Allowed

M/S Ridhi Sidhi Builders and Party v. Urban Improvement Trust and Anr.

Rajasthan HC24 Jan 2024SAW/405/2009

Case brief

AI extract

What is this about?

Intra-court appeal against direction to pay 15% interest on balance amount for a commercial plot bought in UIT auction. Division Bench held the appellant committed no default as UIT did not encash post-dated cheques, and Rule 17 applies only to residential plots. Appeal allowed; interest and penalty directed to be refunded.

What did the court decide?

Direction to pay 15% interest set aside; interest and penalty already deposited pursuant to demand notice dated 31.10.2007 to be refunded within two months.

M/S Ridhi Sidhi Builders and Party Vs Urban Improvement… — Property and Title | Rajasthan HC (2024)

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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR

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D.B. Spl. Appl. Writ No. 405/2009

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S.B. Civil Writ Petition No.452/1996

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M/s Ridhi Sidhi Builders & party, 4B, Hiran Magari, Sector No.5, Udaipur, through partner phoolchand pokharana son of Shri Jeetmal Pokharana, resident of 48, Hiran Magari, Sector No.5, Udaipur

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----Appellant

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Versus

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The Urban Improvement Trust, Udaipur through its Secretary 2. The Collector, Udaipur (Chairman, Urban Improvement Trust, Udaipur, Raj.)

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----Respondent

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For Appellant(s) : Mr. Rishabh Shrimali For Respondent(s) : Mr. Vijay Purohit

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HON'BLE MR. JUSTICE VIJAY BISHNOI HON'BLE MR. JUSTICE RAJENDRA PRAKASH SONI

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Order

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24/01/2024

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This intra court appeal is filed by the appellant being aggrieved with the order dated 27.09.2007 passed by the learned Single Judge in S.B. Civil Writ Petition No.452/1996, whereby the learned Single Judge, while allowing the writ petition filed by the petitioner, has directed the respondents to accept the remaining amount of Rs.11,86,550/- from the petitioner for executing lease deed in his favour with a further direction to the petitioner to pay interest over the balance amount of Rs.11,86,550/- @ 15% per

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annum to the respondent – Urban Improvement Trust (for short ‘the UIT’) from 30.01.1996.

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Learned Single Judge has further observed that the interest shall be appropriated under Sub-Rule 5 of Rule 17 of the Urban Improvement (Disposal of Urban Land) Rules, 1974.

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Brief facts of the case are that the appellant has participated in the auction proceedings conducted by the respondent – UIT for sale of commercial plot situated at Sector 5, Hiran Magri, Udaipur. The appellant deposited earnest money of Rs.5,000/- in cash and his bid of Rs.311 per sq. ft. being the highest bid was accepted by the respondent – UIT. The total cost of the plot was Rs.15,86,100/- and the appellant has deposited 1/4th of the above amount within time. The bid of the appellant was accepted by the Chairman of the UIT on 18.01.1996 and he was requested to deposit the balance amount of Rs.11,86,550/- and pursuant to that, the appellant has deposited three post dated cheques to the respondent, which were accepted by it, however instead of executing the lease deed, the UIT has issued a communication to the appellant that the bid which was accepted and confirmed by the Chairman – UIT has been canceled. Simultaneously, a cheque of Rs.4,00,000/- has been returned to the appellant and being aggrieved with the same, the appellant has preferred the writ petition. The learned Single Judge, while allowing the writ petition, has observed as under :

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"The facts which are not in dispute are that the respondent UIT put the plot in question for sale by auction on 17.01.1996. The petitioner gave bid of Rs. 311/- per sq.ft. and that was the highest bid. The

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petitioner deposited total Rs. 4,00,000/- which is the 1/4th of the amount. The respondent UIT itself conveyed that the sale has been confirmed by the chairman of the UIT on 18.01.1996. The petitioner was asked to deposit the balance amount of Rs. 11,86,550/- by 15.02.1996.

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On 24.01.1996, the chairman of the UIT wrote, “Rate seems quite less. The current rate is approximately 500/- per sq.ft. The proceedings are not conducted properly.” It appears from the said endorsement which is dated 24.01.1996, but before that the chairman of the UIT already confirmed the sale on 18.01.1996. Thereafter, the petitioner was asked to deposit the balance 3/4th amount vide letter dated 19.01.1996. Therefore, once the sale has been confirmed by the chairman of the UIT, it could not have been cancelled by the chairman. Said order of cancellation dated 24.01.1996 was also passed without giving opportunity of hearing to the petitioner and without recording any basis for reaching to the conclusion that the market rate of the property at relevant time was Rs.500/- per sq.ft. It is true that it was not obligatory on the part of the chairman, UIT to accept the highest bid but when the sale is confirmed by the chairman, UIT, a right accrued in favour of the petitioner and that could not have been taken away unilaterally and that too without affording opportunity of hearing to the aggrieved person. Therefore, on this ground alone, the order referred above, which only recorded the fact that the price is less than the current market rate and the price of the land could have been Rs.500/- per sq.ft. and which specifically has not cancelled the auction or the bid, is violative of principles of natural justice and, therefore, liable to be set aside.

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So far as factual aspect is concerned, the petitioner has placed on record the approval granted for the sale of the plot at the rate of Rs.236/- per sq.ft. and that too, to the petitioner by the respondent UIT itself and that sale was confirmed and that plot was also not a small plot but measuring 3850 sq.ft. and had cost of

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Rs.9,09,050/- and further that sale took place after 12 months from the time of sale of the present plot, then on facts also, it appears that there was no reasonable basis for cancelling the confirmation of sale of the plot of the petitioner by the Chairman, UIT by order dated 24.01.1996. It may be true that the size of the plot in question is 5100 sq.ft. as against the size of plot which was sold in December, 1996 which is 3850 sq.ft. but it appears that both the plots are of commercial nature.

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In view of the above discussion, this writ petition is allowed and the respondents are directed to accept the remaining amount of Rs. 11,86,550/- from the petitioner and execute the lease deed in favour of the petitioner.”

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Learned Single Judge has further observed that since the appellant did not part with the money, therefore, it will be appropriate that he shall pay balance amount of Rs.11,86,550/- @ 15% per annum to the respondent – UIT from 30.01.1996.

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Learned counsel for the appellant has submitted that the learned Single Judge has erred in directing the appellant to pay the interest @ 15% per annum. It is submitted that the appellant has committed no default in depositing the remaining amount and in fact, he has already deposited the post dated cheques for the remaining amount as per the communication received by the UIT. It is further submitted that if the UIT has not encashed that amount then the appellant cannot be penalized for the same. It is also submitted that the learned Single Judge while directing the appellant to pay interest has placed reliance on Sub-Rule 5 of Rule 17 of the Urban Improvement (Disposal of Urban Land) Rules, 1974 (for short ‘the Rules of 1974’), however Rule 17 of the Rules 1974 is not applicable in the case of the appellant as the same is

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in respect of residential plots only, whereas the plot allotted to the appellant in the auction proceedings was a commercial plot. Learned counsel for the appellant has, therefore, submitted that the direction given learned Single Judge to pay interest over the balance amount @ 15% per annum from 30.01.1996 is liable to be quashed and set aside.

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Learned counsel for the appellant has submitted that pursuant to the order passed by this Court, the respondent – UIT has asked the appellant to pay the remaining amount of Rs.11,86.550/- along with interest and penalty and the appellant has deposited the same under protest for the purpose of execution of lease deed. Learned counsel has further submitted that the respondent – UIT may be directed to refund amount of interest and penalty amount to the appellant.

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Per contra, learned counsel for the respondents has submitted that the learned Single Judge has not committed any illegality in directing the appellant to pay interest @ 15% per annum on the remaining amount from the date when the cheques were returned to the appellant.

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However, the counsel for the respondent has failed to satisfy this Court that how the order of paying interest was passed while relying on Rule 17 of the Rules of 1974 which speaks about the allotment of the residential plots. It is argued that in respect of public auction as per Annexure-A of the Rules of 1974 interest and penalty can also be imposed on allotment of commercial plots. Learned counsel for the respondents has, therefore, argued that

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no case for interference is made out and this intra court appeal is liable to be dismissed.

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Having heard learned counsel for the parties and after going through the record of the case, we are of the view that the learned Single Judge has held that the action of UIT cancelling auction proceedings without providing any opportunity of hearing to the appellant is bad in the eye of law. Learned Single Judge has further observed that the reason for cancellation of the auction proceedings, supplied by the respondent – UIT, that the rate quoted by the appellant is less, is also not tenable because in the same vicinity, a commercial plot was auctioned in favour of the appellant at lesser price than the plot in question.

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We are of the view that the appellant cannot be penalized for the action/inaction on the part of the UIT. The appellant has already deposited the remaining amount as per the communication of the UIT, however, if the UIT has not encashed the said amount, it cannot be said that the appellant has committed any fault. Otherwise also, the learned Single Judge, while relying on the provisions of Rule 17 of the Rules of 1974, has erred in directing the appellant to pay interest over balance amount because Rule 17 of the Rules of 1974 is in relation to the residential plots, whereas the plot in question was a commercial plot.

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So far as the argument of learned counsel for the appellant that as per Annexure-A of Rules of 1974, the respondents can charge interest as well as penalty is not tenable because we have already held that the appellant was not at fault and cannot be

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penalized for the action/inaction on the part of respondent – UIT. In view of the above discussion, this intra court appeal is allowed and the direction given by the learned Single Judge to the appellant to pay interest for the balance amount of Rs.11,86,550/@ 15% per annum from 30.01.1996 is hereby set aside.

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The amount of interest as well as penalty so deposited by the appellant pursuant to the demand notice dated 31.10.2007 issued by the UIT, Udaipur be refunded back to the appellant within a period of two months from the date of receipt of certified copy of this order.

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(RAJENDRA PRAKASH SONI),J

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(VIJAY BISHNOI),J

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10-Payal/Divya-

M/S Ridhi Sidhi Builders and Party v. Urban Improvement Trust and Anr.

Case brief

What is this about?

What did the court decide?

M/S Ridhi Sidhi Builders and Party v. Urban Improvement Trust and Anr.

Case brief

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