samana, when it received response from the Deputy Commissioner, as referred to above. The petitioner school would, thus, plead that despite this position, Chief Settlement Commissioner-cum-Deputy Commencer, Patiala cancelled this allotment of plot on 21.11.2002 nearly after eight years of its allotment on the ground that petitioner management had sold the property in question in plots to different persons. This order annexed with the petition as Annexure P-4 is now challenged through the present writ petition.

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The petitioner school has averred that it did not come to know of this order till 17.4.2003 and learnt about the order only when a letter was issued to school for taking over possession of the property. The petitioner school then applied for getting a certified copy of the order and ultimately filed a revision petition under Section 10 (4) of the Punjab Package Deal Properties (Disposal) Act (for short “the Act”) on 19.6.2004. This revision was dismissed. The

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Civil Writ Petition No.11823 of 2006 (O&M) : 4 :

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petitioner then filed a revision under Section 15 of the Act before respondent No.1, which was also dismissed on 8.6.2006. The petitioner, therefore, has filed this writ petition to challenge the order of cancellation as well as the orders through which the revision petitions have been dismissed.

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Notice of motion seems to have been issued noticing the submissions made that no notice was given to the petitioner before passing the order of cancellation, which is a requirement under the Statute in terms of Section 10(3) of the Act. During the pendency of the writ petition, one person named Comrade Sham Lal moved an application for being impleaded as a party respondent in the writ petition. His prayer was allowed on 25.9.2006. Reply on behalf of the respondents was filed.

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The perusal of the reply would show that the petitioner school through its President had applied for allotment of this land to Revenue Minister, Punjab on 17.1.1983. This land was accordingly allotted. The petitioner school has, however, concededly sold 2573.67 sq.yards out of this land allotted. Area measuring 967.33 sq.yards has been used as street for the purposes of the plots sold to various persons as residential plots. Thus, the school is now left with only 1159 sq.yards area. The list of the persons to whom the land has been sold is annexed with the record. The list contains names of Rajat Verma and Gagan Verma, who are sons of the Secretary, Veer Bhan, who was authorised to sell the plots. One plot is sold to Smt.Surjit Kaur, working as a Sweepress in the school. It is accordingly pleaded that this action is in violation of the terms and conditions of the allotment.

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Civil Writ Petition No.11823 of 2006 (O&M) : 5 :

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While explaining the communication initiated by the Deputy Commissioner and relied upon by the petitioner to justify its right to sell, it is mentioned that the matter was got enquired into by the Vigilance Department and so also by the Education Department. These enquiries have established that permission of the Deputy Commissioner was obtained in connivance with the concerned officials from the office of Deputy Commissioner and FIR had also been lodged. Accordingly, the impugned orders passed by the Financial Commissioner etc. are justified in the reply.

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As the things started revealing, this court appears to have taken cognizance of the real purpose behind this sale. The petitioner school was directed to file details of the bank accounts and the amount lying in the accounts. The order passed by this court in this regard on 5.3.2007 is reproduced as under:-

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“After hearing for some time, we feel it appropriate to order that the petitioner's school should file details of the bank accounts and the amount lying in those accounts, as on 1.1.1994. The petitioner shall also place on record some proof that after the sale of land in question, as to whether money received, was deposited in any bank account of the school.

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Mr.S.S.Randhawa, Assistant Advocate General, is also directed to intimate this court as to whether the State Government was giving any aid to repair the building etc. so far as the aided schools are concerned.”

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Thereafter, the case was adjourned on various dates to be taken up for hearing on 19.2.2008. On said date, the court felt that

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the financial affairs of the school needed to be enquired into to see if the management has been honestly and diligently running the affairs of the school. The S.D.M.,Samana was, thus, detailed to conduct enquiry into the affairs of the school with the following terms of reference:-

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“(i) The details of the sale deeds executed by the Secretary of the School, as revealed in Annexure R/2, shall be gathered and the SDM shall prepare a statement of the sale proceeds, and how the money was spent. (ii)Statement of income and expenditure from March 31,

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2000 to March 31, 2008 shall be prepared.”

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The case again was adjourned on number of occasions. The enquiry was, thus, held by the S.D.M., who has found that 17 different sale deeds have been executed by the petitioner management realising sum of Rs.18,21,500/-. Interestingly, it is also found that land purchased by son of the Secretary Rajat Verma for Rs.83,000/- was later sold to Smt.Maan Kaur for Rs.90,000/-. This would explain the discrepancy in regard to the averment made by the Secretary in his written statement showing that he had realised sum of Rs.17,50,500/-. Interesting and strange, it would be to notice that the Secretary had claimed Rs.5,91,000/- as his salary from April, 1994 to June, 2002 out of this amount realised due to sale deeds and only an amount of Rs.6,90,200/- has been shown to have been utilised for the construction purposes. Sons of the Secretary, namely, Rajat Verma and Gagan Verma were also found to have purchased plot measuring 506.66 sq.yards for Rs.2,28,500/-. When asked to explain the expenditure on the construction etc., Secretary Veer

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Civil Writ Petition No.11823 of 2006 (O&M) : 7 :

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Bhan pleaded that he was 91 years old and not in a position to tell as to whom and how much he has paid for construction of the building. Headmistress when examined revealed that only Rs.one lac was spent on the construction of a big hall by the Secretary and the staff and student had collected money from the residents of Samana by way of donation and further that sum of Rs.one lac was given to the school in Sangat Darshan Programme of the Chief Minister, Punjab. The S.D.M.while holding enquiry also went into the income and expenditure of the school from March, 2000 to March, 2008. He has observed that no audit of the school funds was done, especially in regard to the funds received by donation and the P.T.A.fund. He accordingly held that the expenditure shown under these heads could not be relied upon. Ultimately, the S.D.M. has given the following findings:-

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“(i) No audit of the funds received as donations and as P.T.A.funds was got conducted by the school authorities. (ii)The Secretary himself claimed Rs.5,91,000/- as salary from the year April, 1994 to June, 2002, out of the funds collected by the sale of property in question. So the funds were not utilized for the sole purpose of construction of new building as claimed by the Secretary.

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(iii) Two plots measuring 506 sq.yards and 41.33 sq.yards were purchased by the sons of the Secretary out of the property in question which is against all ethics of morality.

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(iv) The Secretary did not produce any vouchers, bills or

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Civil Writ Petition No.11823 of 2006 (O&M) : 8 :

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receipts regarding any construction work undertaken by him. So the claim made by the Secretary that funds were utilized for the construction of new building of the school, is without any basis. Moreover, the Secretary and the management of the School were casual and negligent in their duties. That is why the important record of school was not properly kept and was destroyed by termites.”

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Alarmed by the state of affairs of this school, which surfaced only on account of illegal action taken by the school in selling the land allotted to it at concessional rate, this court had ordered the enquiries into the affairs of the school. This may appear to be incidental to decide the challenge raised in the writ petition, but is necessary to understand the reason, purpose and the justification behind this move as was projected in the reply. The state of affairs, as revealed, would show the petitioner school and its secretary and management in poor light. Secretary stands fully discredited and exposed. The submissions made by the counsel for the petitioner for sympathy due to old age of the Secretary are totally misplaced.

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There is substance in stand taken by the respondents that this approach of the school to challenge the cancellation of sale is a diversionary tactics to seek relief in the criminal case registered. Be that as it may, the challenge pursued by the petitioner school against the order of cancellation and strenuously argued by the counsel for the petitioner is required to be decided.

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Primarily, the counsel for the petitioner has made two-fold submissions to challenge cancellation order. The counsel submits

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that there was no rider in the conveyance deed executed in favour of the petitioner and as such the petitioner school was free to sell this land, being its absolute owner. In support, reliance is placed on the communication received from the Deputy Commissioner clarifying that the petitioner was free to sell this land. Plea further is that the cancellation of the plot could not have been done in violation of the statutory provisions and in violation of the principle of natural justice. In this regard, reference is made to the provisions or Section 10 of the Act with special emphasis on Section 10(3), which provides that no order which prejudicially affects any person shall be passed under this Section without giving him a reasonable opportunity of being heard. Let us now proceed to deal with the challenge made by the petitioner.

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Section 10 empowers the Chief Sales Commissioner to call for record of any proceedings under this Act, in which a Tehsildar or a Sales Commissioner etc. has passed an order for the purpose of satisfying himself to the legality or proprietary of any such order. He is entitled to pass such order in relation thereto as he may deem fit. The submission is that no notice was served on the petitioner before passing the order cancelling the plot. The counsel, thus, pleads that the order cannot be sustained being in violation of this statutory and mandatory requirement and otherwise being in violation of principle of natural justice.

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State counsel, while responding to the plea of violation of principle of natural justice, would point out that before cancelling the allotment, a show cause notice was duly issued to the petitioner on 18.11.1996, which is annexed as Annexure R-6. When the petitioner

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did not furnish any reply, another notice dated 26.11.1999 was issued to the petitioner, copy of which is at Annexure R-7. Petitioner had replied to this notice which is annexed with the petition as Annexure R-8. Yet another notice through memo No.612/HC dated 21.11.2001 was issued by Tehsildar Sales-cum-Managing Officer, Samana which is on record as Annexure R-9. Annexure R-10 is the reply given by the petitioner to this notice. It is only upon finding the reply being unsatisfactory, Tehsildar Sales recommended cancellation of allotment to Sales Commissioner, Samana, who in turn, recommended it to Chief Sales Commissioner and, thus, the allotment was cancelled.

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Controverting the plea of the petitioner that it could sell the land being the absolute owner and there being no restriction on the petitioner in this regard, the counsel would refer to Rule 8 (which in fact is sub-rule of Rule 6) of Punjab Package Deal Properties (Disposal) Rules, 1976 (for short “the Rules”), which lays down a bar on alienation of land purchased in restricted auction. It provides that auction purchaser shall not be entitled to lease, transfer, sell, mortgage with possession or otherwise alienate or part with the land wholly or partly so purchased in any manner in favour of a person who is not a member of scheduled caste or backward classes for a period of twenty years. This Rule further provides that if an auction purchaser in a restricted auction violates any of the conditions, then Tehsildar or Naib Tehsildar shall be competent to cancel the sale, forfeit the amount already paid and resume the land after giving due notice. Accordingly, the State counsel would justify the cancellation order, which, as per the counsel is perfectly legal.

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I have heard the counsel for the parties.

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The submission about not serving a notice on the petitioner before the order of cancellation order appears to be factually wrong. The petitioner has not disputed service of notice Annexure R-6. This was a notice issued by the Education Department asking the petitioner to show cause as to why proposed action be not taken against him for removing the school from the list of grant-in-aid in view of collusion of the managing committee with the employees of the office of Deputy Commissioner. Subsequently, through order, Annexure R-7, Sub Divisional Magistrate has summoned the Secretary to submit reply. The Secretary had then submitted reply to the Sub Divisional Magistrate taking the same stand that this land was sold for raising money for repairs of the school building which was in dilapidated condition. This was followed by notice issued by Tehsildar-cum-Managing Officer, Samana to show cause as to why sale deed be not cancelled and the land resumed and further for registering a case against the management on the ground that the school had converted this area into plots and executed sale deeds in favour of different purchasers. This was termed as fraud with the Government.

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The petitioner management through its Secretary had replied to this show cause notice, copy of which is Annexure R-10. Same stand was taken to justify this sale that it was done to raise funds for constructing/repairing the school building which was in dilapidated condition. It is stated in the reply to show cause notice that one hall room was got constructed in the school and there is no misuse of any funds. Reliance was placed on the letter of the Deputy

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Commissioner, which has already been referred to above. It is thereafter that Tehsildar-cum-Managing Officer, Samana had forwarded the case to Chief Sales Commissioner, Patiala for cancellation of the sale deed. Ultimately, Chief Sales Commissionercum-Deputy Commissioner, Patiala cancelled the sale deed on 21.11.2002.

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The impugned order, Annexure P-4, would show that the power to cancel the plot was exercised under Section 10(2) of the Act. The revision filed by the petitioner was dismissed by the Commissioner on 19.6.2004, when the petitioner approached the Financial Commissioner, who also dismissed the revision on 8.3.2006. In fact, a perusal of the orders passed by the Commissioner would show that the petitioner had never raised any plea that he was not served with any notice before passing of the order of cancellation. Before the Financial Commissioner, however, the petitioner did raise a challenge to the cancellation order on the ground that no notice was served on the school. The record referred to above would stand to contradict the plea of the petitioner. The petitioner school indeed was served with notice on more than one occasion. The petitioner had submitted reply and thereafter the order of cancellation was passed. I am unable to comprehend as to how on the face of these documents, the counsel for the petitioner could pursue this line of argument that the cancellation was done without issuance of any notice to the petitioner. Though not pleaded in the manner, perhaps the petitioner would expect that the notice was required to be issued by Chief Sales Commissioner. The requirement of Section 10(3) is that no order which prejudicially affects any

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person is to be passed without giving him a reasonable opportunity of being heard. The service of notices and the one which was served upon the petitioner by Tehsildar Sales had given enough time and opportunity to the school to say whatever it had wished to urge in support of its stand. This would certainly satisfy the requirement of Section 10(3) of the Act, especially when the petitioner has nothing else to urge except that the sale was to raise funds for repairing/constructing school building. This stand indeed was taken in the reply. I am, thus, not at all impressed with this line of submissions made by the counsel and would hold that the order of cancellation was after service of a notice and the impugned order would not call for any interference on this ground.

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The second ground to challenge the cancellation of allotment is also misconceived. The petitioner has urged that it was absolute owner of the property and there being no restriction contained in the conveyance deed, the school was entitled to dispose of the property as it wished. The State counsel has made reference to Rule 6(8) of the Rules, which indicates that a property purchased in a restricted auction is not open to be sold, leased or transferred for a period of twenty years. The State counsel has made references to the dates of sale to say that the sale was certainly in violation of this Rule referred to above and, thus, could be cancelled irrespective of the absence of any rider in the conveyance deed. Counsel for the petitioner, however, would submit that this Rule could apply to that property which is purchased in a restricted auction which is not the case in the present purchase. This on the first blush may sound attracted, but deeper analysis would show that the same plea would

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Civil Writ Petition No.11823 of 2006 (O&M) : 14 :

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also not rescue the cause of the petitioner.

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Transfer of package deal property is regulated by Section 4 of the Act. As per this section, subject to any rules, Tehsildar Sales etc. may transfer any package deal property through following methods:-

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“(a) by sale by public auction;

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(b) by sale by auction restricted to socially and educationally backward classes of citizens notified by the State Government from time to time or to the members of the Scheduled Castes;

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(c ) by sale to such class of occupants and at such price as the State Government may by general or special order specify;

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(d). by sale to any co-operative society, Government company or local authority or to any corporate body for a public purpose;

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(e) by lease on such terms and conditions as may be prescribed; or

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(f) in such other manner as may be prescribed.”

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Thus, restricted auction is not the only mode by which the

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package deal property can be transferred. Grounds (c ) and (d) noted above of Section 4 seem to have come in play for transfer of this property in favour of the petitioner. Section 7 of the Act empowers the Tehsildar or Naib Tehsildar to vary or cancel lease or transfer or amend the terms or any transfer or lease under the package deal property is held or occupied by a person. Section 8 makes a provision of appeal before the Sales commissioner against the order

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passed by Tehsildar or Naib Tehsildar. Right of appeal against the order passed by Sales commissioner is provided under Section 9 of the Act and, thus, an appeal can be filed before Chief Sales Commissioner. Section 10 then makes a provision of power of revision by Chief Sales Commissioner, who at any time, can call for record of any proceedings under this Act in which Tehsildar or Naib Tehsildar or Sales Commissioner has passed an order for the purpose of satisfying himself to the legality or propriety of any such order and may pass such order in relation thereto as he may deem fit. As per Section 10(2) Chief Sales Commissioner is empowered to pass an order cancelling or modifying the order of transfer of package deal property, when he finds that any person has obtained transfer of the said property by means of fraud, false representation or concealment of any material facts. Of-course such an order can be passed after providing reasonable opportunity of being heard as is provided under Section 10(3) of the Act. It can, thus, be seen that Section 10 apparently leaves wide revisional power with the Chief Sales Commissioner to cancel or modify the order of transfer of the property. Section 10(2) of-course appears to restrict the powers of the Chief Sales commissioner on three grounds mentioned therein, i.e., when it is obtained by means of fraud, false representation or concealment of material facts. Section 10, thus, applies to all the allotment whether it be by a public auction or sale by a restricted auction or to a sale to such class of occupants at a price as the State Government may have determined or by sale to cooperative society, Government company or local authority or any corporate body for public purpose. The powers available under Section 10 apparently

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Civil Writ Petition No.11823 of 2006 (O&M) : 16 :

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are not regulated either by the conveyance deed or by the clauses contained therein or by any riders that may have been entered in the sale deed. If it can be shown or ascertained that any allotment of the package deal property was obtained by fraud or false representation etc., the sale can be cancelled in exercise of suo-motu powers given to the Chief Sales Commissioner.

¶82

It is clear from the record that this plot was sold to the school for the purpose of playground. There may not be any restriction for further sale of this plot in the conveyance deed, but the petitioner management will not be able to wish away the provisions of the Act under which this package deal property was sold to it. The sale in favour of the petitioner may be without any rider, but it would not mean that same can not be cancelled if the grounds in Section 10 of the Act are made out. Concededly, the impugned order has been passed under Section 10(2) of the Act. The representation which was made to the authorities for allotment of this plot under the Act was that the school needed this plot for the purpose of playground. Once major portion of the plot has been sold, view is possible that the petitioner school had falsely represented before the authorities about the need of this plot for playground. If the school had then stated before the authorities that the plot was needed for raising funds by further selling the plot to carry out repairs of the dilapidated building etc., the allotment in favour of the petitioner school perhaps would not have been made at all. It can, thus, be said that petitioner school made false representation before the authorities at the time of allotment of this plot and accordingly the power exercised by the Chief Sales Commissioner cannot be termed

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as not warranted under the provisions of Section 10(2) of the Act. While dealing with the cases of purchases made during proceedings, it has been viewed by this court in some of the judgments that even bonafide purchaser would not be protected under Section 41 of the Transfer of Property Act if sale in his favour is in violation of the conditions of the act. The allegations of false representation in this case are writ large. The Secretary has not only sold the plots but has sold some plots to his own sons, who further sold the same on profits. The Secretary realised substantial sum of amount from the sale proceeds as his salary. It appears that purpose of this allotment was nothing but to sell the same further. As per the record, the sale deed in favour of the petitioner is dated 1.2.1994 and from same month onwards, the school management considered the issue of shortage of funds and passed a resolution on 6.2.1994 to sell part of school land for raising funds and authorised the Secretary in this regard to do so. The real purpose for seeking this allotment, thus, is made out to be further sale and hence a false representation on the part of petitioner school can be urged. What subsequently has transpired and the purpose which had been achieved after the sale of this property is on record. The petitioner school has nothing in its favour either in law or in equity. There is no case made out to interfere in the impugned order.

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The writ petition is, thus, dismissed. The petitioner shall pay a cost to the respondents, which is assessed at Rs.10,000/-.

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March 31 ,2009 ( RANJIT SINGH ) ramesh JUDGE

S.S. Harbhagwan High School v. Financial Commissioner Revenue and Ors.

Case brief

What is this about?

What did the court decide?

S.S. Harbhagwan High School v. Financial Commissioner Revenue and Ors.

Case brief

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What did the court decide?

What the court decided

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