- The Hon’ble Supreme Court (SC or Court),in the case of K. Kumara Gupta v Sri Markandaya and Sri Omakreswara Swamy Temple & Ors,quashed and set aside the judgment of the Division Bench of the Hon’ble High Court of Andhra Pradesh (HC) observing that a sale pursuant to public auction cannot be set aside on the basis of an alternate offer made by a third party subsequently, who did not participate in the initialauction.
- The writ before SC was filed against the impugned order of the Division Bench where in it directed the authorities to conduct a re-auction of the entire property by fixing an higher upset price than was fixed earlier.
- The Court also observed that 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/ sale in favour of the highest bidder.
- The Appellant participated in a public auction sale conducted in 1998 to purchase a land belonging to the Respondent and was declared the highest bidder. However, on the representation of a party, who did not participate in the auction (writ petitioner), that the auctioned land could command more value, the auction was cancelled.
- A revision petition was filed and an order confirming sale was issued and a sale deed was registered in the name of the Appellant, being the highest bidder. Thereafter, the Appellant deposited the full amount and physical possession of land was delivered to the Appellant.
- However, the sale deed could not be registered owing to non-availability of the Clearance Certificate (CC) from theIncome Tax department. Subsequently, the CC was granted.
- In the second round of litigation, the High Court granted an interim stay on the execution of the sale deed at the instance of a writ petition filed by the writ petitioner and unilaterally passed an order cancelling the auction and ordered a re-auction. This ex-parte order was challenged by the Appellant by way another petition and the appeal was allowed by the Learned Single Judge.
- Eventually, in 2018, the Division Bench of HC set aside the order of the Learned Single Judge and directed the authorities concerned to conduct the re-auction of the entire land. The Court directed the upset price to be fixed higher than what had been fixed earlier. The Bench also observed that both the writ petitioner as well as the appellant shall be allowed to participate in the re-auction, if they are otherwise eligible.
- Aggrieved, the Appellant filed the instant appeal before the SC.
- After considering all the material facts placed on record before it and the arguments advanced from both sides, the Court observed that the Division Bench of the HC erred in ordering a re-auction of the entire land after 23 years of sale and execution of the sale deed in favour of the auction purchaser by observing that the value of the property might have been much more.
- The Court observed that the Division Bench had no material to confirm that the valuation of the property in the year 1998 was higher than the Appellant’s bid price. Unless the Respondent shave made out any case of fraud in the conduct of the auction/ sale, they are estopped from raising objections on the conduct of the sale proceedings.
- The Court further observed that the third-party writ petitioner had no locus standi to approach the High Court in the first place owing to his non-participation in the original auction-cum-sale. Merely stating that the land would fetch more value is not an argument thatcan be looked into without establishing any malafides or fraud played by thevendor or vendee.
- In effect, the appeal was allowed in favour of the Appellant.
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