Full Judgment Text
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PETITIONER:
CHENCHU RAMI REDDY & ANR.
Vs.
RESPONDENT:
GOVERNMENT OF ANDHRA PRADESH & ORS.
DATE OF JUDGMENT01/04/1986
BENCH:
THAKKAR, M.P. (J)
BENCH:
THAKKAR, M.P. (J)
VENKATARAMIAH, E.S. (J)
CITATION:
1986 AIR 1158 1986 SCR (1) 989
1986 SCC (3) 391 1986 SCALE (1)652
CITATOR INFO :
R 1987 SC1109 (30,38)
F 1990 SC 444 (13)
ACT:
Andhra Pradesh Charitable & Hindu Religious and
Endowments Act, 1966, s.74 - Sale of lands belonging to Math
by Private negotiation - When permissible.
HEADNOTE:
Section 74(1) of the Andhra Pradesh Charitable & Hindu
Religious and Endowments Act 1966 by clause (c) provides : C
"(c) Every sale of any such immovable property
sanctioned by the Commissioner under clause (b)
shall be effected by public auction in the
prescribed manner subject to the confirmation by
the Commissioner within a period prescribed:
Provided that the Government may, in the interest
of the institution or endowments and for reasons
to be recorded therefore in writing, permit the
sale of such immovable property, otherwise than by
public auction." E
Respondent Nos. 5 to 24, purchased certain lands
belonging to Sri Bugga Math, Tirupathi by private
negotiations at the rate of Rs.62,500 per acre. The
Government of Andhra Pradesh passed an order dated 12th
February, 1982 according its permission to the said sale
under the proviso to clause (c) of sub-s.(1) of s.74 of the
act. The appellants challenged before the High Court the
legality and validity of the Government Order granting such
permission, but the same was upheld by the High Court.
In appeal to the Supreme Court, it was contended on
behalf of the appellants that the impugned order of the
State Government manifests total non-application of mind to
the essential pre-condition embodied in the proviso to s.
74(1)(c) and therefore, it should be struck down. The
appellants also offered their bid to purchase the said land
@ Rs. 2,50,000 per acre and deposited Rs. 20 lacs as earnest
money.
990
Allowing the appeal,
^
HELD : 1. The essential pre-condition embodied in
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proviso to s.74(1)(c) are : (a) that the Government must be
satisfied that it is in the interest of the institution or
endowment to permit the sale of these lands otherwise than
by public auction; and (b) that reasons for reaching this
satisfaction must be recorded in the order. [993 F-G]
2. The impugned order deserves to be quashed; (i) as it
suffers from the vice of non-application of mind to
essential matters; and (ii) as there is no compliance with
the relevant statutory provision. The impugned order, far
from recording the satisfaction that it is in the interest
of the institution to sell the lands otherwise than by
public auction, does not even reveal awareness (1) as
regards the necessity for being so satisfied and (2) as
regards the mandatory obligation imposed by the statute to
record the reasons for forming such an opinion in the order
itself. In the instant case, there is nothing to show that
the authority which passed the impugned order was even aware
of the essential pre-conditions envisioned by the statute.
On the other hand, it is clear that if the concerned
authority had even stolen a casual glance at the relevant
statutory provision it could not have failed to say, what it
was bound to say, if it was so satisfied, that the departure
from the prescribed mode of selling by public auction was in
the interest of the ’Math’. Nor could it have failed to
record its reasons in support of this conclusion, for the
statute in so many words, casts an obligation on the
concerned authority to record such reasons in the order
itself. The inference is therefore irresistible that the
competent authority had failed to direct its mind to the
requirements of law before passing the impugned order. [995
C-D; 994 C-G]
3. What belongs to ’many’, collectively, does not cause
pangs to ’any’, for no one is personally hurt directly. That
is why public officials and public minded citizens entrusted
with the care of ’public property’ have to show exemplary
vigilance. that is true of ’public property’, is equally
true of property belonging to religious or charitable
institutions or endowments. Properties of religious or
charitable R institutions or endowments must be jealously
protected. A
991
large segment of the community has beneficial interest in it
A (that is the raison d’etre of the Act itself). The
authorities exercising the powers under the Act must not
only be lost alert and vigilant in such matters but also
show awareness of the ways of the present day world as also
the ugly realities of the world of today. They cannot afford
to take things at their face value or make a less than the
closest-and-best-attention approach to guard against all
pitfalls. The approving authority must be aware that in such
matters the trustees, or persons authorised to sell by
private negotiations, can, in a given case, enter into a
secret or invisible under-hand deal or understanding with
the purchasers at the cost of the concerned institution.
Those who are willing to purchase by private negotiations
can also bid at a public auction. Why would they feel shy or
be deterred from bidding at a public auction? Why then
permit sale by private negotiations which will give rise to
public suspicion unless there are special reasons to justify
doing so? and care must be taken to fix a reserve price
after ascertaining the market value for the sake of
safeguarding the interest of the endowment. [991 G-H; 998 E-
H; 999 A]
[The Court directed the lands in question to be
hold in public auction and indicated the manner.]
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JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 1147-48
of 1986.
From the Judgment and Order dated 24.12.1984 of the
Andhra Pradesh High Court in W.P. No. 5138/82 and 545 of
1982.
C.S. Vaidyanathan for the Appellants. F
P.P. Rao and R. Venkataramani for the Respondents.
The Judgment of the Court was delivered by
THAKKAR, J. More often than not detriment to what
belongs to ’many’, collectively, does not cause pangs to
’any’, for no one is personally hurt directly. That is why
public officials and public minded citizens entrusted with
the care of ’public property’ have to show exemplary
vigilance. What is t me of ’public property’ is equally true
of property belonging to religious or charitable
institutions or H
992
endowments. The facts of the present case involving The sale
of lands which have been sanctioned Lo be sold for about Rs.
20 lakhs by private negotiations, instead of by public
auction, which the appellants are prepared to purchase for
about Rs. 80 lakhs, illustrate this point in a telling
manner
Background : The legality and validity of a Government Order
according permission to "Bugga Math", Tirupathi, a religious
endowment, in exercise of powers under proviso Lo clause (c)
of sub-section (I) of Section 74 of Andhra Pradesh
Charitable and Hindu Religious and Endowments Act, 1966
(Act) to sell certain lands belonging to the Math by private
negotiations to Respondents 5 to 24, at the price of Rs.
62,500 per acre has been questioned by the Appellants The
impugned order, in so for as material, reads
"Revenue (Endowments-III) Department,
G. O. Rt. No. 232 Dated 12.2.1982.
Read the following :
1. From the Commissioner, Endowments Department, Lr. No.
M3/M.A. 4/81 dated 16.4.1981.
2. From the Commissioner, Endowments Department, Lr
No.143/M.A. 4/81 dated 1.12.81.
Order :
In The circumstances reported by The Commissioner,
Endowment Department in the references read above, the
Government hereby accord permission under proviso to clause
(c) of the sub-section (I) of Section 74 of the Andhra
Pradesh Charitable and Hindu Religious and Endowments Act
1966 (Act 17 of 1966) for The sale of The lands belonging to
Sri Bugga, Math, Tirupathi, Chandragiri Taluk, Chittoor dt.,
in favour of the sitting tenants as detailed by private
negotiations :
993
------------------------------------------------------------
S.No. Name Sy.No. Extent Cost per
Ac. Cts. acre
------------------------------------------------------------
1. Sri K. Subramanya Reddy 268/1A 1.81 62,500
(Rupees Sixty
x x x x x x x x two thousands
five hundred
only)
20. Smt. K. Alamalamma 268/1F 2.00
----------
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Total 32.01
----------
(BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA
PRADESH).
Shravan Kumar
Second Secretary to Government."
The Appellants, who are willing to purchase the said lands
at a price four times the price offered by Respondents 5 to
24, that is to say at Rs. 2,50,000 per acre, as against Rs.
62,500 per acre offered by the latter, have challenged the
impugned order dated 12th February, 1982 (G.O. Rt. No. 232)
passed by the Government of Andhra Pradesh inter alia on the
ground that it manifests total non-application of mind to
the essential pre-conditions embodied in proviso to section
74 (1)(c). The pre-conditions are :-
(1) That the Government must be satisfied that lt is
in the interest of the institution or endowment to
permit the sale of these lands otherwise than by
public auction.
(2) That reasons for reaching this satisfaction must
be recorded in the order.
The aforesaid two pre-conditions are clearly spelled
out by the relevant provision (proviso to Section 74(1)(c)
which may be quoted in extenso :
994
"(c) Every sale of any such immovable property
sanctioned by the Commissioner under clause (b)
shall be effected by public auction in the
prescribed manner subject to the confirmation by
the Commissioner within a period prescribed :
Provided that the Government may, in the interest
of the institution or endowment and for reasons to
be recorded therefore in writing, permit the sale
of such immovable property, otherwise than by
public auction.
The Problem : The question has arisen whether the High Court
was justified in upholding the impugned order in the face of
the fact that ex-facie there is no compliance with the pre-
conditions engrafted in the relevant provision inasmuch as
the order in question, far from recording the satisfaction
that it is in the interest of the institution to sell the
lands otherwise than by public auction, (which is the normal
mode prescribed by the legislature) does not even reveal
awareness (1) as regards the necessity for being so
satisfied and (2) as regards the mandatory obligation
imposed by the statute to record the reasons for forming
such an opinion in the order itself.
Whether there is compliance : Now what is there to show
that the authority which passed the impugned order was even
aware of the essential pre-conditions envisioned by the
statute? Nothing. On the otherhand, it is clear that if the
concerned authority had even stolen a casual glance at the
relevant statutory provisions it could not have failed to
say, what it was bound to say, if it was so satisfied, that
the departure from the prescribed mode of selling by public
auction was in the interest of the ’Math’. Nor could it have
failed to record its reasons in support of this conclusion,
for, the statute in so many words, casts an obligation on
the concerned authority to record such reasons in the order
itself.
The inference is therefore irresistible that the
competent authority had failed to direct its mind to the
requirements of law before passing the impugned order. It
was argued that the impugned order reveals that the
competent authority had ’read the two communications (dated
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16.4.1981
995
and 1.12.1981) emanating from the Commissioner of endowments
Department, and the reasons mentioned therein must be deemed
to have been approved by the competent authority. We are not
impressed by the submission. The report do not advert to the
pre-conditions enjoined by the statute. The Commissioner
cannot and did not tell the State Government ’What’ it
should do and ’how’ it should do it in order to discharge
its statutory function of forming the opinion as to whether
departure from the normal mode of sale by public auction was
called for in the interest of the institution. Or as to what
guidelines or tests the competent authority should apply for
forming its opinion. There is therefore no substance in this
apology offered on behalf of the State Government. This much
is more than sufficient to reverse the High Court and to
hold that the impugned order deserves to be quashed (1) as
it suffers from the vice of non-application of mind to
essential matters and (2) as there is no compliance with the
relevant statutory provision. But it is not sufficient to do
so. Ends of Justice demand that we advert to some other
facets of the case and issue appropriate directions to
protect the interest of the Math.
Other facets : The following facts have emerged :-
(1) A scheme for managing the Math was framed in
1929. Since 1943 there is no Mahant and an
Executive Officer of the Endowments Department is
managing the affairs of the Math.
(2) The lands in question belonging to the Math
are dry lands admeasuring 32-01 acres.
(3) The lands were given on lease to Original
Respondent No. 8 (A. Munaswamy : Now deceased :
represented by his Legal Representatives) in 1964.
(4) The lands are in occupation of respondents 5
to 7 and 9 to 24. Their Legal capacity and legal
right, if any, to be in possession of the land,
has yet to be established.
(5) Respondent No. 8 who claims to be a sitting
tenant obtained a decree from the Court of
District
996
Munsiff, Tirupati, in O.S. No. 361/76 restraining
the Manager from auctioning the lease hold rights
before evicting him from the land.
(6) The income derived by the Math from these
lands is Rs. 1,225 per annum as at present.
(7) The proposal to sell the lands to respondents
5 to 24 at Rs. 60,000 per acre would have fetched
Rs. 19,20,000 and yielded an annual income of
approximately Rs. 1,90,000 (at 10% p.a.) from the
sale proceeds.
(8) The Commissioner, endowment, has accorded
sanction to the proposed transaction of sale at
Rs. 62,500 per acre on his forming the opinion
that the transaction is (i) necessary or
beneficial to the institution (ii) consistent with
the objects of the institution and (iii) that
consideration therefore is reasonable and proper
in the context of Section 79(1) of the Act.
That it would be beneficial to the institution or the
endowment to sell the land cannot be gainsaid provided the
price is a reasonable and fair price, since in place of an
annual income of Rs. 1,225 the institution would be earning
an annual income of Rs. 1,90,000 or more which can be put to
use for the benefit of the community in a manner consistent
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with the objects of the Math. More so, as for more than 40
years there is no "Mahant" and the institution is being
managed by a Government official. Still more so, as
respondent 8 has dragged the institution to a Court of Law
as a result of which the "sword of Damocles" of the
uncertainties of litigation remains hanging and the
purchaser would be purchasing not only the land but a
litigation. Being fully aware of this aspect and the need to
protect the institution, this Court had passed an Order in
the following terms when the Special Leave Petition came up
for hearing on September 2, 1985 :-
"Issue notice.
Learned counsel for the petitioners, states that
the petitioners are willing to buy the land in
997
question at the rate of Rs. 2,50,000 per acre and
would deposit In this Court a sum of Rs. 10 lacs
within three months from today and another Rs. 10
lacs within three months thereafter as earnest
money with the condition that the amount of Rs. 20
lacs so deposited would be forefeited if the
petitioners failed to purchase the land at the
rate of Rs. 2,50,000 per acre. All further
proceedings including execution of sale deed are
stayed. This case be listed for hearing in the
first week of March, 1986."
In compliance with this Order the appellants have deposited
the sum of Rs. 20,00,000 (Rupees Twenty Lakhs) in due course
subject to the condition that the said amount of Rs.
20,00,000 will be liable to be forefeited if they back out
of the firm offer to purchase the land at the rate of Rs.
2,50,000 per acre which will fetch a total sale price of
approximately Rs. 80,00,000 (Rupees Eighty Lakhs) and an
annual income of Rs. 8 Lakhs. The appellants have reaffirmed
this firm offer at the time of the hearing of this appeal.
If the Commissioner, Endowments, considered Rs. lO Lakhs and
odd as a fair and reasonable sale price he cannot but
consider Rs. 80 Lakhs likewise for it will fetch a yield of
about Rs. 8 lakhs as against a yield of about 2 lakhs in
respect of the transaction already approved by him. But then
some one else may offer a still higher price at a public
auction (which is the mode prescribed by the Legislature).
We, therefore, direct that the lands in question may be
sold by public auction in the following manner :- F
(1) sale must be on the basis of "as-is-where is-
whatever-is" subject to the rights, if any, of any
of the respondents and of the other occupants, if
any, in regard to the claim for alleged tenancy,
sub-tenancy, possession or of any other nature. G
(2) wide publicity should be given to the date,
time and place of public auction to ensure that
maximum number of intending purchasers attend the
auction in order to offer their bids.
998
(3) The terms and conditions must inter alia
provide for deposit of atleast 15% of the sale
price in cash within a week (or two weeks) which
will be liable to be forfeited if the transaction
is not completed.
(4) special notice shall be given to the
appellants And the concerned respondents herein.
(5) the appellants’ offer made in this Court for
purchase at the rate of Rs.2,50,000 per acre on
the condition specified in clause (1) herein will
be treated as the minimum bid of the appellants
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and the sum of Rs. 20,00,000 deposited in this
Court (which will be transmitted to the
Commissioner, Endowment in due course), shall be
treated as the deposit made by them in pursuance
to clause (3) herein.
(6) The other terms and conditions may be such as
are usually incorporated in such public auctions
by the Commissioner who shall specify them along
with the above mentioned terms in the public
notice.
We cannot conclude without observing that property of
such institutions or endowments must be jealously protected.
It must be protected, for, a large segment of the community
has beneficial interest in it (that is the raison d’etre of
the Act itself). The authorities exercising the powers under
the Act must not only be most alert and vigilant in such
matters but also show awareness of the ways of the present
day world as also the ugly realities of the world of today.
They cannot afford to take things at their face value or
make a less than the closest-and-best-attention approach to
guard against all pitfalls. The approving authority must be
aware that in such matters the trustees, or persons
authorised to sell by private negotiations, can, in a given
case, enter into a secret or invisible under-hand deal or
understanding with the purchasers at the cost of the
concerned institution. Those who are willing to purchase by
private negotiations can also bid at a public auction. Why
would they feel shy or be deterred from bidding at a public
auction? Why then permit sale by private negotiations which
will not be visible to the
999
public-eye and may even give rise to public suspicion unless
there are special reasons to justify doing so? And care must
be taken to fix a reserve price after ascertaining the
market value for the sake of safeguarding the interest of
the endowment. With these words of caution we close the
matter.
Appeal is allowed, order of the High Court is set
aside, order in the aforementioned terms be and is passed.
M.L.A. Appeal allowed.
1