The Registrar Coop. Societies vs Hem Raj

Hemant Gupta, J.—The instant application is preferred on behalf of the applicant- auction purchaser for direction to the Chandigarh Administration to refund the amount of the auction price already deposited alongwith interest @ 18% in respect of Plot No.377, Industrial Area, Phase-I, Chandigarh.

The Central Cooperative Consumer Store Ltd. (hereinafter to be referred as �the Super Bazar�) was owner of properties including Plot No.377, Industrial Area, Phase-I, Chandigarh. The Super Bazar went into financial difficulties. Ultimately, a winding up order was passed on 10.10.2000 under the Punjab Cooperative Societies Act, 1961 (as applicable to UT, Chandigarh). The legality and the validity of the winding up order is subject matter of challenge in the present Letters Patent Appeal.

However, on 03.02.2011 with the consent of the parties, a two- Member Committee under the Chairmanship of Hon''ble Mr. Justice A.L.Bahri (Retd.) was constituted to dispose of the assets of the Society including the above-mentioned Industrial Plot. After number of attempts, the auction was conducted on 17.04.2013 in which the applicant was the highest bidder having given bid of Rs.5.24 crores. Admittedly, the applicant-auction purchaser has deposited the entire bid amount i.e. Rs.5.24 crores. The relevant terms and conditions of sale announced at the time of auction, which are part of the report dated 20.04.2013 of the two Member Committee, read as under:

�9. The highest bidder whose bid is accepted by the Committee shall deposit Rs.3.00 lacs on the spot and will make good the 25% of bid amount within 2 days from the date of auction by way of Pay Order / Demand Draft, with the Liquidator, the Central Coop. Consumers Store Ltd. The purchaser shall pay the balance amount of 75% within 20 days from the date of confirmation of sale by the Committee on the directions of the Hon''ble High Court, Chandigarh or as may be directed by the Hon''ble High Court.

If the purchaser fails and/or neglect for any reason or any account whatsoever to pay in full the amount and/or the balance of the purchase price as provided herein above and/or to complete the sale in terms of these conditions, then and in that event the entire earnest money shall stand forfeited which would be subject to any order passed by the Hon''ble High Court and shall be entitled to proceed to hold another sale (by public auction or otherwise) at such time and subject to such conditions and in such manner for all purposes and in all respect as the Committee may in his discretion think fit and proper.

The Committee does not provide any guarantee as to the specifications of the assets/properties offered for sale. The tenderers/bidders are to satisfy themselves in this regard after physical inspection of the assets/properties of the Coop. Store and the purchasers will be deemed to offer with full knowledge as to defects, if any, in the description of the assets offered and no complaint in this regard after the sale is completed would be entertained. However, the properties offered for auction are on Leasehold basis, only the leasehold rights will be transferred to the successful bidder. The unearned increase, if any, against the properties offered for sale will be paid by the successful bidder.�

On the basis of the report of the Committee, this Court confirmed the sale in favour of the applicant on 29.04.2013, when the following order was passed:

�On April 22, 2013, the report sent by the Committee headed by Hon''ble Mr. Justice A.K.Bahri (Retd.) regarding sale of left out properties at serial Nos.2, 6 and 7 was considered and a copy thereof was handed over to learned counsel for the respondent-employees. No objection has been received from any quarter against the said auction. No other higher bidder has also come forward.

In these circumstances and keeping in view the fact that the auction has been conducted through wide publicity, the auction held on 17.04.2013 in respect of properties at serial Nos.2, 6 and 7 is hereby confirmed. The appellants are directed to receive the balance sale consideration in respect of these three properties as per the terms and conditions of the auction and the sale proceeds so realized be deposited in fixed deposits towards the balance amount. All those purchasers who have deposited the entire sale consideration and if there is no legal impediment also, the auctioned properties be transferred in their favour.

It is pointed out by Mr. B.S.Sidhu, learned counsel for respondent-employees that most of the employees by now have attained the age of superannuation except 50-60 employees. They submit that the Chandigarh Administration can explore the possibility of absorbing the remaining employees in other co- operative societies/autonomous organizations run/funded by the U.T. Administration.

We have impressed upon Mr. Sanjay Kaushal, Senior Standing Counsel for U.T. Chandigarh, who is present in Court to consider the desirability of above-stated absorption and submit a report on the next date of hearing. Let a copy of this order be given dasti to Mr. Sanjay Kaushal, Advocate, for information and necessary compliance.

Meanwhile, the report of the Committee headed by Hon''ble Mr. Justice G.C.Garg (Retd.) for settlement of claims of the employees of the society, be also placed on record.

List on 30.07.2013.

A photostat copy of this order be placed in the file of connected case.�

Thereafter, this Court considered the interim report and the grievance of the auction purchaser regarding non-execution of the conveyance deed in their favour. As per the stand of the appellant, the conveyance deed could not be executed on account of the failure of the auction purchaser to deposit un-earned increase in terms of Rule 17(10) of the Chandigarh Lease Hold of Sites and Building Rules, 1973 read with Clause 11 of the terms and conditions of Auction. This court after examining the stand of the parties passed an order on 27.11.2013. It was inter-alia stated to the following effect:

�6. Learned counsel for the Auction Purchasers, however, refutes this contention and submits that the Auction Purchasers have not been conveyed till date the amount payable under the above stated Rule. He states that should the Authorities convey that amount, the Auction Purchasers have no objection in depositing it, subject to their right to challenge the same in separate proceedings, if so required.�

Later, on 05.05.2014, while considering the controversy regarding calculations of un-earned increase payable by the applicant, the amount as per the auction purchaser being Rs.94,37,319/- whereas, the counsel for the Administration stated that the said amount was arrived at and communicated vide letter dated 29.04.2011, but the amount has since gone up. This Court observed as under:

�The U.T. Administration, considering this as a public auction, would have to calculate the unearned increase on the date of auction since that would be the date deemed to be the date when application would be made for transfer. Needless to say that the calculation of unearned increase would be as per the rules prevalent at that stage of time, i.e. on the date of auction. This amount be crystallized and intimated to the applicant within a maximum period of one weeks from today.�

It is, thereafter, the applicant-auction purchaser was informed that the amount of un-earned increase is Rs.1,84,38,678/-.

In these factual basis, the argument on behalf of the applicant- auction purchaser is that the amount of un-earned increase was communicated to be Rs.94,37,319/- as per the report dated 14.07.2014 (wrongly mentioned as 14.07.2013) from one of the Members of the Committee constituted to conduct the sale at the time of auction, therefore, it is the said amount alone, which is payable by the applicant-auction purchaser and not a sum of Rs.1,84,38,678/-. It is contended that since the applicant is not in a position to pay the said amount, therefore, the bid amount should be returned to the applicant after deducting Rs.50,000/- as per the terms and conditions of the auction.

We have heard learned counsel for the parties and find no merit in the present application. One of the conditions of the auction made public at the time of auction on 17.04.2013 was that un-earned increase, if any against the property offered for sale, will be paid by the successful bidder. The forfeiture of the earnest money was contemplated, if the purchaser fails and/or neglect for any reason or any account whatsoever to pay in full the amount and/or the balance of the purchase price. Once the auction purchaser has deposited the purchase price, the default clause contained in Condition No.10, as reproduced above, would not come into operation.

Though at one stage, learned counsel for the applicant relied upon the communication dated 14.07.2014 by one of the members of the Committee, but later withdrew to rely on such communication keeping in view the fact, that the process of sale was video-graphed.

The amount of un-earned increase is required to be determined by 3rd party i.e. Chandigarh Administration, who is not a party to the sale. The sale has been conducted at the instance of the Super Bazar. The payment of the amount of un-earned increase is part of the statutory Rules. The terms of sale do not and cannot supersede the statutory Rules. The un- earned increase is payable by the auction purchaser in terms of the conditions of sale as well as in terms of the statutory Rules. Still further, the auction stands confirmed vide order dated 29.04.2013. The applicant has undertaken to pay the amount of un-earned increase with liberty to challenge such amount in appropriate proceedings. Therefore, the applicant cannot be permitted to wriggle out of the concluded contract by way of the present application.

In view of the above, we do not find any ground to allow the present application. The same is dismissed. The applicant may avail such other remedy as may be available to them as recorded in the order dated 27.11.2013.