A) ABSTRACT / HEADNOTE

This case revolves around the legality and procedural validity of an auction sale conducted by the Tahsildar under the Maharashtra Land Revenue Code, 1966. The appellant, M/s Al-Can Export Pvt. Ltd., purchased the property, allegedly bypassing mandatory legal provisions, including the 30-day notice requirement under Section 194. The High Court ruled against the auction’s validity, citing gross violations of procedural mandates. Despite this, the Supreme Court balanced the appellant’s industrial interests with the law’s sanctity by allowing conditional settlement. The decision also explored the interplay between Order XXI, Rule 90 of CPC and writ jurisdiction under Article 226.

Keywords:

Auction Proceedings, Order XXI, Rule 90 CPC, Judicial Review, Revenue Code, Public Functionaries.

B) CASE DETAILS

i) Judgment Cause Title

M/s Al-Can Export Pvt. Ltd. v. Prestige H.M. Polycontainers Ltd. & Ors.

ii) Case Number

Civil Appeal No. 7254 of 2024

iii) Judgment Date

09 July 2024

iv) Court

Supreme Court of India

v) Quorum

J. B. Pardiwala and Manoj Misra, JJ.

vi) Author

J. B. Pardiwala

vii) Citation

[2024] 7 S.C.R. 474

viii) Legal Provisions Involved

• Maharashtra Land Revenue Code, 1966 (Sections 194, 195, 212, 247)
• Order XXI, Rule 90, Code of Civil Procedure, 1908
• Article 226, Constitution of India

ix) Judgments Overruled by the Case

None specified

x) Case is Related to which Law Subjects

Constitutional Law, Civil Procedure, Revenue Law, Administrative Law.

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The dispute arose from an auction sale of a property owned by Prestige H.M. Polycontainers Ltd. The sale was challenged for failing to adhere to statutory mandates, including proper notices and procedural fairness. The auction’s legitimacy was contested by stakeholders, including lenders like IFCI, claiming malpractices and fraud. The Additional Commissioner set aside the sale, but the appellant, who had invested significantly in the property, sought protection of their rights. The Bombay High Court ruled in favor of procedural rectitude, prompting the appellant to approach the Supreme Court.

D) FACTS OF THE CASE

1. Prestige H.M. Polycontainers Ltd. mortgaged property to secure loans but defaulted, leading to arrears in land revenue.
2. The Tahsildar auctioned the property without adhering to a mandatory 30-day notice period as required under Section 194.
3. The appellant acquired the property at auction and established an industrial unit employing 200 workers.
4. Allegations surfaced of undue collusion between the Tahsildar and the appellant.
5. Lenders like IFCI raised objections to the auction, citing violations of mandatory provisions.
6. The High Court set aside the auction, affirming the Additional Commissioner’s order, but left the appellant’s industrial operations in limbo.
7. The case reached the Supreme Court for adjudication.

E) LEGAL ISSUES RAISED

i) Whether Order XXI, Rule 90 CPC applies to writ proceedings under Article 226.

ii) Whether the Additional Commissioner had jurisdiction under Section 247 of the Maharashtra Land Revenue Code to entertain appeals.

F) PETITIONER/APPELLANT’S ARGUMENTS

i) Procedural Regularity:

The appellant argued that all auction formalities were adhered to, including requisite notices under Section 193 and 194.

ii) Bona Fide Purchaser:

It was claimed the appellant acted in good faith, investing heavily post-auction. Setting aside the sale would lead to irreparable harm.

iii) Inapplicability of CPC Provisions:

The appellant contended that Order XXI, Rule 90 CPC was irrelevant to writ proceedings under Article 226, which followed a distinct constitutional framework.

iv) Industrial Interests:

The appellant emphasized that 200 employees depended on the factory and highlighted their investment in oxygen cylinder manufacturing, a public utility.

v) Jurisdictional Bar:

The appellant questioned the Additional Commissioner’s jurisdiction, citing that Section 210 offered a remedy, precluding appeals under Section 247.

G) RESPONDENT’S ARGUMENTS

i) Procedural Violations:

Respondents highlighted that the auction was conducted in haste, violating mandatory statutory provisions, including the 30-day notice period.

ii) Collusion and Fraud:

Allegations of collusion between the Tahsildar and appellant were raised, supported by IFCI’s objections and discrepancies in notice publication.

iii) Illegality in Possession Transfer:

The Tahsildar transferred possession prior to sale confirmation, violating Sections 208 and 212 of the Revenue Code.

iv) Valuation Issues:

Respondents argued the valuation process undervalued assets, depriving creditors of fair compensation.

v) Applicability of Rule 90:

Respondents maintained that the CPC’s principles, including fairness and absence of fraud, guided the writ court’s review.

H) JUDGMENT

a. Ratio Decidendi:

The Supreme Court upheld the High Court’s findings on procedural breaches, emphasizing the necessity of strict adherence to statutory provisions. The auction’s procedural infirmities rendered it illegal.

b. Obiter Dicta:

The court noted that writ jurisdiction under Article 226 permitted deviations from CPC procedures to ensure substantial justice.

c. Guidelines:

1. Strict Compliance with Revenue Laws: Public auctions must adhere to statutory mandates to uphold fairness and transparency.
2. State Accountability: Authorities must ensure non-arbitrariness in auction procedures, safeguarding public exchequer interests.
3. Balancing Equity: Industrial interests were accommodated by directing the appellant to settle liabilities or face a fresh auction.

I) REFERENCES

a. Important Cases Referred

1. Mathew Varghese v. M. Amritha Kumar (2014) 5 SCC 610.
2. Chilamkurti Bala Subrahmanyam v. Samanthapudi Vijaya Lakshmi (2017) 6 SCC 770.
3. Maharaja Chintamani Saran Nath Shahdeo v. State of Bihar (1999) 8 SCC 16.

b. Important Statutes Referred

1. Maharashtra Land Revenue Code, 1966 (Sections 194, 195, 212, 247).
2. Code of Civil Procedure, 1908 (Order XXI, Rule 90).
3. Constitution of India (Article 226).