# Virendra Kumar Shukla & Ors v. State of U.P. & Ors

- **Citation:** (2024) 2 ILRA 582
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-01-25
- **Case number:** Writ C No. 1004613 of 2003
- **Bench:** Alok Mathur
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/virendra-kumar-shukla-ors-v-state-of-u-p-ors-51443
- **Pages:** 11

## Headnote

Civil Law - Constitution of India, 1950Article
226
&
300A-U.P.
Zamindari
Abolition and Land Reforms Act,1950 and
Rules
1952-Rule
285B
-Auction
of
immovable
property-Petitioners
challenged the auction of 1.717 hectares
of mortgaged agricultural land conducted
by the State in 2003 for recovery of
agricultural loans-The land was auctioned
for Re.1 due to lack of bidders, and the
State subsequently mutated the property
in its name-the petitioners fully repaid the
loans under a one-time settlement in 2019
and received a "no dues" certificateHeld,
the
auction
process
was
arbitrary, illegal and violated statutory
and
constitutional
principles-Rule
285B
mandates
fair
valuation
and
adequate publicity for auctions, selling
the property for Re. 1 violated these
principles-The
State,
acting
as
auctioneer and purchaser, failed to
ensure transparency and fairness in
the auction process-The state was
directed to revert the land to the legal
heirs of the borrower and update the
revenue records accordingly.(Para 1 to
39)

The writ petition is allowed. .( E-6)

List of cases cited:

## Text

582 INDIAN LAW REPORTS ALLAHABAD SERIES
the
fact
that
the
petitioner
has
superannuated in the meantime, and also
looking into the gravity of punishment
where only punishment inflicted was only
withdrawal of allowance, which is not a
major punishment, accordingly, award
dated 21.01.2010, appellate order dated
20.03.2002 and punishment order dated
19.12.2001 are hereby set aside.

35. The writ petition is allowed with
all consequential benefits.
----------
(2024) 2 ILRA 582
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 25.01.2024
BEFORE

THE HON'BLE ALOK MATHUR, J.

Writ C No. 1004613 of 2003

Virendra Kumar Shukla & Ors.
 ...Petitioners
Versus
State of U.P. & Ors. ...Respondents

Counsel for the Petitioners:
V.V.Tripathi, Alpana Yadav, Dr. Aniruddha
Kumar
Singh,
Illegible,
Pankaj
Kr.Srivastava, Raj Mani Dubey, Sukha Ram
Shukla

Counsel for the Respondents:
C.S.C., Ananttika Singh, H.S. Tiwari, Pankaj
Khare, S.P.Shukla, Sarvesh Kumar Dubey

Civil Law - Constitution of India, 1950Article
226
&
300A-U.P.
Zamindari
Abolition and Land Reforms Act,1950 and
Rules
1952-Rule
285B
-Auction
of
immovable
property-Petitioners
challenged the auction of 1.717 hectares
of mortgaged agricultural land conducted
by the State in 2003 for recovery of
agricultural loans-The land was auctioned
for Re.1 due to lack of bidders, and the
State subsequently mutated the property
in its name-the petitioners fully repaid the
loans under a one-time settlement in 2019
and received a "no dues" certificateHeld,
the
auction
process
was
arbitrary, illegal and violated statutory
and
constitutional
principles-Rule
285B
mandates
fair
valuation
and
adequate publicity for auctions, selling
the property for Re. 1 violated these
principles-The
State,
acting
as
auctioneer and purchaser, failed to
ensure transparency and fairness in
the auction process-The state was
directed to revert the land to the legal
heirs of the borrower and update the
revenue records accordingly.(Para 1 to
39)

The writ petition is allowed. .( E-6)

List of cases cited:

1. U.O.I. Vs Official Liquidator (2000)5 SCC 274

2. Divya Manufg. Co.(P) Ltd.& anr. Vs U.O.I. &
ors.. (2000) AIR SC 2346

3. Gajraj Jain Vs St.of Bih. & ors.. (2004) 7 SCC
151

4. St. of U.P. & ors.. Vs Swadeshi Polytex Ltd. &
ors.. (2008) 12 SCC 596

5. S.J.S. Business Enterprises (P) Ltd Vs St. of
Bih. (2004) 7 SCC 166

6. Pannalal Binjraj Vs U.O.I. AIR a.p. 409

7. Mahesh Chandra Vs U.P. Fin. Corpn.

8. Haryana Fin. Corpn. Vs Jagdamba Oil Mills

9. SIPCOT Vs Contromix (P) Ltd. (1995)4 SCC
595

 (Delivered by Hon'ble Alok Mathur J.)

1. Heard Sri S. R. Shukla, learned
counsel for the petitioners, Sri Shantanu
holding brief of Ms. Ananttika Singh for
2 All. Virendra Kumar Shukla & Ors. Vs. State of U.P. & Ors.
583
respondent No.5 and the Standing counsel
on behalf of respondent Nos. 1 to 4.

2. By means of the present writ
petition, the petitioners have challenged the
auction dated 3.3.2023 held by Sub
Divisional Magistrate, Tehsil Dalmau,
Raebareli on account of recovery of
agricultural loan taken by late Sri Ram
Shankar Shukla, the father of the petitioner
No.s 1 to 5 and husband of petitioner No.6.

3. It has been submitted that late Ram
Shankar
Shukla
had
taken
loan
of
Rs.31100/- in the year 1990-91 for
agricultural purpose but could not repay the
said loan installments within the prescribed
time. He had taken further loan of
Rs.32,000/- from Kshetriya Gramin Bank
Ltd. Branch Ghurwara, District Raebareli
i.e. opposite party No.6 and another loan of
Rs.40,000/- from Uttar Pradesh Sahkari
Gramya Vikas Bank, Branch Dalmau,
District Raebareli and for the aforesaid
loans he had mortgages his agricultural
lands of gata No.s 433-KHa/0.115, 601Ka/0.076, 611/1.00 and 925/0.526 hectares
totaling to 1.717 hectares situated in
Village Ranjitpur Lonari, Post Kathgar,
Tehsil Dalmau, District Raebareli. Sri Ram
Shankar Shukla died leaving behind his
five sons and his widow who are the
petitioners in the present writ petition. In
the meantime, the respondent-bank initiated
the recovery proceedings against the
borrower and a recovery citation was also
issued on 15.4.2002.

4. A writ petition bearing writ petition
No.763 (M/S) of 2003 was filed before this
Court which was disposed of by means of
order dated 12.3.2003 directing petitioner
No.1 to deposit a sum of Rs.20,000/- within
a
month
and
rest
in
three
equal
installments. It is not disputed that the
petitioner No.1 could not comply with the
said order of the Court and could not repay
the amount as directed by the Court. It is in
aforesaid circumstances that the mortgaged
agricultural land was put to auction. The
said auction was carried out and as no
borrower had come forward to purchase the
said property, the State had purchased the
said property for Re.1/- and the auction was
also confirmed by the order of the
competent authority on 3.3.2003. It is after
confirmation of the auction that the present
writ petition was filed assailing the said
auction.

5. In the counter affidavit filed by the
state it has been stated that recovery
certificate dated 7.2.2002 was issued for an
amount
of
?
64,844/-
by
Khadi
Gramoudyog, Rai Bareilly against the
father of the petitioners. The recovery
certificate was issued upon the defaulters
personally, but they did not repay the said
amount. Subsequently the land measuring
area of 1.717 hectares was attached and
several dates were fixed for the auction but
the same could not be conducted.

6. It has further been stated that in the
meanwhile the defaulter Sri Ram Shankar
expired and his legal representatives
despite being informed to repay the
outstanding amount of loan did not repay
and also did not participate in the auction
proceedings conducted on 18/01/2003. On
the said date no one appeared to participate
in the said auction and hence the auction
was
done
in
favour
of
the
State
Government.
The
Sub
Divisional
Magistrate, Dalmau confirmed the auction
in favour of the State Government.

7. During pendency of the aforesaid
petition an affidavit was filed on behalf of
the petitioners stating that they have
584 INDIAN LAW REPORTS ALLAHABAD SERIES
deposited the total remaining amount of the
outstanding loan to the respondent-bank
and the respondent-bank, on the other hand,
has given no dues certificate to the
petitioner
on
26.11.2019.
No
dues
certificate has been issued by District
Gramodyog Adhikari, Raebareli stating that
the petitioner has re-payed a total amount
of Rs.89,363/- towards all the outstanding
loan taken by late Ram Shankar Shukla and
no further outstanding remains on account
of the said loan. In the application the
petitioner has submitted that now that all
the amount of loan has been re-payed and
the land is still in possession of the
respondents the mortgaged land ought to be
released in favour of the petitioners as they
have redeemed the loan taken by late Ram
Shankar Shukla.

8. To verify the fact as to whether
firstly the petitioners have re-payed the
total loan and secondly as to whether the
land
is
still
in
possession
of
the
respondents, instructions were sought
from Sri Shantanu, learned counsel
appearing for the respondents, who has
informed this Court, on the basis of
written instructions received from Uttar
Pradesh Khadi and Gramodyog Board
(Legal
Cell),
Lucknow,
confirming
firstly that the petitioners have re-payed
the
outstanding
loan
amount
and
secondly that no dues certificate has
been issued in this regard and also that
the officials made inquiries with regard
to the status of the mortgaged land in
which it has been found that gata No.s
433 Kha/0.1150 hectare, 601 Ka/0.0760
hectare,
611/1.000
hectare
and
925/0.5260 hectare have now been
mutated in favour of the State and
possession of the said land still vests
with the petitioners. The said written
instructions are taken on record.

9. During the pendency of the writ
petition an affidavit was filed stating that
the petitioner had deposited ? 31,100/-on
22/10/2019 and 21,900/- on 23/10/2019,
and accordingly requested the respondent
to give him a no due certificate. On the
deposit of the aforesaid amount the District
Gramoudyog Officer vide letter dated
26/11/2019 issued a no due certificate
stating that nothing remains due against the
petitioners and recommended that his
mortgaged deed be returned back.

10. The aforesaid facts have also not
been disputed by the respondents and it has
been confirmed by the Standing Counsel,
who has informed this Court, on the basis
of the written instructions received from
the Sub Divisional Magistrate, Dalmau,
that though the land has been mutated in
the name of the State, but the petitioner and
other legal heirs continue to be in
possession of the same.

11. In the aforesaid circumstances, the
petitioner has prayed that the auction
proceedings dated 16/01/2003 be set aside
along with the confirmation of the said
auction and the respondents be directed to
mutate the name of the legal heirs of the
borrower in the revenue records and also be
injuncted from interfering in the possession
of the petitioners.

12. I heard the counsel the parties and
perused the record.

13. The undisputed facts of the
present case are that one Ram Shankar
Shukla had taken an agricultural loan from
the
Khadi
Gramudyog
Board
for
installation of ?Kolhoo? in 1990 ? 91
amount of ? 31,000/- and a further loan of ?
32,000/- from Kshetriya Gramin Bank, ?
40,000 From Uttar Pradesh Sahkari Gram
2 All. Virendra Kumar Shukla & Ors. Vs. State of U.P. & Ors.
585
Vikas Bank and to secure the said loan
equitable
mortgage
was
created
by
mortgaging the land at Gatta No. 423Kha/0.115, 601-Ka/0.076, 611/1.00, and
925/0.526 total 4 plots with an area of
1.717 hectares. As the borrower could not
repay the said loan, the Khadi Gramudyog
Board sent notice to Collector, Rai Bareilly
to recover an outstanding amount of Rs.
64,844/- from the petitioner. Consequently,
recovery proceedings were initiated, and
the petitioner approached this Court filing
writ petition No. 763 (MS) of 2003 and this
Court by means of order dated 12/03/2003
directed the petitioner to deposit an amount
of ? 20,000 within one month and the rest
of
the
amount
in
three
quarterly
installments. The petitioner in pursuance of
the order of this Court had deposited the
sum of ? 20,000/- on 19/04/2003 but did
not deposit the remaining installments, and
consequently recovery proceedings were
recommenced as per directions of this
Court, as the petitioner himself had failed
to deposit the outstanding amount.

14. It is in pursuance to the recovery
proceedings initiated by the respondents
that the property mortgaged by the
petitioner was sought to be auctioned. No
person appeared in the auction, and
consequently the auction was settled in
favour of the State and the mortgaged
property of the petitioner was purchased by
the State for Re1/-. According to the entry
made in the revenue records, pursuant to
the confirmation of the auction on
03/03/2003 the name of the petitioner was
deleted and in his place name of State of
Uttar Pradesh was mutated by the Lekhpal
on 16/04/2003.

15.

Subsequently,
the
entire
outstanding amount of loan has been repaid
to the District, Khadi Gramoudyog, Rai
Bareilly, under a onetime settlement
scheme, and they have also issued a no due
certificate and also released the mortgaged
property as per the said certificate dated
26/11/2019.

16. The grievance of the petitioners
which has been agitated in the present writ
petition is with regard to setting aside the
auction and mutating the name of the
petitioners in relevant revenue records. The
respondents having themselves permitted
the petitioners to redeem the said loan, and
the entire outstanding amount having been
paid, the mortgage would come to an end
on the repayment of the entire outstanding
amount of loan.

17. In the present facts and
circumstances of the case, the other issue
which arises for consideration is as to
whether the State could have purchased the
mortgaged property for Rs.1/- in the
auction.

18. The proceedings for auction were
initiated by the State under the provisions
of U.P Zamadari Abolition and Land
Reforms Act, 1950 as well as rules of 1952.

19. Section 284 of the Act deals with
the attachment, lease and sale of holding of
defaulter, which provides that Collector
may in addition to or instead of any other
processes hereinbefore specified, either of
his own motion or on the application of the
Land Management Committee, attach the
holding in respect of which an arrear is due.
Section 286 of the Act provides procedure
and power to proceed against the interest of
defaulter in other immovable property,
which provides that if any arrears of land
revenue cannot be recovered by any of the
process mentioned in clauses (a) to (e) of
Section 279, the Collector may realize the
586 INDIAN LAW REPORTS ALLAHABAD SERIES
same by attachment and sale of interest of
defaulter in any other immovable property
of the defaulter.

20. Rule 281 of U.P.Z.A. & L.R.
Rules, 1952 deals with procedure and
power of sale of immovable property which
inter alia provides that process for sale of
holding under section 284 and other
immovable property under section 286
shall be issued by the Collector. Rule 281
(2-A) of the said Rules provides that in
case of sale of a holding the Collector shall
auction the holding in lots of 1.26 Hectares
(3.125 acres) to 5.04 Hectares (12.50 acres)
after working out and announcing the land
revenue and the estimated value of each lot.
It should also be made clear that only those
persons would bid in the auction /
acquisition of land who would not
contravene the provisions of Section 154.

21. For ready reference Rule 281 of
the U.P.Z.A. &.L.R. Rules is quoted as
under:

"281. Section 284.-

{((1) Recourse can only be had to
the sale of the holding under Section 284
when the process specified in clause (a),
(b), (c) and (d) of Section 279 would be
insufficient for the recovery of the arrear.

{(2) Process for sale of holding
under Section 284 and of other immovable
property under Section 286 shall be issued
by the Collector.

(2-A)--In the case of sale of a
holding the Collector shall auction the
holding in lots of 1.26 hectares (3.125
acres) to 5.04 hectares (12.50 acres) after
working out and announcing the land
revenue and the estimated value of each lot.
It should also be made clear that only those
persons
would
bid
in
the
auction,
acquisition of land by whom would not
contravene the provisions of Section 154.}

{(3) * * *}"

22. Rule 282 of said Rules provides
that proclamation for sale shall be in Z.A.
Form 74. Rule 283 provides that in
proclamation for sale under section 286, the
Collector shall state the amount of the
annual demand and the estimated value of
the property calculated in accordance with
the rules in Chapter XV of the Revenue
Manual. For ready reference the provisions
of Rules 282 and 283 are quoted as under:

 "282.
Section
286.-
The
proclamation for sale shall be in Z.A. Form
74.

283. In proclamation for sale
under Section 286, the Collector shall state
the amount of the annual demand and the
estimated value of the property calculated
in accordance with the rules in Chapter XV
of the Revenue Manual." 17. Rule 285-A
provides the officer authorised and time
frame for holding auction sale as under:
"285-A. Every sale under Sections 284 and
286 shall be made either by the Collector
in person or by an Assistant Collector
specially appointed by him in this behalf.
No such sale shall take 8 place on a Sunday
or other gazetted holiday, or until after the
expiration of at least thirty days from the
date on which the proclamation under rule
282 was issued. The Collector may from
time to time postpone that sale."

23. Rules 285-H, 285-I, 285-J and
285-K deal with the grounds and procedure
for setting aside the sale and confirmation
of sale, as under: "285-H. (1) Any person
whose
holding
or
other
immovable
property has been sold under the Act may,
at any time within thirty days from the date
of sale, apply to have the sale set aside on
2 All. Virendra Kumar Shukla & Ors. Vs. State of U.P. & Ors.
587
his depositing in the Collector's office-- (a)
for payment to the purchaser, a sum equal
to 5 per cent of the purchaser money; and
(b) for payment on account of the arrear,
the amount specified in the proclamation in
Z.A. Form 74 as that for the recovery of
which the sale was ordered, less any
amount which may, since the date of such
proclamation of sale, have been paid on
that account; and (c) the costs of the sale.
On the making of such deposit, the
Collector shall pass an order setting aside
the sale: Provided that if a person applied
under Rule 258-I to set aside such sale he
shall not be entitled to make an application
under this rule. (2) .

285-I. (i) At any time within thirty
days from the date of the sale, application
may be made to the Commissioner to set
aside the sale on the ground of some
material
irregularity
or
mistake
in
publishing or conducting it; but no sale
shall be set aside on such ground unless the
applicant proves to the satisfaction of the
Commissioner that he has sustained
substantial injury by reason of such
irregularity or mistake.

(ii) { }. (iii) The order of the
Commissioner passed under this rule shall
be final.

285-J. On the expiration of thirty
days from the date of the sale if no such
application as is mentioned in Rule 285-H
or Rule 285-I, has been made or if such
application has been made and rejected by
the Collector or the Commissioner, the
Collector shall pass an order confirming
the sale after satisfying himself that the 9
purchase of land in question by the bidder
would not be in contravention of the
provisions of Section 154. Every order
passed under this rule shall be final." 285K. If no application under Rule 285-I is
made within the time allowed therefor, all
claims on the ground of irregularity or
mistake in publishing or conducting the
sale shall be barred: Provided nothing
contained in this rule shall bar the
institution of a suit in the Civil Court for
the purpose of setting aside a sale on the
ground of fraud."

24. Before dealing with rival
contentions of parties, it would be useful to
refer some decisions of the Apex Court,
having material bearing on the question in
controversy
involved
in
the
case,
hereinafter.

25. In the case of Union Bank of
India Vs. Official Liquidator, 2000 (5)
SCC 274, the Apex Court has observed as
under:-

"In auction-sale of the property of
the company which is ordered to be wound
up, the Company Court acts as a custodian
for the interest of the Company and its
creditors. It is the duty of the Company
Court to satisfy itself as to reasonableness
of price by disclosing valuation report to
secured creditors of the company and other
interested persons. It was further held that
the
Court
should
exercise
judicial
discretion to ensure that sale of property
should fetch adequate price. For deciding
what would be reasonable price, valuation
report of an expert is essential. The
Company Judge himself must apply his
mind to the valuation report. The Court
observed that the High Court did not
interfere with the auction-sale on the
ground of sympathy for the workers which
was not proper. The auction-sale was,
therefore, set aside by this Court and the
Official Liquidator was directed to resell
the property after obtaining fresh valuation
report and after furnishing copy of such
report to secured creditors."
588 INDIAN LAW REPORTS ALLAHABAD SERIES

26.

In
Divya
Manufacturing
Company (P) Ltd. and another Vs.
Union of India and others, AIR 2000 SC
2346, the Apex Court held that in
appropriate cases, even the confirmed sale
can be set aside.

27. In Gajraj Jain v. State of Bihar
and others, (2004) 7 SCC 151, the Apex
Court held that in absence of valuation
report and reserve price, the auction sale
becomes only a pretence and if there is no
proper mechanism and if the intending
purchasers are not able to know the details
of the assets or 10 intemised valuation, the
auction-sale cannot be said to be in
accordance with law. If publicity and
maximum participation is to be attained, all
bidders must know the details of the assets
and the valuation thereof.

28. In State of Uttar Pradesh and
others Vs. Swadeshi Polytex Limited and
others (2008) 12 SCC 596 the sale
proclamation had been issued on 1.4.2005
without any valuation of properties and
only the area of vacant land had been
specified therein and it was this notice that
had been served on the chowkidar on
21.4.2005 and publication had been made
in newspaper on 22.4.2005.The auction
was held on 2.5.2005. In backdrop of this
case, it was found that there was clear
violation of Rules 282 and 283 of U.P.Z.A.
& L.R. Rules. The Apex Court further held
that the question of valuation is of the
utmost importance as it is designed to
ensure the best price for the property and
it is essential in this circumstance that
wide publication and notice of the
proposed sale should be given as per
Rule 285-A of the Rules. The pertinent
observations made by Apex Court in
paras 31 and 37 of the aforesaid
decision are quoted as under:-

"31. Rule 283 provides for the
estimated value of the property to be
determined under the provisions contained
in Chapter XV of the Revenue Manual. The
said Chapter specifies the procedure for
valuation of the property in terms of other
similar properties. It is, however, clear
from the record that the figure Rs.27 crores,
the value of the property which is
mentioned in the advertisement in Amar
Ujala, appears to have picked up without
any basis as it is not the case of UPSIDC
that the property had been valued in
accordance with the provisions of the
Revenue Manual or by a valuer or expert in
the field.

37. The question of valuation is to
our mind of the utmost importance as it is
designed to ensure the best price for the
property and it is essential in this
circumstance that wide publication and
notice of the proposed sale should be given
as per Rule 285-A which postulates a
notice of 30 days between the date of
issuance of the sale proclamation and the
date of auction. It can hardly be
overemphasised that the proper valuation
of the property and wide publicity of the
proposed auction is intimately linked with
the price that the auction fetches. As
already mentioned above, the auction had
been
held
on
2.5.2005.
The
sale
proclamation had been issued on 1.4.2005,
and served on the chowkidar on 21.4.2005,
the publication made in Amar Ujala on
22.4.2005 whereas Rule 285-A itself
postulates a notice period of 30 days to be
counted from the date of issuance of the
sale proclamation. While dealing with a
similar situation, this is what this Court
had to say in S.J.S. Business Enterprises
(P) Ltd. Vs. State of Bihar 2004 (7) SCC
166 (SCC 175- 76, paras 17-18) "

31. We are of the view that the
sale effected in favour of Respondent 6
2 All. Virendra Kumar Shukla & Ors. Vs. State of U.P. & Ors.
589
cannot be sustained. It is axiomatic that the
statutory powers vested in State financial
corporation under the State Financial
Corporations Act, must be exercised bona
fide. The presumption that public officials
will discharge their duties honestly and in
accordance with the law may be rebutted
by
establishing
circumstances
which
reasonably probabilise the abuse of that
power. In such event it is for the officer
concerned to explain the circumstances
which are set up against him. If there is no
credible explanation forthcoming the court
can assume that the impugned action was
improper. (See Pannalal Binjraj Vs. Union
of India, AIR a p. 409) Doubtless some of
the restrictions placed on State financial
corporations exercising their powers under
Section
29
of
the
State
Financial
Corporations Act, as prescribed in Mahesh
Chandra Vs. U.P. Financial Corpn. are no
longer in place in view of the subsequent
decision in Haryana Financial Corpn. Vs.
Jagdamba
Oil
Mills.
However,
in
overruling the decision in Mahesh Chandra
this Court has affirmed the view taken in
SIPCOT v. Contromix (P) Ltd.1995 (4)
SCC 595 and said that in the matter of sale
under
Section
29,
State
financial
corporations must act in accordance with
the statute and must not act unfairly i.e.
unreasonably. If they do, their action can
be called into question under Article 226.
Reasonableness is to be tested against the
dominant consideration to secure the best
price for the property to be sold.

"12. ...... This can be achieved
only when there is maximum public
participation in the process of sale and
everybody has an opportunity of making an
offer.
Public
auction
after
adequate
publicity ensures participation of every
person who is interested in purchasing the
property and generally secures the best
price." (SIPCOT case, SCC p. 601, para
12)

29. Adequate publicity to ensure
maximum participation of bidders in turn
requires that fair and practical period of
time must be given to purchasers to
effectively participate in the sale. Unless
the subject-matter of sale is of such a
nature which requires immediate disposal,
an opportunity must be given to the
possible purchaser who is required to
purchase the property on 'as-is-where-is
basis' to inspect it and to give a considered
offer with the necessary financial support
to deposit the earnest money and pay the
offered amount, if required.

We must, therefore, repel Mr
Dwidedi's argument that as SPL had
suffered not prejudice in the auction
proceedings, the sale should not be
interfered with."

29. Thus, on a close analysis of the
aforesaid decisions it is clear that in Union
Bank of India Vs. Official Liquidator
(supra) the Apex Court has held that in
auction sale of property of company which
is ordered to be wound up, the Company
Court acts as custodian for the interest of
company and its creditors. It is the duty of
the Company Court to satisfy itself as to
reasonableness of price by disclosing
valuation report to secured creditors of the
company and other interested persons. The
Court should exercise judicial discretion to
ensure that sale of property should fetch
adequate price. For deciding what would be
reasonable price, valuation report of an
expert is essential.

30. In Gajraj Jain Vs. State of Bihar
and others (supra) it was held that in
absence of valuation report and reserved
price the auction sale becomes only a
pretence and if there is no proper
590 INDIAN LAW REPORTS ALLAHABAD SERIES
mechanism and if intending purchasers are
not able to know the details of the asset or
itemised valuation, the auction sale cannot
be said to be in accordance with law. If
publicity and maximum participation is to
be attained, all the bidders must know the
details of asset and valuation thereof.

31. In State of Uttar Pradesh and
others Vs. Swadeshi Polytex Ltd. (supra)
the Apex Court has held that the question
of valuation is of utmost importance as it is
designed to ensure the best price for the
property and it is essential that wide
publication and notice of proposed sale
should be given as per Rules 285-A of the
Rules.

32. In SIPCOT vs. Contromix (P)
Ltd. 1995 (4) SCC 595 it was held by the
Apex Court that reasonableness is to be
tested against dominant consideration to
secure best price for the property to be sold.
The Apex Court further held that this can
be achieved only when there is maximum
public participation in the process of sale
and everybody has opportunity of making
offer.
Public
auction
after
adequate
publicity ensures participation of every
person who is interested in purchasing the
property and generally secures the best
price. It was further observed that adequate
publicity to ensure maximum participation
of bidders in turn requires that fair and
practical period of the time must be given
to purchasers to effectively participate in
the sale. Unless the subject matter of sale is
of such a nature which requires immediate
disposal, an opportunity must be given to
the possible purchaser who is required to
purchase the 13 property on 'as-is-where-is
basis' to inspect it and to give a considered
offer with the necessary financial support to
deposit the earnest money and pay the
offered amount, if required.

33. From the aforesaid judgements, it
is clear that whenever a property is put up
for auction to realise the outstanding
amount of dues, one of the main
considerations is to get the maximum value
out of the said property. For the said
purpose, it is an essential condition that
there should be proper valuation of the
property, for which purpose provision has
been made even in the Zamindari Abolition
and Land Reforms Act. Even in a situation
where no person appears to participate in
the auction and no bidders participate in the
auction, Collector has been given the
discretion to bid up to the amount of such
arrears. Rule 285B of the said Act is quoted
here for ready reference:-

"285B. No officer having any
duty to perform in connection with any
such sale, and no person employed by, on
subordinate to, such officer shall, either
directly or indirectly, bid for, acquire or
attempt to acquire the property sold or any
interest therein :

Provided that where at any
auction under Section 248 no bid is offered
up to the amount of the arrear, for which
the sale has been ordered, the Collector
may bid upto the amount of such arrear."

34. In the facts of the present case,
according to the State Government no one
participated in the said auction and
consequently the property was purchased
by the State for Re 1/-. Even in a situation
where no person has appeared to bid, it was
open for the State to purchase the said
property, but the reserve price had to be
offered and paid. There is no law which
permits the State to purchase the mortgaged
property Re 1/-, which would be below the
reserve price for 1.7 hectares of land
anywhere. The said action of the State is
clearly illegal and arbitrary and contrary to
2 All. Virendra Kumar Shukla & Ors. Vs. State of U.P. & Ors.
591
the statutory provisions of Rule 285B of the
Act of 1950.

35. The State is under a mandate to
act reasonably and fairly in all spheres of
activity. Even the rules providing for sale of
immovable property provide for a detailed
mechanism where proper notices have to be
issued, the property has to be valued before
fixing the reserve price, and even the
auction has to be fair and transparent. The
action of the State in purchasing the
property at an auction conducted by
themselves for a price of Re. 1/- is nothing
but confiscation of the property. Such a
right cannot be vested in a democratic
State, to confiscate the property of the
citizen under the garb of a realisation of
outstanding amount of loan for a paltry sum
of Re.1/-. According to Rule 285B even if
no one had participated in the auction, the
minimum reserve price should have been
paid for purchase of the said property. At
this stage, we cannot lose sight of the
Constitutional provisions contained in
Article 300A.

36. According to Article 300 A of the
Constitution of India 'no person can be
deprived of his / her property save by
authority of law' and the State cannot
dispossess a citizen of his / her property
except in accordance with the procedure
provided for in the Zamindari Abolition
and Land Reforms Rules, 1952. In the
present case, deprivation of the property
of the petitioner in purported exercise
of the powers to sell mortgaged
property to recovery amount of loan by
the State Government and to purchase it
at Re.1/- is nothing except confiscation
of the property. The said action cannot
be sustained on the anvil of the
provisions contained in U.P.Z.A. and
L.R. Act, especially Rule 285 B as
quoted hereinabove and Article 300 A
of the Constitution. It is surprising that
when no person appeared during the
auction why was not another date fixed
after due publicity to ensure maximum
participation at the auction but still the
State proceeded with the said auction
and settled in their own favour at a
paltry sum of Re.1/-. On the touchstone
In the Constitutional Scheme as well as
under the statutory provisions and rules
of U.P.Z.A. and L.R. Act, the said
exercise is clearly arbitrary and illegal
and deserves to be quashed.

37. In light of the above, this
Court is of the considered view that
once the agricultural loan taken by late
Ram
Shankar
Shukla
has
been
redeemed then the land which has been
auctioned ought to have been reverted
back to the petitioners, who are legal
heirs of the borrower, namely Ram
Shankar Shukla.

38. Learned counsel for the
respondents do not object to the prayer
made by the petitioners nor is there any
legal
basis
for
retention
of
the
auctioned land.

39. Accordingly, the writ petition
is allowed. The auction dated 16.1.2003
and its confirmation dated 3.3.2003
held by Sub Divisional Magistrate,
Tahsil- Dalmau, District Raebareli, are
set aside.

40. Considering the fact that the
loan has already been redeemed, the
State Government is directed to revert
the
land
back
to
the
legal
representatives of the borrower, namely,
Ram
Shankar
Shukla
and
necessary
direction be issued to the revenue officers
592 INDIAN LAW REPORTS ALLAHABAD SERIES
forthwith to pass necessary orders and
mutate the name of legal heirs of late Ram
Shankar Shukla.
----------
(2024) 2 ILRA 592
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 25.01.2024
BEFORE

THE HON'BLE ALOK MATHUR, J.

Writ C No. 1006851 of 2011

Smt. Savitri Devi ...Petitioner
Versus
Civil Judge Junior Division Court No. 22
Barabanki & Ors. ...Respondents

Counsel for the Petitioner:
Ashish Kumar Rastogi, Anurag Shukla,
Prem Chandra Chauhan, R.R. Upadhyaya

Counsel for the Respondents:
Om Chandra Sahu, Piyush Kr. Singh

Civil Law - Constitution of India,1950Article 226-Civil Procedure Code,1908Order 1 Rule 10-Transfer of Property
Act,1882-Section 52-The respondent filed
a suit seeking cancellation of a sale deed
executed
on
28.04.2009-During
the
pendency of the suit, the property was
transferred to the petitioner through a
registered gift deed on 10.08.2009-the
application
for
impleadment
by
the
petitioner was rejected on the grounds
that the transfer was void under section
52 of the T.P. Act-Held, that the trial court
erred in declaring the gift deed void at the
preliminary
stage
without
framing
proper issues or conducting a trial-The
petitioner having acquired substantial
interest in the property, was deemed a
necessary party to the litigation to
avoid multiplicity of proceedings-Thus
the
impugned
order
was
set
aside.(Para 1 to 23)

A
transferee
pendente
lite
is
not
barred from being impleaded as a
party if their interest in the subject
matter of the suit is substantial. The
decision to implead lies within the
judicial discretion of the court.The
doctrine does not render a transfer
during litigation void but subordinates
it to the rights determined by the court
in the pending litigation.(Para 11 to
20)

The writ petition is allowed. .( E-6)

List of cases cited:

1. Amit Kumar Shaw & anr. Vs Farida
Khatoon & anr., (2005) AIR SC 2209

2. Sri Jaggannath Mahaprabbu Vs Pravat
Chandra Chatterjee & ors.. (1992) AIR
ORISSA 47

3. Thomson Press (India) Ltd. Vs Nanak
Builders & Investors Pvt. Ltd. & ors..(2013)
3 SCC 397

4. Purshottam Das Verma Vs 2nd Addl.
Distt. Judge, Alld. & ors.. (1991)9 LCD 567

5. The Municipal Corpn of the City of
Ahmedabad Vs Chandulal Shamaldas Patel
& ors.. (1971)3 SCC 821

 (Delivered by Hon'ble Alok Mathur J.)

1. Heard Sri Prem Chandra
Chauhan,
learned
counsel
for
the
petitioner as well as Sri Om Chandra
Sahu, learned counsel appearing on
behalf of respondent no. 2.

2. Controversy raised in the
present writ petition is with regard to
the scope of provisions contained in
Order 1 Rule 10 CPC as the application
preferred by the petitioner for impleadment
has been rejected by the Additional Civil
Judge (Junior Division), Barabanki by
means of order dated 25.07.2011, which