Read Judgment: K. Kumara Gupta vs. Sri Markendaya and Sri Omkareswara Swamy Temple & Ors.

Pankaj Bajpai

New Delhi, February 21, 2022: The Supreme Court has recently opined that unless it stands established that there was any fraud and/or collusion or the land in question was sold at a throw away price, the sale pursuant to the public auction cannot be set aside at the instance of strangers to the auction proceeding. It has also directed the highest bidder (Appellant) of the Temple Trust (Respondent) property to deposit the balance amount since the auction/sale was confirmed in his favour, including registration of the sale deed being done in his name and taking possession of the land in question.

A Division Bench of Justice M.R. Shah and Justice B.V. Nagarathna observed that the High Court ought not to have ordered re-auction of the temple land in question after a period of 23 years of confirmation of the sale and execution of the sale deed in favour of the auction purchaser by presuming that the value of the property might have been much more.

Otherwise, the object and purpose of holding the public auction and the sanctity of the public auction will be frustrated, added the Bench. 

Going by the background of the case, a proposal was published by the office of Commissioner, Endowments Department to auction the land in question belonging to Sri Markendaya and Omkareswara Swamy Devasthanam, Eluru, which was published in the newspaper in 1997. Since nobody raised any objection against the said proposal, the probable expected price of the land was fixed and the total extent of land was about 1.81 acre. Thereafter, the Commissioner of Endowments Department granted permission to sell the land. Accordingly, the Executive Officer of the Temple Trust issued tender/public notice to sell the land by way of an open auction. The appellant was declared as the highest bidder fixing the price at Rs.13,01,000/- per acre. 

One Jagat Kumar, who as such did not participate in the auction, made a representation in 1998 that the subject land has a potential of getting more money. Accordingly, the auction came to be cancelled. The appellant therefore filed revision u/s 93 of the Endowments Act, 1987 and the order confirming the sale was issued by the Office of the Commissioner, Endowments Department in favour of Kumara Gupta (Appellant). Although possession of the land was delivered to the appellant, the sale deed could not be registered because of the non-availability of the Clearance Certificate from the Income Tax department. Later, the Clearance Certificate was granted to the Executive Officer and first round of litigation ended there.

In second round of litigation, L. Kantha Rao filed a petition before the High Court to direct the Executive Officer/ the Temple Committee not to execute the sale deed in respect of the auctioned land. The High Court granted interim stay, and in meanwhile, the office of the Commissioner, Endowments Department unilaterally passed an order cancelling the auction and instructed the Executive Officer of the Temple to conduct a re-auction keeping the upset price of Rs.30 lakhs.

 Accordingly, the appellant preferred revision before the Government u/s 93 of 1987 Act and resultantly, the Government stayed the order of the Commissioner. The matter reached the High Court, where it was observed that as the Commissioner had revoked the order, the Government was not required to decide the issue on merits unless suo moto revision was taken up by the Government. 

Later, the High Court directed the Commissioner to refund the amount paid by the appellant and to conduct a re-auction by observing that more than twenty years had elapsed from the date of issuance of government order. Hence, this appeal was filed. 

After considering the submissions, the Top Court found that the sale, which was held and confirmed in the year 1998 and for which the sale deed was executed in 1998, the High Court had ordered re-auction of the property in question after a period of more than 23 years solely on the basis of the offer made by one Jagat Kumar in the year 1998 (after the public auction was concluded) and the offer made by one L. Kantha Rao that they were ready to offer / pay a higher price than fetched in the public auction already concluded and therefore, the High Court presumed that the value of the property must have been much more than the sale consideration realized in the public auction. 

However, the High Court had not at all appreciated and considered the lack of bona fides on the part of the said Jagat Kumar and even L. Kantha Rao, that though they were willing to pay a higher price for the auctioned land, but, subsequently backed out and did not deposit any money, and therefore they should not be permitted to raise any objection subsequently on the valuation when they had not participated in the public auction and made any offer, added the Top Court. 

Speaking for the Bench, Justice Shah observed that once the appellant was found to be the highest bidder in a public auction in which 45 persons had participated and thereafter when the sale was confirmed in his favour and even the sale deed was executed, unless and until it was found that there was any material irregularity and/or illegality in holding the public auction and/or auction/sale was vitiated by any fraud or collusion, it was not open to set aside the auction or sale in favour of a highest bidder on the basis of some representations made by third parties, who did not even participate in the auction proceedings and did not make any offer. 

If there was any error in the decision-making process adopted by the authority, the remedy available was to question the sale deed in an appropriate proceeding available under the law and not by filing a petition under Article 226 of the Constitution of India, added the Bench. 

Accordingly, the Apex Court concluded that petition filed by L. Kantha Rao had ceased to be a “Public Interest Litigation” but it was a litigation with a private mala fide interest as he had no locus to file such a case, not being a participant in the auction and being unable to point out any irregularity or illegality in the auction. 

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