REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO. 7438 OF 2019 (Arising out of SLP (C) No. 21790 of 2018) SANKALP RECREATION PRIVATE LIMITED Appellant(s) VERSUS UNION OF INDIA & ORS. Respondent(s) JUDGMENT R. F. NARIMAN, J. Leave granted. present appeal discloses very sorry state of affairs in that property admeasuring 1053.5 square meters bearing Plot No. 27/A, Survey No. 8, 9, 10 Opposite Santacruz Police Station, Junction of Juhu Tara Road and Linking Road, Santacruz (W), Mumbai-54, though acquired by Union of India in 1994 under Section 269UD(1) of Income Tax Act, could only be sold in 2018. Despite various attempts to sell property starting in 1994, several auctions conducted qua said property failed. Even auction dated 27.03.2017 with reserve price fixed at Rs.32.11 crores failed to elicit response from any buyer. Signature Not Verified This being case, Digitally signed by R NATARAJAN Date: 2019.09.25 17:38:31 IST Reason: appellant before us then made offer to Central Board of Direct Taxes (hereinafter referred to as CBDT ) to 1 CIVIL APPEAL NO. 7438 OF 2019 purchase aforesaid property for sum of Rs.32.11 crores. This offer could not be accepted as CBDT stated that accepting such offer by private treaty would be beyond their jurisdiction. However, in meanwhile, fresh valuation report of aforesaid property was called for, which was submitted on 04.09.2017, valuing property at Rs.29,91,35,000/-. Pursuant to aforesaid, brochure/catalogue was circulated sometime in September, 2017, in which clauses 2, 12 and 16 are material and are set out hereinbelow: 2. property is being sold under instruction from CCIT-2, Mumbai and auction by way of sealed tenders is subject to confirmation by him/her. . . 12. balance amount by successful bidder will have to be paid within 90 days from date of confirmation of sale by Chief Commissioner of Income Tax 2, Mumbai. . . 16. Chief Commissioner of Income Tax 2 Mumbai reserves right to reject any tender form any bid including highest bid, without assigning any reason. In such event, money already paid will be refunded to intending purchaser without any liability of interest. However, no refunds for amounts forfeited shall be made. Pursuant to aforesaid, reserve price being 2 CIVIL APPEAL NO. 7438 OF 2019 fixed at Rs.30 crores, appellant was sole bidder, having bid at sum which is Rs.21 lakhs above reserve price at total sum amounting to Rs.30.21 crores. In its letter dated 26.09.2017, respondent No.3 sent report to respondent No.2, in which it was stated that though bid of Rs.30.21 crores offered by appellant was above reserve price, it was yet less than sum of Rs.32.11 crores that had been offered by same bidder earlier. In this view of matter, clarification was sought as to future course of action in matter. Given this report, on 20.11.2017, CBDT directed that auction proceedings be kept in abeyance for time being, and appointed Valuer from outside State, viz., Mr. P. Ramaraj, District Valuation Officer, Chennai. Pursuant to this, valuation report dated 23.02.2018 was submitted by aforesaid Valuer valuing aforesaid property at Rs.31.07 crores as on 23.01.2018, as cap in TDR which would be available by way of FSI, had been introduced in January, 2018. Short of this cap, Valuer valued aforesaid property at Rs.36,51,59,000/-. Based on aforesaid valuation report, property was put up for yet another auction. Meanwhile, by letter dated 04.05.2018, earlier auction which yielded sum of Rs.30.21 crores from appellant was treated as cancelled. said letter specifically called upon appellant to participate in upcoming auction to be conducted shortly. 3 CIVIL APPEAL NO. 7438 OF 2019 appellant, by its communication dated 12.04.2018, referred to return of Demand Drafts of Rs.7.5 crores and Rs.5 lakhs towards Earnest money and Caution money stating that burden of interest liability was continuing. appellant made it clear that its participation in future auction will still be very much there as they are not exiting auction proceedings. As stated hereinabove, pursuant to valuation report, on 10.05.2018, notice for public auction was published with reserve price fixed this time at Rs.31.10 crores. On 17.05.2018, Income Tax Department wrote to appellant, in which it intimated fact that fresh auction was to be conduced on 30.05.2018 and that appellant should participate in same. Meanwhile, appellant being aggrieved by cancellation of auction process in which he was highest bidder at Rs.30.21 crores, filed writ petition in High Court of Judicature at Bombay on 21.05.2018. On 23.05.2018, High Court permitted respondent Nos. 2 and 3 to conduct fresh auction subject to refraining from confirmation of sale. On 30.05.2018, fresh auction was conducted and respondent No. 4 was sole bidder, with bid being equal to reserve price of Rs.31.10 crores. Ultimately, by impugned judgment dated 27.07.2018, finding no infirmity in auction process and finding that 4 CIVIL APPEAL NO. 7438 OF 2019 cancellation, though without reason, was not arbitrary, High Court dismissed writ petition so filed. Learned counsel appearing on behalf of appellant has argued that cancellation being without reason is per se invalid in law and therefore, ought to have been set aside by High Court. He also argued that process of conducting yet another auction after so many auctions had failed, was itself arbitrary and that, as he was highest bidder at Rs.30.21 crores, that is Rs.21 lakhs above reserve price, auction sale ought to have been confirmed in his favour. Further, after citing number of judgments before us, he made with prejudice offer stating that he was willing to abide by earlier offer made by him of Rs.32.11 crores. Shri Kavin Gulati, learned senior counsel appearing for respondent No.4, painstakingly took us through record and argued that there was no infirmity whatsoever in entire process. He highlighted fact that under clause 16 of brochure/catalogue, Chief Commissioner reserved right to reject any tender form, including highest bid, without assigning any reason. He also referred to report dated 26.09.2017 that was sent by respondent No. 3 to respondent No. 2 highlighting fact that decision for conducting fresh auction could not possibly be said to be arbitrary when appellant himself had earlier offered higher sum than amount that was ultimately payable by him in auction 5 CIVIL APPEAL NO. 7438 OF 2019 conducted. At every stage, according to learned senior counsel, valuation reports were taken, and on basis of such valuation reports, reserve price was fixed. He argued that though it is true that cancellation letter did not itself contained any reason for cancellation, reason was forthcoming from letter dated 06.04.2018, in which it was stated that other properties of similar nature in same area was sold for considerably higher amount, as result of which amount that was fetched was found to be low. He also took us through valuation report that was submitted so far as last auction was concerned, in which he was successful bidder, and ultimately, also made with prejudice offer that if we were to dismiss appeal, his client would pay sum of Rs.35 crores with adjustment qua Earnest money that has been deposited and lying with Union of India, if we were to give his client reasonable rate of interest thereon. Having heard learned counsel for both sides, it is important to first advert to facts of this case. As has been pointed out, several auctions were conducted from year 1994, including auction as recent as 27.03.2017 which failed to elicit response from any buyer. Ultimately, auction with reserve price of Rs.30 crores, on which appellant bid was Rs.30.21 crores, was kept in abeyance. reason that is available from record is in Report dated 26.09.2017 in which it was 6 CIVIL APPEAL NO. 7438 OF 2019 pointed out that this figure was considerably lower than figure offered by appellant itself at Rs.32.11 crores and that, therefore, fresh auction be held. We cannot say that aforesaid reason can be said to be, in any manner, arbitrary. After all, it was in public interest to see that highest possible price be fetched for such properties. Further, we have also seen how at every stage valuation reports were submitted by reputed Valuers, first from Mumbai, and then from Chennai, and have no reason to doubt what has been stated to be Fair Market Value in any of these reports. It may also be pointed out that though appellant was given several opportunities to bid in fresh auction conducted, ultimately, for reasons best known to him, he chose to refrain from participating in fresh auction that was conducted. So far as judgments cited by appellant are concerned, there cannot be any doubt whatsoever as to parameters of judicial review in these matters. Broadly speaking, so long as auction process is conducted bona fide and in public interest, judicial hands off is mandated by decisions that have been cited, in particular, Michigan Rubber (India) Ltd. v. State of Karnataka & Ors. [2012 (8) SCC 216] at paragraph 21. Equally, there can be no manner of doubt that ordinarily, reasons must inform all governmental decisions including administrative decisions of Government so that both 7 CIVIL APPEAL NO. 7438 OF 2019 administration as well as challenges made to such orders, can be said to be fair and not arbitrary. Mohinder Singh Gill v. Chief Election Commissioner 1978 (1) SCC 405 which was relied upon for oft quoted passage in paragraph 8, has been subject matter of future comment in some later cases. In 63 Moons Technologies Ltd. (Formerly known as Financial Technologies India Ltd.) & Ors. v. Union of India & Ors. 2019 (7) SCALE 50, this Court had occasion to deal with this celebrated passage and its aftermath in paragraph 63 and 64 of said judgment. This Court concluded: It will be seen that there is no broad proposition that case of Mohinder Singh Gill (supra) will not apply where larger public interest is involved. It is only subsequent materials, i.e., materials in form of facts that have taken place after order in question is passed, that can be looked at in larger public interest, in order to support administrative order. To same effect is judgment in PRP Exports and Ors. v. Chief Secretary, Government of Tamil Nadu and Ors. (2014) 13 SCC 692 [at paragraph 8]. Following these judgments, suffice is to state that reasons disclosed both in Report dated 26.09.2017 and letter dated 06.04.2018 from Government of India, Ministry of Finance, to Chief Commissioner of Income Tax, make it clear that there is no arbitrariness that is discernible in entire auction process. This being case, we dismiss this appeal and hold Shri Kavin Gulati, learned senior counsel, to offer very fairly made to us. 8 CIVIL APPEAL NO. 7438 OF 2019 We may indicate that from figure of Rs.35 crores, which will be paid within period of 12 weeks from today directly to Union treasury, sum equivalent to interest of 9 per cent on amount of Rs.7.78 crores, that is lying with Union, calculated from date on which it was deposited with Union till today be substracted, and net figure be handed over as aforesaid. ., J. [ R. F. NARIMAN ] ., J. [ SURYA KANT ] New Delhi; September 19, 2019. 9 CIVIL APPEAL NO. 7438 OF 2019 ITEM NO.12 COURT NO.5 SECTION IX SUPREME COURT OF INDIA RECORD OF PROCEEDINGS Petition(s) for Special Leave to Appeal (C) No(s). 21790/2018 (Arising out of impugned final judgment and order dated 27-07-2018 in WP No. 1598/2018 passed by High Court of Judicature at Bombay) SANKALP RECREATION PRIVATE LIMITED Petitioner(s) VERSUS UNION OF INDIA & ORS. Respondent(s) Date : 19-09-2019 This matter was called on for hearing today. CORAM : HON'BLE MR. JUSTICE R. F. NARIMAN HON'BLE MR. JUSTICE SURYA KANT For Petitioner(s) Mr. R. K. Patel, Adv. Ms. Manisha T. Karia, AOR Mr. Shashank S. M., Adv. Ms. Sukhda Kaira, Adv. Mr. Aman I., Adv. For Respondent(s) Mr. Sanjay Jain, ASG. Mr. K. Radhakrishnan, Sr. Adv. Mr. H. R. Rao, Adv. Ms. Seema Bengani, Adv. Mr. Anas Zaid, Adv. Mrs. Anil Katiyar, AOR Mr. Kavin Gulati, Sr. Adv. Mr. Avi Tandon, Adv. Mr. Anish Agarwal, Adv. Ms. Vanshika Gupta, Adv. Ms. Meghna Tandon, Adv. Mr. Ish Karan Singh, Adv. Mr. Shriman Kumar, Adv. Mr. T. Mahipal, AOR UPON hearing counsel Court made following ORDER Leave granted. 10 CIVIL APPEAL NO. 7438 OF 2019 appeal is dismissed in terms of signed reportable judgment. Pending application stands disposed of. (NIDHI AHUJA) (RENU DIWAN) COURT MASTER (SH) ASSISTANT REGISTRAR [Signed reportable judgment is placed on file.] 11 Sankalp Recreation Private Limited v. Union of India & Or