THE MUNICIPAL COMMITTEE, BARWALA, DISTRICT HISAR, HARYANA vs JAI NARAYAN AND COMPANY

THE MUNICIPAL COMMITTEE, BARWALA, DISTRICT HISAR, HARYANA vs JAI NARAYAN AND COMPANY

Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले

 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2222 OF 2022

(ARISING OUT OF SLP (CIVIL) NO. 16530 OF 2018)

THE MUNICIPAL COMMITTEE, BARWALA,

DISTRICT HISAR, HARYANA THROUGH ITS

SECRETARY/PRESIDENT

.....APPELLANT(S)

VERSUS

JAI NARAYAN AND COMPANY & ANR. .....RESPONDENT(S)

J U D G M E N T

HEMANT GUPTA, J.

1. The Municipal Committee, Barwala1

 is in appeal against the judgment

dated 1.5.2018, whereby its second appeal was dismissed arising out

of a suit for mandatory injunction to execute a sale deed in respect of

land measuring 55 kanals 5 marlas sought by the respondent-plaintiff.

2. The respondent-plaintiff claimed title and possession on the basis of an

open auction conducted by the Sub-Divisional Officer, Hisar on

23.3.1999 @ Rs.2,32,000/- per acre after sanction was granted for

auction of the land in question on 25.10.1995. The total sale

consideration comes out to be Rs.15,76,150/- which was deposited

1 For short, the “Municipal Committee”

1

with the Municipal Committee. The plaintiff thus claimed that he is a

bonafide purchaser and is in possession as owner of the suit land. He

deposited the remaining consideration after adjusting an amount of

Rs.4,10,000/- which was already deposited with the Municipal

Committee.

3. The plaintiff asserts that the Municipal Committee had passed a

resolution on 1.5.2002 to get the sale deed executed and registered.

Since the sale deed was not executed, the plaintiff had allegedly

served a registered notice dated 14.8.2006 which was made the cause

of action to file the civil suit for mandatory injunction on 13.6.2011.

4. In the written statement filed by the Municipal Committee, it has been

admitted that the property was put to auction after obtaining

permission from the Deputy Commissioner. However, the possession

of the plaintiff was said to be illegal possession. It was pleaded that

the Municipal Committee is unable to execute the sale deed without

proper sanction of the competent authority i.e., Government of

Haryana.

5. The learned trial court decreed the suit vide judgment and decree

dated 9.3.2016 after giving findings on the following issues framed in

view of the pleadings of the parties:

“1. Whether the plaintiff is entitled to a decree for mandatory

injunction as prayed for?

2. Whether the suit is not maintainable due to non-joinder of

necessary parties?

2

3. Whether the plaintiff has not come to the Court with clean

hand and suppressed the material facts?

4. Whether the plaintiff has no locus standi to file the present

suit?

5. Relief.”

6. Aggrieved against the judgment and decree of the trial court, the

Municipal Committee filed the first appeal which was dismissed on

5.9.2016. The second appeal was also dismissed vide impugned

judgment dated 1.5.2018.

7. Before this Court, learned counsel for the appellant argued that the

auction conducted in which the plaintiff was the highest bidder was not

approved by the State Government. The Ex.P/34 is a communication

addressed by the Deputy Commissioner to the Director Local Bodies to

seek approval of the property put to auction. However, there was no

approval by the State Government of the auction once conducted in

favor of the plaintiff. It was contended that till such time the auction is

confirmed, mere fact that the plaintiff was the highest bidder would not

confer any equitable and legal right to him. It is only after the

confirmation of sale and the letter accepting the bid is issued, the

plaintiff could claim any enforceable right. It was thus contended that

the plaintiff is in unauthorized and illegal possession of the property. It

was contended that the approval of sale of the property by public

auction itself does not amount to confirmation of the auction,

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therefore, in the absence of confirmation of sale by the State

Government, the plaintiff would not get any right over the property. It

was also argued that the plaintiff in his counter affidavit before this

Court relied upon Section 5 read with Section 10(2)(e) of the Haryana

Municipal Common Lands (Regulation) Act, 19742

 read with Rule 2(4) of

the Haryana Municipalities Management of Municipal Properties and

State Properties Rules, 19763

, though the 1974 Act has been declared

unconstitutional by the Full Bench of Punjab & Haryana High Court in

Rajender Parshad & Ors. v. State of Haryana & Ors.

4

. Even the

First Appellate Court and Second Appellate Court have referred to the

1974 Act while dismissing the appeals filed by the Municipal

Committee.

8. When the appeal came up for hearing before this Court on 14.3.2022,

attention of the counsel for the plaintiff was drawn to the Full Bench

judgment of Punjab & Haryana High Court in Rajender Parshad

declaring the 1974 Act as illegal. Therefore, vesting of land to

shamilat deh on the strength of the aforesaid statute itself was not

tenable. However, Mr. Sanchar Anand, learned counsel for the plaintiff

submitted that it is not the case that the property vested with the

Municipality on the strength of the 1974 Act. It was argued that the

property was put to auction after previous approval of the Deputy

Commissioner and later vide Ex.P/34, the sale stands confirmed.

2 For short, the “1974 Act”

3 For short, the “1976 Rules”

4 AIR 1980 P&H 37

4

Therefore, once the plaintiff has been found to be the highest bidder

and sale has been confirmed by the Deputy Commissioner, the plaintiff

has been rightly granted decree for mandatory injunction.

9. We have heard learned counsel for the parties and find that the decree

passed by the three courts below, to say the least, is a perverse

reading of the provisions of law as well as the factual position. Rule 2 of

the 1976 Rules has to be referred to appreciate the present dispute. It

reads as thus:

“2. Procedure for alienation. – (1) A municipal committee

proposing to alienate permanently or for a term exceeding ten

years any land or other immovable property of which it is the

owner shall apply to the Deputy Commissioner for sanction.

(2) An application under sub-rule (1) shall be accompanied by a

plan of the proposed property to be alienated together with a

statement in Form A appended to these rules.

(3) The Deputy Commissioner shall record an order on the

application, -

(i) sanctioning it (subject to such conditions, if any, as he thinks

fit); or

(ii) refusing to sanction it; provided that no sale by auction shall

be valid, until it has been confirmed by the Deputy

Commissioner.

(4) When the Deputy Commissioner has accorded sanction to a

sale by auction, the Form A aforesaid shall in due course be resubmitted to him with the details regarding the auction shown in

Form B. The Deputy Commissioner shall thereon either confirm

the sale or refuse to confirm it. If the Deputy Commissioner

refuses to confirm the sale, the same shall be void.”

10. The 1976 Rules contemplates two acts to be completed by the Deputy

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Commissioner, one of which is approval of conduct of sale which was

granted on 25.10.1995. Thus, there is compliance as far as clause (i) of

Rule 2(3) of the 1976 Rules is concerned. The other important provision

is sub-rule (ii) of Rule 2(3) of the 1976 Rules which contemplates that

no sale by auction shall be valid until it has been confirmed by the

Deputy Commissioner. The communication dated 10.1.2007 (Ex P-34)

referred to by the plaintiff is not the communication by the Deputy

Commissioner to the Municipality or to the plaintiff that the sale stands

confirmed. In fact, it is an inter-departmental communication with no

endorsement of the copy of the said communication to the plaintiff.

Thus, the reliance of the plaintiff on the communication dated

10.1.2007 (Ex.P/34) is not helpful to the argument raised by him as it is

the inter-departmental communication from the Deputy Commissioner

to the Director, Urban Local Body Department to seek approval but in

the absence of any approval granted, no right would accrue. The

communication is inter alia to the following effect:

“3. Hence while confirming sale of Municipal Committee land

measuring 54 Kanal & 7 Marla comprised in Khasra No. 517 and

518, conducted on 23.03.1999 by open auction/bid to the

maximum successful bidder of this land @ Rs.2,32,000/- (Rupees

Two Lacs Thirty Two Thousand) per acre, which has been

accepted by Sub Divisional Office and Head Municipal

Committee Barwala, you are requested to please issue Ex-post

facto approval so that the sale deed of the land in the name of

the purchaser M/s Jai Narain & Company may be got done by the

Municipal Corporation Barwala.”

11. Therefore, no concluded contract ever came into force. Reference may

6

be made to the judgment of this Court reported as Haryana Urban

Development Authority & Ors. v. Orchid Infrastructure

Developers Private Limited

5

, wherein this Court held as under:

“13. Firstly, we examine the question whether there being no

concluded contract in the absence of acceptance of bid and

issuance of allotment letter, the suit could be said to be

maintainable for the declaratory relief and mandatory injunction

sought by the plaintiff. The plaintiff has prayed for a declaration

that rejection of the bid was illegal. Merely by that, plaintiff could

not have become entitled for consequential mandatory

injunction for issuance of formal letter of allotment. Court while

exercising judicial review could not have accepted the bid. The

bid had never been accepted by concerned authorities. It was

not a case of cancellation of bid after being accepted. Thus even

assuming as per plaintiff's case that the Administrator was not

equipped with the power and the Chief Administrator had the

power to accept or refuse the bid, there had been no decision by

the Chief Administrator. Thus, merely by declaration that

rejection of the bid by the Administrator was illegal, the plaintiff

could not have become entitled to consequential relief of

issuance of allotment letter. Thus the suit, in the form it was

filed, was not maintainable for relief sought in view of the fact

that there was no concluded contract in the absence of allotment

letter being issued to the plaintiff, which was a sine qua non for

filing the civil suit.

14. It is a settled law that the highest bidder has no vested right

to have the auction concluded in his favour. The Government or

its authority could validly retain power to accept or reject the

highest bid in the interest of public revenue. We are of the

considered opinion that there was no right acquired and no

vested right accrued in favour of the plaintiff merely because his

bid amount was highest and had deposited 10% of the bid

amount. As per Regulation 6(2) of the Regulations of 1978,

allotment letter has to be issued on acceptance of the bid by the

Chief Administrator and within 30 days thereof, the successful

bidder has to deposit another 15% of the bid amount. In the

instant case allotment letter has never been issued to the

petitioner as per Regulation 6(2) in view of non-acceptance of

the bid. Thus there was no concluded contract....”

5 (2017) 4 SCC 243

7

12. In State of Punjab & Ors. v. Mehar Din

6

 this Court observed that

State or authority which can be held to be State within the meaning of

Article 12 of the Constitution is not bound to accept the highest tender

of bid. It was held as under:

“18. This Court has examined right of the highest bidder at

public auctions in umpteen number of cases and it was

repeatedly pointed out that the State or authority which can be

held to be State within the meaning of Article 12 of the

Constitution, is not bound to accept the highest tender of bid.

The acceptance of the highest bid or highest bidder is always

subject to conditions of holding public auction and the right of

the highest bidder is always provisional to be examined in the

context in different conditions in which the auction has been

held. In the present case, no right had accrued to the respondent

even on the basis of statutory provisions as being contemplated

under Rule 8(1)(h) of Chapter III of the Scheme of Rules, 1976

and in terms of the conditions of auction notice notified for

public auction.”

13. This Court has also considered that the inter-departmental

communication and/or the notings on the file are not the decisions of

the State. It has been held by the Constitution Bench in a judgment

reported as Bachhittar Singh v. State of Punjab

7

 that merely

writing something on the file does not amount to an order. It was held

as under:

“10. The business of State is a complicated one and has

necessarily to be conducted through the agency of a large

number of officials and authorities. The Constitution, therefore,

requires and so did the Rules of Business framed by the

Rajpramukh of PEPSU provide, that the action must be taken by

the authority concerned in the name of the Rajpramukh. It is not

6 2022 SCC OnLine SC 250

7 AIR 1963 SC 395

8

till this formality is observed that the action can be regarded as

that of the State or here, by the Rajpramukh. ................. Indeed,

it is possible that after expressing one opinion about a particular

matter at a particular stage a Minister or the Council of Ministers

may express quite a different opinion, one which may be

completely opposed to the earlier opinion. Which of them can be

regarded as the “order” of the State Government? Therefore, to

make the opinion amount to a decision of the Government it

must be communicated to the person concerned. In this

connection we may quote the following from the judgment of

this Court in the State of Punjab v. Sodhi Sukhdev Singh (AIR

1961 SC 493 at page 512] :

xxx xxx xxx

11. We are, therefore, of the opinion that the remarks or the

order of the Revenue Minister, PEPSU are of no avail to the

appellant.”

14. Furthermore, this Court in a judgment reported as Union of India v.

Avtar Singh

8

 held that letter does not records the decision of the

Central Government under Section 33 of the Displaced Persons

(Compensation and Rehabilitation) Act 1954, so as to be a decision by

the Central Government. It was observed as under:

“19. .…..Therefore the High Court was clearly in error in treating

the letter of Shri Dube dated May 31, 1963 as a decision of the

Central Government in exercise of the power conferred by

Section 33. There was no reason for decision nor any occasion

for the Central Government to exercise power under Section 33

and therefore, it is not possible to agree with the High Court that

the letter records the decision of the Central Government under

Section 33. If the letter of Shri Dube is not a decision of the

Central Government under Section 33 of the Act, as a necessary

corollary, the impugned decision must be treated as one

rendered for the first time in exercise of the revisional power

under Section 33 and therefore, it cannot be said to be one

without jurisdiction. In this view of the matter, the appeal will

have to be allowed.”

8 (1984) 3 SCC 589

9

15. In a judgment reported as State of Orissa and Others v. Mesco

Steels Limited and Another

9

, this Court held that the High Court

was in error in proceeding on an assumption that a final decision had

been taken and in quashing what was no more than an interdepartmental communication constituting at best a step in the process

of taking a final decision by the Government. It was held as under:

“20. On the contrary, the issue of the show cause notice setting

out the reasons that impelled the Government to claim

resumption of a part of the proposed lease area from the

respondent-company clearly suggested that the entire process

leading up to the issue of the show cause notice was tentative

and no final decision on the subject had been taken at any level.

It is only after the Government provisionally decided to resume

the area in part or full that a show cause notice could have been

issued. To put the matter beyond any pale of controversy, Mr.

Lalit made an unequivocal statement at the bar on behalf of the

State Government that no final decision regarding resumption of

any part of the lease area has been taken by the State

Government so far and all that had transpired till date must

necessarily be taken as provisional. Such being the case the

High Court was in error in proceeding on an assumption that a

final decision had been taken and in quashing what was no more

than an inter-departmental communication constituting at best a

step in the process of taking a final decision by the Government.

The writ petition in that view was pre-mature and ought to have

been disposed of as such. Our answer to question No. 1 is

accordingly in the affirmative.”

16. This Court in a judgment reported as State of Uttaranchal v. Sunil

Kumar Vaish

10 held that a noting recorded in the file is merely a

noting simpliciter and nothing more. It merely represents expression of

opinion by the particular individual. By no stretch of imagination, such

9 (2013) 4 SCC 340

10 (2011) 8 SCC 670

10

noting can be treated as a decision of the Government. It was held as

under:

“24. A noting recorded in the file is merely a noting simpliciter

and nothing more. It merely represents expression of opinion by

the particular individual. By no stretch of imagination, such

noting can be treated as a decision of the Government. Even if

the competent authority records its opinion in the file on the

merits of the matter under consideration, the same cannot be

termed as a decision of the Government unless it is sanctified

and acted upon by issuing an order in accordance with Articles

77(1) and (2) or Articles 166(1) and (2). The noting in the file or

even a decision gets culminated into an order affecting right of

the parties only when it is expressed in the name of the

President or the Governor, as the case may be, and

authenticated in the manner provided in Article 77(2) or Article

166(2). A noting or even a decision recorded in the file can

always be reviewed/reversed/overruled or overturned and the

court cannot take cognizance of the earlier noting or decision for

exercise of the power of judicial review. (See State of Punjab v.

Sodhi Sukhdev Singh AIR 1961 SC 493, Bachhittar Singh v. State

of Punjab AIR 1963 SC 395, State of Bihar v. Kripalu Shankar

(1987) 3 SCC 34, Rajasthan Housing Board v. Shri Kishan (1993)

2 SCC 84, Sethi Auto Service Station v. DDA (2009) 1 SCC 180

and Shanti Sports Club v. Union of India (2009) 15 SCC 705).”

17. Thus, the letter seeking approval of the State Government by the

Deputy Commissioner is not the approval granted by him, which could

be enforced by the plaintiff in the court of law.

18. The suit was not maintainable for the reason that there was no vested

right with the plaintiff to claim such a decree merely on the basis of a

participation in the public auction. Secondly, even if the plaintiff had

any right on the basis of an auction, he could at best sue for specific

performance of the so-called agreement. In Orchid, the plaintiff had

sought decree of declaration and of consequential mandatory

11

injunction. This Court held that such suit was not maintainable as no

concluded contract came into existence by merely submitting the

highest bid. In these circumstances, suit for mandatory injunction was

not maintainable.

19. It is to be noted that though the plaintiff had served a notice on

14.9.2006, but still the suit was filed in the year 2011 in respect of the

auction conducted in the year 1999. The suit for mandatory injunction

was filed on or after 13.6.2011, i.e., more than 12 years after the

auction was conducted on 23.3.1999. Therefore, even the suit for

specific performance was barred by limitation as such suit, even if

maintainable, could be filed within three years of the auction being

conducted in terms of Article 54 of the Schedule to the Limitation Act,

1963. The suit for injunction was filed beyond the period of limitation

and was not properly constituted. The courts have not examined such

aspect as was expected to examine legally.

20. Section 61 of the 1973 Act deals with vesting of the property with the

Municipal Committee and how the property can be utilized. Sections

61 and 62 read thus:

“61. Property vested in committee.—(1) Subject to any special

reservation made or to any special conditions imposed by the

State Government, all property of the nature hereinafter in this

section specified and situated within the municipality, shall vest

in and be under the control of the committee, and with all other

property which has already vested or may here after vest in the

committee, shall be held and applied by it for the purposes of

this Act, that is to say,—

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(a) all public town-walls, gates, markets, stalls, slaughter houses,

manure and night-soil depots and public buildings of every

description which have been constructed or are maintained out

of the municipal fund;

(b) all public streams, springs and works for the supply, storage

and distribution of water for public purposes, and all bridges,

buildings, engines, materials and things connected therewith or

appertaining thereto, and also any adjacent land, not being

private property appertaining, to any public tank or well;

(c) all public sewers and drains, and all sewers, drains, culverts

and water-courses in or under any public street or constructed

by or for the committee alongside any public Street, and all

works, materials and things appertaining thereto;

(d) all dust, dirt, dung, ashes, refuse, animal matter or filth or

rubbish of any kind or dead bodies of animals collected by the

committee from the streets, houses, privies, sewers, cesspools

or elsewhere or deposited in places fixed by the committee

under section 152;

(e) all public lamps, lamp-posts, and apparatus connected

therewith or appertaining thereto;

(f) all land or other property transferred to the committee by the

State Government or acquired by gift, purchase or otherwise for

local public purposes;

(g) all public streets, not being land owned by the State

Government, and the payments, stones and other materials

thereof, and also trees growing on, and erections, materials,

implements, and things provided for, such streets;

(h) Shamlat Deh.

(2) Where any immovable property is transferred otherwise than

by the sale by the State Government to a committee for public

purposes, it shall be deemed to be a condition of such transfer,

unless specially provided to the contrary, that should the

property be at any resumed by the State Government the

compensation payable therefor shall, notwithstanding anything

to the contrary in the Land Acquisition Act, 1894, in no case

exceed the amount, if any, paid to the State Government for the

transfer together with the cost or the present value, whichever

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shall be less of any buildings erected or other works executed on

the land by the committee.

62. Inventory and map of municipal property.—(1) The

committee shall maintain an inventory and a map of, all

immovable property of which the committee is proprietor, or

which vests in it or which it holds in trust for the State

Government.

(2) The copies of such inventory and map shall be deposited in

the office of the Deputy Commissioner and such other officer or

authority as the State Government may direct and all changes,

made therein shall forth with be communicated to the Deputy

Commissioner or other officer or authority.”

21. Clause 61(1)(h) of the 1973 Act is the subject matter of challenge in

another appeal before this Court whereas clauses (a) to (g) except

clause (f) deal with the public utility services. The clause (f) deals with,

“the land or other property transferred to the Committee by the State

Government or acquired by gift, purchase or otherwise can be utilised

only for local public purposes.”

22. In terms of Section 62 of the 1973 Act, the Municipal Committee is

required to maintain an inventory and map of all immovable property

of which the Committee is the proprietor or which vests in it or which it

holds in trust for the State Government. In the absence of nature of

land as to whether it is a land owned by the Municipality and is not

vested with the Municipality in terms of Section 61 of the Act, no

direction by the courts could have been granted. It has not come on

record as to whether such land was vesting with the Municipal

Committee or that it was not mentioned in the list of inventories of the

14

properties of Municipal Committee. We find that Municipal Committee

was remiss in defending its property as a custodian of public property.

23. Section 245 of the 1973 Act falling in Chapter XII (Control) empowers

the Deputy Commissioner or any other officer not below the rank of

Assistant Commissioner by a general or special order to carry out the

functions assigned therein. The Deputy Commissioner has a power to

suspend any resolution or order of Committee under Section 246. Any

action taken by the Deputy Commissioner under Sections 246, 247 or

248 of the 1973 Act is to be reported to the Commissioner.

24. Section 250 of the 1973 Act confers power with the State Government

to issue directions for carrying out the purposes of the Act. The said

provision reads thus:

“250. Power of State Government to give directions.—The State

Government may issue directions to any committee for carrying

out the purposes of this Act and in particular with regard to—

(a) various uses to which any land within a municipal are may be

put;

(b) repayment of debts and discharging of obligations;

(c) collection of taxes;

(d) observance of rules and bye-laws;

(e) adoption of development measures and measures for

promotion of public safety, health, convenience and welfare;

(f) sanitation and cleanliness;

(g) establishment and maintenance of fire-brigade.”

15

25. It is in pursuance of the powers conferred on the State Government, a

message was conveyed on 12.9.1994 on behalf of the Director, Local

Bodies, Haryana to all the Deputy Commissioners of the State of

Haryana that no municipal property will be sold without the prior

approval of the Government. The learned trial court has discarded

such communication for the reason that such communication has not

been proved as per the provisions of the Indian Evidence Act, 1872. It

may be stated that the State or the Deputy Commissioner was not

impleaded as a party to the civil suit filed. In fact, the objection raised

was that the State has not been impleaded as a party. Such

communication has been produced by the Municipal Committee when

the Committee examined Shri Mahavir Singh, Secretary as DW-1 and

Shri Sandeep Kumar, Building Inspector as DW-2. Such communication

has come on record from the official source which would carry

presumption of correctness under Section 114 of the Indian Evidence

Act, 1872 that the official acts have been regularly performed. The

original record was not necessarily required to be proved by

summoning the Government officials as such document was produced

by the officials of the Municipal Committee from the official record.

26. Thus, since direction issued by the State Government is in terms of

Section 250 of the 1973 Act, the Deputy Commissioner was bound to

seek approval of the State Government. The binding nature of such

instructions is evident from the fact that the Deputy Commissioner has

16

sought approval from the State Government when a communication to

this effect was addressed on 10.1.2007.

27. In view of the above, we find that the plaintiff has been granted decree

for mandatory injunction not only beyond the period of limitation but in

contravention of the statute and the rules framed thereunder.

28. Consequently, the appeal is allowed. The judgment and decree passed

by the courts below are set aside. The plaintiff is in possession, which

is found to be illegal and without the authority of law. The Municipality

shall take possession of land forthwith and furnish compliance report

within three months. The amount of Rs.15,76,150/- shall stand

forfeited towards the damages for the illegal occupation of the land for

more than 20 years since the date of auction in contravention of law.

.............................................J.

(HEMANT GUPTA)

.............................................J.

(V. RAMASUBRAMANIAN)

NEW DELHI;

MARCH 29, 2022.

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