S K AGARWAL Vs. A P HOUSING BOARD

JUDGEMENT

(1.) THE Andhra Pradesh Housing Board (APHB), first respondent herein, issued notification dated 19-7-2005 inviting sealed tenders for auctioning upon the land admeasuring 7,700 sq. yards situated adjacent to waterworks reservoir, red hills, hyderabad. The last date for submission of bid was 5-8-2005. First petitioner acting on behalf of other petitioners submitted bid quoting Rs. 15,050/- per sq. yard (total rs. 11,58,85,000/- ). By communication dated 5-8-2005, the executive engineer (housing)second respondent herein; informed the petitioners that they are the highest bidders for the land offered for sale. Second respondent also informed the petitioners that they have to pay an amount of rs. 2,96,30,100/- by 8-8-2005 as per the terms and conditions of the bid as otherwise earnest money deposit (EMD) of rs. 5,00,000/- paid by them will be forfeited. After receiving said communication first petitioner submitted objections, inter alia, stating as the survey plan was not provided and that Bharatiya Vidya Bhavan (BVB) was claiming lease of the land. Yet another communication dated 13-8-2005 through their counsel was also sent with similar objections. By communication dated 25-8-2005 the Vice Chairman (VC) and housing Commissioner of APHB sent the impugned order forfeiting EMD of rs. 5,00,000/- paid by the petitioners. Almost simultaneously APHB's counsel also sent a reply to the petitioners and illegal notice dated 13-8-2005 rejecting the contentions of the petitioners. Thereafter assailing the communication dated 25-8-2005 instant writ petition is filed. It is mainly contended by the petitioners that APHB did not disclose the defects in title and therefore, under section 55 of the Transfer of Property Act, 1882 (TP Act, for brevity) the buyer is entitled to compel the seller to remove all the defects and then alienate the property. It is also contended that while not disclosing the cloud over the property by reason of lease claimed by BVB, it is APHB that has committed breach of contract and not the petitioners and therefore, forfeiture of EMD is illegal. The petitioners prayed for a writ of Certiorari to quash the impugned order and also declaration that the auction conducted on 5-8-2005 is null and void.

(2.) SECOND respondent filed a detailed counter-affidavit opposing the writ petition while denying various contentions and allegations in the writ affidavit it is stated that as per condition (11) of the terms and conditions of auction notification (TCAN), it is responsibility of the purchaser to satisfy about the land before he/she participating in the auction and APHB would not entertain any kind of objections after bid is knocked down in favour of highest bidder.

(3.) LEARNED counsel for the petitioners made the following submissions. The action of APHB in issuing impugned order forfeiting emd is illegal and arbitrary. The petitioners have not committed any breach of contract and therefore, any forfeiture would be unsustainable. As per Section 55 of TP Act seller is bound to disclose the material defects in the property and the buyer has a right to decline and accept the delivery of the property with defect and insist upon the rectification of the defects or encumbrances of the property. Learned counsel relied on decisions in Sohan Lal v. Bal Kishan, and n. Narasingarayudu v. N. Ankineedu.