Sale pursuant to public auction can't be set aside unless fraud: SC

The Supreme Court said that a sale pursuant to the public auction cannot be set aside unless there is concrete material that there was any fraud or collusion

The Supreme Court Friday said that a sale pursuant to the public auction cannot be set aside unless there is concrete material that there was any fraud or collusion.

A bench comprising Justices M R Shah and B V Nagarathna made the observation while setting aside an order of the Andhra Pradesh High Court.

“The sale pursuant to the public auction can be set aside in an eventuality where it is found on the basis of material on record that the property had been sold away at a throwaway price and/or on a wholly inadequate consideration because of the fraud and/or collusion and/or after any material irregularity and/or illegality is found in conducing/holding the public auction.

“After the public auction is held and the highest bid is received and the property is sold in a public auction in favour of the highest bidder, such a sale cannot be set aside on the basis of some offer made by third parties subsequently and that too when they did not participate in the auction proceedings and made any offer and/or the offer is made only for the sake of making it and without any serious intent,” the bench said.

The Executive Officer of a Temple Trust in Andhra Pradesh's Eluru issued tender/public notice to sell a piece of land by way of an open auction in 1997.

Thereafter the auction took place on June 24, 1998, in which 45 people participated. The appellant was declared as the highest bidder quoting the price of Rs.13,01,000 per acre as per the bid submitted by hun.

On the representation that the land in question has the potential of getting more money, the auction came to be cancelled .

A PIL was also moved to stop the execution of the sale deed of land.

The high court had directed the authorities concerned to conduct a re-auction of the entire properties by fixing the upset price higher than what has been fixed earlier.

The auction purchaser, who purchased the property in question in the year 1998, moved the top court against the high court order.

The apex court said the high court should not have ordered re-auction of the land in question after a period of 23 years of confirmation of the 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 top court further said the High Court ought to have appreciated that the man who objected to the auction and filed a PIL regarding the same did not participate in the auction proceedings and submit any bid can be said to be a “fence-sitter”.

The apex court said the courts must encourage genuine and bona fide PIL and effectively discourage and curb the PIL filed for extraneous considerations.

It also said that the Courts should prima facie verify the credentials of the petitioner before entertaining a PIL and the Courts should be prima facie satisfied regarding the correctness of the contents of the petition before entertaining a PIL.

“The Courts should be fully satisfied that substantial public interest is involved before entertaining the petition.

“The Courts before entertaining the PIL should ensure that the PIL is aimed at redressal of genuine public harm or public injury. The Court should also ensure that there is no personal gain, private motive, or oblique motive behind filing the public interest litigation,” the bench said.

It also said that the Courts should also ensure that the petitions filed for extraneous and ulterior motives must be discouraged by imposing exemplary costs or by adopting similar novel methods to curb frivolous petitions and the petitions filed for extraneous considerations.