STATE OF ASSAM vs. SUSRITA HOLDINGS PVT.LTD.

NON-REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO.4849 OF 2014
(ARISING OUT OF SLP(C) 14843 OF 2012 )
STATE OF ASSAM & ORS. ………APPELLANTS
VS.
SUSRITA HOLDINGS PVT. LTD. ……RESPONDENT
J U D G M E N T
V. GOPALA GOWDA, J.
JUDGMENT
Leave granted.
2. This appeal is filed by the appellants questioning
the correctness of the impugned judgment and final
Order dated 2.2.2012 passed by the High Court of
Guwahati, Assam, in M.C. No. 5 of 2012 in Writ Appeal
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Sl. No.168339 of 2011, urging various facts and legal
contentions in justification of their claim.
3. Necessary relevant facts are stated hereunder to
appreciate the case of the appellants and also to find
out whether the appellants are entitled for the relief
as prayed in this appeal.
4. The Government of Assam issued instructions in
respect of alienation of tea garden land from time to
time, particularly, letter no. RSS 573/94/25 dated
26.3.2001 of the Government of Assam, Revenue
(Settlement) Department requiring prior approval of the
Government.
5. On 30.10.2006, following the dissolution of Cachar
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Tea Farming and Industrial Cooperative Society, the
Cachar Ex- Officio liquidator, Cachar Tea Farming and
Industrial Cooperaive Society Ltd, (in short the
‘Liquidator’), issued a notice inviting tenders for the
sale of Chincoorie Tea Estate owned by Cachar Tea
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Farming and Industrial Cooperative Society Ltd. The
concerned tea estate measured 9951 bighas.
6. As on 5.1.2007, no tender had been cast in response
to the tender notice issued. Therefore, a fresh tender
notice dated 5.1.2007, was issued by the liquidator
with minor modifications made on the previous tender
notice. The land mentioned in the modified notice
admeasured 9000 bighas. The last date for submission of
tenders was fixed at 29.1.2007 which was further
extended to 26.2.2007 upto 2 p.m. by another modified
tender notice dated 28.1.2007.
7. It is pertinent to note that the tender of the sale
of the concerned land was floated without the prior
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approval of the government as required by instructions
issued in respect of alienation of tea garden land from
time to time, particularly, letter no. RSS 573/94/25
dated 26.3.2001 of the Government of Assam Revenue
(Settlement) Department. The other codal formalities
for tender process were not followed either.
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8. On 26.2.2007, two tender bids were received. The
respondent herein made a bid for Rs.1.11 crore. Another
party, M/s Luxmi Township made a bid for Rs.1.05 crore.
However, since the respondent had submitted his tender
document by hand at 3:45 p.m., the same was objected by
the other contender. The respondent was still
considered the only valid bidder.
9. The Liquidator subsequently, vide Order dated
21.4.2007, cancelled the tender process by observing
that the price quoted by the parties for the 9000
bighas of land is not at all justifiable. Further, M/s
Luxmi Township Pvt. Ltd. had intimated that the entire
stamp duty for the transfer of land, in case of a valid
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sale, has to be borne by the Ex- Officio Liquidator of
CTFICS Ltd. The bid value is based on this condition
which the liquidator did not agree.
10. The respondent thereafter, filed a Writ Petition
(C)No. 1928/2007 before the Guwahati High Court after
the tender process had been cancelled vide Order dated
21.4.2007. In the Writ Petition, the respondent sought
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directions for the Official respondents therein to
issue final Order of award in favour of the respondent
herein. The respondent further sought restrain order
from cancelling the tender process and initiation of
fresh tender process. The High Court, vide Order dated
27.4.2007, restrained the Official respondents therein
from initiating fresh process for the disposal of the
land involved. The Order further clarified that it
shall not be a bar to issue Order in favour of the
respondent herein.
11. The Liquidator, on 9.5.2007, issued notice in a
local daily- The Assam Tribune, declaring that the
tender process had been cancelled vide Order dated
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21.4.2007. The respondent thereafter, filed another
Writ Petition (C) No. 2416/2007 before the Guwahati
High Court impugning the notice dated 9.5.2007. The
High Court, vide Order dated 23.5.2007, issued notice
and directed that the notice dated 9.5.2007 shall not
be given effect till the returnable date.
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12. The Respondent next filed a Writ Petition (C)
No. 2971/2007 challenging the cancellation Order by the
liquidator dated 21.4.2007. In the meantime, the Joint
Registrar of the Co-operative Societies forwarded a
report to the Registrar of the Co-operative Societies
by issuing letter to him.
13. The Deputy Registrar who had cancelled the sale of
the tea garden was transferred by that time. His
successor vide letter dated 2.7.2009, sought
permission/approval of the Registrar of the
Co-operative Societies to dispose of the land in
question in favour of the respondent herein in the
light of the Order of the High Court dated 27.4.2007 in
JUDGMENT
W.P. (c) No. 1928/ 2007.
14. Thereafter, vide Order dated 23.7.2009, the
Registrar of the Co-operative Societies, permitted the
Liquidator to dispose of the property involved in
favour of the respondent herein.
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15. The Deputy Registrar issued an award letter dated
27.8.2009 and thereafter, signed the agreement for sale
of the tea garden land on 2.9.2009 and sent a draft
copy of the Deed of Agreement for the sale of the land
in question. The respondent was required to make an
initial deposition of 25% of the total bid initially
within a week of issuance thereof, as per the terms
laid in Clause 3 of the Deed of Agreement. The
remaining 75% of the total consideration amount was
required to be paid by the respondent at the time of
execution of the sale deed, subject however, to the
withdrawal of W.P. (C) No. 1928/2007 by the respondent.
The Writ Petition was closed subsequently since it was
not pursued.
JUDGMENT
16. The sub-Registrar (Registration), Silchar was
approached by the liquidator on 9.12.2009 for
registration of the sale deed. The sub-Registrar asked
the liquidator to produce permission/approval from the
Revenue Department for registration of the sale deed.
The liquidator on 10.12.2009, wrote to the Registrar of
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the Co-operative Societies seeking instruction on the
same. The Liquidator however, could not produce the
government permission for execution of the sale deed in
respect of the land in question. Therefore, the sale
deed could not be executed in favour of the respondent.
Therefore, vide Communication dated 20.1.2010 from the
Secretary, Co-operation Department to the Deputy
Commissioner, Cachar, he was directed to refrain from
registering the sale deed in respect of the property in
question without the clearance from the Co-operation
Department.
17. Aggrieved by the same, the respondent filed another
Writ Petition (C) No. 4147/2010 before the High Court
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seeking a direction to the appellant for execution of
the sale deed in its favour and also to quash the
communication dated 20.1.2010 of the Secretary of the
Co-operation Department which gave direction to the
Deputy Commissioner, Cachar, to refrain him from
registering the sale deed without the clearance of the
Co-operation Department.
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18. The High Court held that since the amount has
already been paid by the respondent to the Department,
there is no question of taking further approval from
the government. Therefore, the High Court directed the
Deputy Registrar of the Co-operative Societies to
follow up the execution of the sale deed in respect of
the property and its registration.
19. The said order was forwarded to the higher
authority. However, the sale deed did not get
registered subsequently which was followed by a
Contempt Case No. 443/2010 initiated by the respondent.
20. The appellants filed a Review Petition No. 112/
2010 before the High Court seeking review of its Order
JUDGMENT
dated 6.8.2010 passed in W.P. (c) No. 4147/2010. In the
meanwhile, the Deputy Commissioner, Cachar vide letter
dated 13.10.2010 to Secretary, Revenue, sought approval
of the government for alienation of the garden land. In
response to the letter mentioned above, the Deputy
Secretary, Revenue and Disaster Management wrote a
letter dated 29.11.2010 to the Deputy Secretary,
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Co-operation Department to submit a report in order to
accord approval for alienation of the land. Another
letter was issued to the Deputy Commissioner, Cachar to
submit proposal as per Government land policy and
guidelines for alienation of garden land.
21. The Review Petition No. 112/2010 filed by the
appellant was dismissed by the High Court on 2.2.2011.
On 29.6.2011, the letter dated 24.5.2011 was put up
before the Principal Secretary. The Principal Secretary
in turn, forwarded the proposal to the Minister,
Revenue and Disaster Management Department for
obtaining necessary approval from the Chief Minister of
Assam State on the condition that the land under
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transfer will be used only for the purpose of tea
cultivation and no bona fide worker or the erstwhile
Co-operative Society should be adversely affected by
the transfer of ownership.
22. The Chief Minister of the State observed that there
are various discrepancies in the proposal forwarded to
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him and therefore, directed the Revenue Department to
examine the matter and to consult the Legal
Remembrancer for further course of action in case
discrepancies are found. The Legal Remambrancer
observed that since loss of huge amount of public money
to the tune of several crores is involved in the
matter, the government might prefer an appeal before
the Division Bench in wider public interest along with
petition for condonation of delay. Accordingly, an
appeal was filed by the appellants against the Order
dated 6.8.2010 passed by the High Court in W.P. (C) No.
4147/2010. The High Court however, vide Order dated
2.2.2012, rejected the application for condonation of
delay being M.C. No. 5/ 2011 in WA Sl. No. 168339/2011.
JUDGMENT
23. The High Court opined that the time lag between
2.2.2011 and 22.11.2011 has not at all been
convincingly explained by the appellants. Though the
State is in shackle by unavoidable official formalities
to streamline its decision, however, the explanation
offered by the appellants towards justification of the
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delay in filing the appeal is insufficient and it has
dismissed the condonation of delay application and
consequently dismissed the writ appeal.
24. The appellants have come in appeal before this
Court mainly on two grounds:
Firstly, the impugned Order is violative of the
principles of natural justice. The appellants in the
writ proceedings, have not been afforded an opportunity
to file their affidavits on merits. Also, the Order in
this perspective is unsafe to be acted upon since
enormous amount of public revenue is involved in the
matter.
Secondly, the appellants claim that the transaction
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sought to be completed squarely within the realm of a
contract. Therefore, no direction in the nature of
mandamus could have been issued to the appellants as
the same is not permissible in law, and rendered the
impugned decision void ab initio .
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25. The impugned Order passed by the High Court stated
that the appeal brought before it by the appellants has
been dismissed on the ground of delay. Though,
submissions were made by both the parties explaining
the cause for delay. However, instead of deciding this
issue on merit which was required in this case as it
involved substantial question of law and public
interest, the Court dismissed the case on the ground of
delay after hearing the submissions of the parties.
26. We are of the opinion that the High Court erred in
dismissing the appeal of the appellants on the ground
of delay since this appeal requires to be heard on
merit. There is no qualm on the fact that there has
JUDGMENT
been a delay of 9 months in filing the Review Petition.
The appellants contended that the delay was due to
unavoidable government procedure involved.
27. It has been held by this Court in the case of G.
Ramegowda, Major and Ors. v. Special Land Acquisition
1
Officer, Bangalore that:
1
(1988) 2 SCC 142
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“15. In litigations to which Government is a
party there is yet another aspect which,
perhaps, cannot be ignored. If appeals
brought by Government are lost for such
defaults, no person is individually affected;
but what, in the ultimate analysis, suffers
is public interest. The decisions
of Government are collective and
institutional decisions and do not share the
characteristics of decisions of private
individuals.
XXX XXX XXX
17. Therefore, in assessing what, in a
particular case, constitutes "sufficient
cause" for purposes of Section 5, it might,
perhaps, be somewhat unrealistic to exclude
from the considerations that go into the
judicial verdict, these factors which are
peculiar to and characteristic of the
functioning of the government. Governmental
decisions are proverbially slow encumbered,
as they are, by a considerable degree of
procedural red tape in the process of their
making.”
JUDGMENT
Therefore, regarding the matter of delay in this case,
we are inclined to observe that the malfunctioning of
the State Government regarding the unpardonable
lackadaisical attitude towards pursuing matter in the
court of law cannot be the reason for loss of public
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property, which involves public money and causes loss
to the public exchequer. Therefore, we feel that it is
a fit case to exercise our discretionary power to
condone the delay in filing the writ appeal in the
interest of public at large as the High Court has
failed to do so. We therefore, condone the delay in
filing the Review Petition by the appellants before the
High Court in the larger interest of public. However,
this case should not set a precedent to justify
inordinate delays on the part of the State Government
to file appeals or any other legal proceedings required
to be filed within the period of limitation prescribed
in law.

28. The only legal issue before us for our
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consideration is therefore, whether the appellants
lawfully cancelled the tender process in relation to
the property in question in view of the discrepancies
crept in the process of transfer of the land in favour
of the respondent.
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29. It is an undisputed fact that in the present times
consideration of Rs.1.11 crores for 9000 bighas of land
does not reflect the correct market value prevalent at
the relevant point of time and not even to the civil
valuer’s report without either factual or legal basis.
As per the report of the Joint Registrar of Co-
operative Societies dated 31.02.2006, the updated
registered value of the concerned tea garden stands at
Rs.4,24,72,124/- as opined by Sri. M.P. Gindora, Tea
Consultant and Registered Valuer. This report however,
carried a qualifier along with it. It is stated in the
report on the assumption that it is hardly expected
that any party will come forward to purchase an
existing tea garden with huge encroachment. As per the
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facts put on record, the total area of the estate is
1247.29 Hectares out of which 70% is encroached.
However, this alone cannot be a ground for the Joint
Registrar of Co-operative Societies to opine that it
would not fetch the value of the property as indicated
by the valuer in the report. Therefore, there was no
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justification for the appellants to sell the property
at an extremely low price without any effort of issuing
eviction notice to the alleged encroachers to evict
them by following the due process of law. There will
not be any impediment for the appellants to evict
trespassers from the land in question without
considering the above relevant aspects of the case. The
High Court granted the relief in favour of the
respondent in its writ petition by quashing the order
of cancelling the tender process by the officer of the
appellant No. 1 and further directing the appellants to
execute the sale deed accepting the offer of the
respondent.
JUDGMENT
30. Further, according to the material placed on
record, the land concerned involves significant amount
of public money. Therefore, its transfer in favour of
the respondent attracts the greatest amount of
responsibility and caution. The competent valuer had
already determined the registered value of land at
Rs.4,24,72,124/-. Therefore, it was the responsibility
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of the concerned authority to ensure all steps which
should have been undertaken to sell the land at a
minimum cost of Rs.4,24,72,124/- or above instead of
its attempt to sell the same at a lower price merely on
the pretext that no one would come up to purchase the
land at the valuer’s price or that since the land is an
encroached land, the lower price is justified cannot be
accepted. The strong reliance placed by the learned
senior counsel, Mr. Mehta on the report of the Joint
Registrar of Co-operative Societies, is the basis for
the High Court for grant of relief in favour of the
respondent is wholly untenable in law and therefore,
the same cannot be accepted by this Court. The High
Court should have noticed the above relevant aspects of
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the case in passing the impugned order which would
certainly affect the public interest.
31. With regard to the procedure to be followed while
selling the property, this Court, in the case of Mahesh
2
Chandra v. Regl. Manager, U.P.F.C. , has held :-
2
(1993) 2 SCC 279
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“15. ….. Every wide power, the exercise of
which has far reaching repercussion, has
inherent limitation on it. It should be
exercised to effectuate the purpose of the
Act. In legislations enacted for general
benefit and common good the responsibility is
far graver. It demands purposeful approach.
The exercise of discretion should be
objective. Test of reasonableness is more
strict. The public functionaries should be
duty conscious rather than power charged. Its
actions and decisions which touch the common
man have to be tested on the touchstone of
fairness and justice. That which is not fair
and just is unreasonable. And what is
unreasonable is arbitrary. An arbitrary
action is ultra vires. It does not become
bona fide and in good faith merely because no
personal gain or benefit to the person
exercising discretion should be established.
An action is mala fide if it is contrary to
the purpose for which it was authorised to be
exercised. Dishonesty in discharge of duty
vitiates the action without anything more. An
action is bad even without proof of motive of
dishonesty, if the authority is found to have
acted contrary to reason.……..
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16. ……It saddles the Corporation or the
officer concerned with inbuilt duties,
responsibilities and obligations towards the
debtor in dealing with the property and
entails him to act as a prudent and
reasonable man standing in the shoes of the
owner. According to Prof. Issac, a noted
author on Trusts, trusteeship has become a
readily available tool for everyday purpose
of organisation financing, risk shifting,
credit operations, settling disputes and
liquidation of business affairs. Maitland,
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the other renowned writer on Equity, observed
that one of the exploits of equity; the
largest and the most important, is the
innovation and development of the trust.
Thus, trust has been and is being applied for
all purposes mentioned by Prof. Issac and
many others as device to accomplish different
purposes. Trusteeship is an institution of
elasticity and generality. The broad base of
the concept of property or its management
vested in one person and obligation imposed
for its enjoyment by others is accepted in
Hindu jurisprudence. Therefore, when the
property of the debtor stands transferred to
the Corporation for management or possession
thereof which includes right to sell or
further mortgage etc., the Corporation or its
officers or employees stands in the shoes of
the debtor as trustee and the property caste
que trust. In N. Swyanarayan Iyer's Indian
Trust Act, Third Edition, 1987 at page 275 in
Section 37 it is stated that, "Where the
trustee is empowered to sell any trust
property...by public auction or private
contract and either at one time or at several
times..." the duty of trustee is to obtain
the best price. He should, therefore, use
reasonable diligence in inviting competition
to that end. Where a contract of sale has
been entered into bona fide by a trustee the
court will not allow it to be rescinded or
invalidated because another purchaser conies
forward with a higher price. It would,
however, be improper for the trustee to
contract in circumstances of haste and
improvidence. Where in a trust for sale and
payment of creditors the trustee sold at a
gross under valuation showing a preference to
one of the creditors, he was held guilty, of
breach of trust. If the purchaser is privy of
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the fraud the property itself can be
recovered from him."
17. The sale may be either by public auction
or private contract. In either case the
trustee has to keep in mind that he must
obtain the most advantageous price. Kerr on
Receivers 17th Edition, at page 208 stated
that "a receiver, however, is not expected
any more than a trustee or an executor to
take more care of their property entrusted
to him than he would have as a reasonably
prudent man of business". In Halsbury's Law
of England, 4th Edition, Vol. 39, at para 919
it is stated that the "receiver will be
compelled to show that he has acted with
perfect regularity and has used such degree
of prudence as would be expected from a
private individual in relation to his own
affairs". The trustee or a receiver is,
therefore, duty bound to protect and preserve
the property in his possession and the
standard of conduct expected of him, in
dealing with the property or sale thereof, is
as a prudent owner would exercise in dealing
with his own property or estate. The degree
of care expected of him in handling property
taken possession of is measured by the degree
of care expected of a person acting as
trustee, executors or assignees. The object
and endeavour should also be to secure
maximum advantage or price in a sale of the
property in lots or as whole, as exigencies
”
warrant.
JUDGMENT
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Though, this case was subsequently overruled by this
Court by a three judge bench decision in the case of
Haryana Financial Corporation and Anr. v. Jagdamba Oil
3
Mills and Anr. on the point of guiding principles laid
down to sell mortgaged property by the Financial
Corporation under Section 29 of the State Financial
Corporations Act, 1951 (in short ‘SFC Act’). However,
keeping in view the facts and circumstances of that
case and as per Section 29 of the SFC Act, the
guidelines laid down in the case of Mahesh Chandra were
found fault with to sell the property mortgaged with
Financial Corporations. However, the principle of
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Public Trust Doctrine referred to in Mahesh Chandra’s
case (supra) shall be applied to fact situation at hand
as the public interest has adversely affected in this
case. Notwithstanding the aforesaid decision in
Jagdamba Oil Mills’s case (supra) in overruling
guidelines laid down in Mahesh Chandra’s case keeping
3
(2002) 3 SCC 496
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in view the reasonableness and fairness in action shall
be adhered by the state and its instrumentalities is
the ratio laid down by this court to pass the test of
Article 14 reiterated after referring to three Judge
Bench decisions in case of Ramana Dayaram Shetty v.
4
International Airport Authority of India & Ors. M/s
Kasturi Lal Lakshmi Reddy & Ors. v. State of Jammu and
5
Kashmir & Anr. and other catena of cases which were
mentioned in the case of Akhil Bhartiya Upbhokta
6
Congress v . State of Madhya Pradesh & Ors. are aptly
applicable to the fact situation of the case on hand.
JUDGMENT
32. Therefore, in the light of the legal principle laid
down by this Court with regard to Public Trust Doctrine
in Mahesh Chandra’s case (supra) and the cases
mentioned supra, we are inclined to observe that the
liquidator did not act fairly and reasonably in the
best interest of the public of the State whose interest
4
(1979) 3 SCC 489
5
(1980) 4 SCC 1
6
(2011) 5 SCC 29
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he is required to uphold. As per the material evidence
put on record, the liquidator and the concerned
authority did not take any step to improve the
condition of the land and sell it at reasonable and
standard price prevalent at the time of sale of the
property in question.
33. Hence, we hold that the tender process initiated by
the appellants is not legal and is liable to be set
aside. We direct the concerned authority to issue fresh
notice of tender for selling the land. The notice shall
be made available in government websites and other
local and national newspapers so as to encourage and
invite more bidders. In the meanwhile, the authority
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shall take all necessary steps to improve and restore
the condition of the land so as to make the purchase of
the land free from legal encumbrances.

34. Since, the respondent had paid up the entire bid
amount, it is entitled to refund of the entire amount.
Further, since it is also proved that the amount paid
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by the respondent has been used to pay the arrears, the
respondent is entitled to interest for the amount paid
@7% p.a. from the date of payment till the date of
refund.
35. Accordingly, we set aside the order dated 2.2.2012
passed by the High Court of Guwahati in M.C. No.5 of
2012 in Writ Appeal Sl. No.168339 of 2011 after
condoning the delay and consequently we allow the writ
appeal by allowing this Civil Appeal.

………………………………………………………………………J.
[GYAN SUDHA MISRA]

JUDGMENT


………………………………………………………………………J.
[V. GOPALA GOWDA]
New Delhi,
April 23, 2014.
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