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Right of Bona fide purchaser of land at public auction

The Supreme Court of India in the case of Gurbax Singh Vs. Financial Commissioner, AIR 1991 SC 435: 1991 Supp (1) SCC 167 : 1990 (2) SCR Supl. 14 held that once the sale certificate was issued in favour of the appellant, he became the true owner and it had the effect of taking away the land from pool of evacuee properties and thereafter so long that was not cancelled according to law, it was not open to the Rehabilitation Department to deal with the sale.

Allowing the Appeal, a bench comprising of K.N. SAIKIA AND S. RANGNATHAN JJ. held that in the instant case, the appellant as a bone fide purchaser of the disputed land for value at public auction under Rule 34H of the rules on August 11, 1967 should have been put in the same position which he would have been, had his auction purchase as evidenced by the 16 Sale Certificate been effective from the date of purchase.

Displaced persons Compensation & Rehabilitation Rules, 1955

Rule 90 of the Rules prescribes the procedure for sale of property by public auction. Sub-rule 15 of Rule 90 provides for issue of sale certificate and Rule 92 prescribes the procedure for setting aside the sale.

The difficulty in the present case has arisen because the State confirmed the sale in favour of the appellant in 1969, whereas it issued sale certificate to him on June 23,1973 with effect from September 15, 1969 without waiting for the final outcome of the second respondent’s revision application to the Chief Settlement Commissioner & further proceedings thereafter.

Thus the odd situation resulted in creating equities favour of both the parties with no fault of the appellant or the second respondent. If the State had held over the auction until the second respondent’s application had been finally disposed of or had held the auction subject to the result of the application, the second respondent could have challenged the auction in favour of the appellant but perhaps misguidedly he was concentrating on getting an allotment under section 34C.

So both the parties had to suffer and indulge in lengthy protracted litigation for 22 years. Had the Rehabilitation authorities acting under the Act and the Rules decided the competing claims of the appellant as well as the second respondent as to the disputed land and provided an equal extent of land with equal benefits to both the parties justice may appear to be done but that being uncertain the availability of land being limited. the court can only look towards equity for solution.

The dilemma that equity is to be better than justice and yet not quite opposed to justice but rather a kind of justice and the distinction between commutative justice and distributive justice discussed.

Passages from justinian, gustav Radbrach, Aristotle and Cardozo referred to.

Considering the facts, the extent of land and the purposes of the Act and the Rules and the reality that land must have become scarce and much more expensive than in 1967 to meet the ends of justice on the basis of facts, the Court directed that the disputed land be divided by the Financial Commissioner into two equal halves and one half and one half be given possession of to the appellant by dint of his being auction purchaser and the other half be allotted and given possession of to the second respondent under Rule 34C of the Rules. This order be carried out accordingly within three months.

Facts of the Case

The appellant, a retired army subedar and also a displaced person from west Pakistan purchased the Land in public auction conducted by The Rehabilitation Department, by offering the highest bid of Rs.9,500. The laud in dispute measured 7 Kanals & 4 Marlas and was owned by one Vinod Kumar.

Having paid the purchase money with the sincere hope of his rehabilitation, he had to be in protracted litigation for 22 years during which he earned nothing out of the land because the State did not honour its final commitment made in the sale certificate in favour of the appellant.

The State confirmed the sale in favour of the appellant in 1969 but issued sale certificate on 23 June, 1973 being effective from September 15, 1969 without waiting for the final out come of the second respondent’s revision application to the Chief Settlement Commissioner, and further consequent proceedings thereon.

It was submitted by the second respondent that the said land was in his cultivatory possession since 1956 and as per public records he was sub-lessee under Budha Singh Lessee, and the Lease in favour of Budha Singh was cancelled in 1958 by the Rehabilitation Department and thereafter he became a sub-tenant holding over on the date he applied for allotment in 1961, under Rule 34C of the Rules.

The decision rejecting his first application was not communicated to him. So he made his second application which was rejected by The Chief Settlement Officer vide his order dated July 24th, 1969. Then he moved a revision application before the Chief Settlement Commissioner who remanded the case to the Managing Officer for fresh decision by his order dated July 29, 1970.

The second respondent’s second application was rejected on March 22, 1973. The second appeal to the Settlement Commissioner was also rejected on May 13, 1973 as he could not prove his continuous cultivator) possession as a sub-lessee under Budha Singh from January 1956 till the termination of the latter’s lease.

Thereafter second 15 respondent instituted a suit against Budha Singh for declaration of his continuous possession of the land and got a decree in his favour as being in continuous possession of the land. The second respondent again filed a revision against the appellate order of the Settlement Commissioner, which was remanded to the Managing officer and he got land allotted under Rule 34C of the Rules vide order dated January 6th, 1978.

The appellant’s appeal therefrom was dismissed by the Settlement Commissioner, but in his revision application therefrom, the allotment order in favour of the second respondent was quashed by the Chief Settlement Commissioner vide his order dated January 1, 1979 declaring the appellant to be the auction purchaser and therefore the true owner of the Land.

The second respondent’s revision was rejected by the Financial Commissioner on Oct. 23, 1979. Thus all authorities in the successive rounds found the facts against the second respondent. Therefore, the second respondent filed a writ petition challenging the Financial Commissioner’s order in the High Court. High Court remanded the case to the Financial Commissioner for fresh decision on January 7, 1983.

The Financial Commissioner vide his order February 2, 1988 held that the second respondent was eligible for allotment of land under rule 34C of the rules, holding that being a sub-lessee in continuous possession since January 1, 1956, and thereafter he had a superior claim to the allotment of the land and quashed the auction sale made in favour of the appellant on August 11, 1967.

The Financial Commissioner found that since 1953 to 1961 the second respondent was in possession of the land and again in 1964-65, 65-66 the records also bore out this fact. The absence of records for 1961-62, 62-63 due to their illegibility due to mutilation should not be held against him and his continuous possession since 1962 can be presumed entitling him to an allotment under Rule 34 C of the Rules.

This was a conclusion on facts which the High Court declined to interfere with and dismissed the appellant’s writ petition in limine on August 24, 1988.

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