1969 PLP 756 (SCMR)

The relevant file also disclosed that there was no application of the said respondent for withdrawing the bid nor was there on the file any specific order for the re‑auction of the property. Hence the auction purported to be taken by Mr. Nazar Hussain, the Assistant Settlement Commissioner, on the 20th August 1960, appeared to the Additional Settlement and Rehabilitation Commissioner to be void ab initio and to have been obtained in ex parse proceedings "with the connivance of Abdul Karim," the present appellant. In this view of the matter the auction in favour of the respondent No. 3 was ordered to be finalized within 30 days from the issue of a notice in that behalf and the order of cancellation, purported to have been recorded on the bid sheet on the 20th August 1960, was declared to be void and redundant. Notices were then issued to both the appellant and the respondent No. 3, intimating that the auction had been finalized in favour of respondent No. 3 and that he had to pay the entire auction price within 30 days of the issue of the notice. The appellant went up in revision from this order to the Additional District Judge and ex officio Settlement Commissioner, Nawab Shah. The latter agreed with the findings of the Additional Settlement Commissioner that there was nothing on the record either to show that the respondent No. 3 had ever Withdrawn, his bid or that any re‑auction had been ordered. The assertion to hat effect made by the said respondent in his affidavit on the 28th September 1963, was never even controverted by the appellant. The report of Mr. Nazar Hussain, the Assistant Settlement Commissioner was, therefore, "obviously incorrect." In any event the said Assistant Settlement Commissioner had no jurisdiction to reject the highest bid of the respondent No. 3 and forfeit his earnest money. The fact that the purported cancellation was sought to be recorded more than 3 months after the second auction was also considered to be a very unusual circum stance. The Settlement Commissioner was also of the view that there was no substance in the contention that in any event the auction in favour of respondent No. 3 could not be recognised at this late stage because he had never paid up the auction price within the specified time. From this order the appellant went to the High Court but there too he failed. Leave was, however, granted to him by this Court on the 13th December 1965, to consider whether the failure on the part of the respondent No. 3 to pay the balance of the auction price within the specified time was, by itself, a sufficient ground for avoiding the auction, particularly, since he had never taken any serious steps to obtain the confirmation of his bid from the Additional Settlement Commissioner within the time fixed for the purpose. The date for either paying the balance of the auction price or obtaining confirmation of the bid had expired long before the date of the second auction. The question, therefore, needed consideration as to whether in such circumstances the first auction could at all be considered to be still effective. Learned counsel, appearing in support of this appeal, has contended that the auction in his favour was duly confirmed by the Additional Settlement Commissioner and intimation of the acceptance of his bid was communicated to him on the 17th November 1960. Thereafter, since he was already in possession of the disputed premises from even before the auction, he demolished the structures thereon and reconstructed a common building over this plot‑‑and 3 other adjoining plots held by him. Subsequently he even let out a portion of the premises constructed by him to the National Bank of Pakistan. No objection was taken at any stage by the respondent No. 3 although, being a resident of the locality, he must have known as to what was being done by the appellant on the premises. Thereafter he paid the entire price by the 31st December 1963 and obtained a Provisional Transfer Order in his favour, again without any objection from either the respondent No. 3 or from any one else. It was only in July 1963, that the respondent No. 3 started taking steps to have the auction in his own favour finalized. The intimation of the finalization of the auction in favour of the respondent No. 3 was issued long afterwards on the 24th October 1963 and the respondent purported to pay the auction price only on the 14th January 1964. He had never deposited any portion of the auction price, as required by the terms and conditions of the auction, at any stage before. Hence, it is urged, the auction, if any, in favour of the respondent No. 3, became anfractuous by reason of such default and, therefore, the second auction was validly held. Alternatively, it is argued that even if it is assumed that the bid offered by the respondent No. 3 on the 10th February 1960, constituted a vaild offer, it never fructified into a contract on account of the fact that his bid was never formally accepted by the Additional Settlement Commissioner until long after the bid made by the appellant had been accepted and a valid contract constituted on the 11th November 1960. The learned counsel further contends that the respondent No. 3 and the Settlement Department were estopped from either challenging or setting aside the auction in his favour in view of the fact that they had not only stood by and allowed him to construct a pacca building over the disputed land but also, because, the Settlement Organization had, with full knowledge of the fa: is of this case, completed the contract in his favour by intimating the acceptance of his bid, accepting the auction price and issuing the P. T. O. in his favour. Therefore, they could not now interfere with his rights which he had validly acquired under the second auction. The estoppel sought to be raised against the respondent No. 3 is, in our view, not tenable. It appears that in February 1960, when the respondent made his bid, the relevant instructions with regard to such auctions were those specified in the departmental Memorandum No. 839‑PI‑Reh‑60, dated the 9th January 1960, and under paragraph 2 thereof, the terms and conditions of auction prescribed in the case of industrial concerns were to be adopted mutatis mutandis for the auction of shops as well and they were, inter alia, to include that (i) only one year's gross annual rent of the shop was to be paid by way of earnest money. This the respondent No. 3 had paid, as is evident from the order of the Assistant Settlement Commissioner, passed on the 28th August 1960, whereby the earnest money was purported to be forfeited. The terms and conditions of auction of industrial concerns which are set out at pages 86 to 89 of the old Settlement Manual, inter alia, provide that the highest bid offered to the Auction Committee shall be subject to the approval of the Additional Settlement Commissioner concerned who may or may not accept it without assigning any reason and may order a fresh auction. Then, "after an offer is accepted by the Additional Settlement Commissioner or Chief Settlement Commissioner, as the case may be, the Deputy Settlement Commissioner, will issue the intimation of acceptance which will be delivered to the successful bidder by hand or by registered post. The mode of payment prescribed thereunder is to the following effect: "In case the highest bid made and accepted is that of a local or a non‑claimant displaced person, the whole amount of the bid money will be paid by him within thirty days of the date of receipt of the intimation of acceptance." These rules also contemplate that possession will be delivered to the purchaser either on acceptance of the offer where the amount is covered by deferred payment or on payment of the first installment where the price is to be partially adjusted against the deferred payment. But where the price is payable in lump sum, on payment of the full price. When the entire purchase money has been paid in cash, the property will be permanently transferred to the purchaser. The purchaser will acquire full proprietary rights only when the property is transferred permanently. But where the property is transferred only provisionally, proprietary rights will not vest in the transferee. He will, however, be permitted in such event to lease out the premises or to make additions or alterations therein or to mortgage it but on such terms and conditions as may be prescribed by the Chief Settlement Commissioner. It will thus be seen that after the respondent No. 3 had complied with the terms and conditions of the auction then prevailing and deposited the earnest money calculated on the basic of the instructions of the 9th January 1960, the question of the payment of the balance of the purchase money could not arise until the intimation of the acceptance of his offer was given to him. This was not done until the 24th of October 1963 and he paid the entire balance of the auction price thereafter within the time allowed to him, namely, the 14th January 1964. The ap pellant cannot, therefore, complain that the respondent No. 3 was not entitled to have his auction finalized in accordance with the depatmental instructions. He was not in default at any stage. There could be no question, therefore, of his bid having becomel infructuous. As regards this question of estoppel which has been urged with some earnestness by the learned counsel for the appellant, it will be sufficient to point out that the statement on affidavit of the respondent No. 3 to the effect that he had never done anything to evidence any intention on his part of abandoning his right to the property, which had accrued to him as a result of the auction held on the 10th February 1960, was never controverted by the appellant at any stage. So the question of estoppel does not arise. So far as the title of the appellant is concerned, it has to be pointed out that if the re‑auction in his favour was not in accordance with the rules laid down by the Settlement Authorities then he could not claim to have acquired any valid or legal right as a result of the alleged auction in his favour. This auction was never finalised by the issuance of any permanent transfer deed in favour of the appellant. So he never acquired full proprietary rights in this property. It is clear from the instructions, relating to the auction of industrial concerns, contained in pages 86 to 89 of the old Settlement Manual, that no re‑auction or fresh auction could be held until the Additional Settlement Commissioner passed an order in that behalf. Under paragraph 9 of the aforesaid instructions, the Assistant Settlement Commissioner was not even competent to order or to hold any such re‑auction. The auction in favour of the appellant was thus wholly without jurisdiction and, therefore, illegal and void. Unless there was an order rejecting the highest bid of respondent No. 3 and ordering afresh auction, no such re‑auction could have been held. No rights, therefore, accrued to the purchaser, namely, the appellant, as a result of such a re‑auction. Normally, in the case of a public auction, a contract is, in they absence of any other conditions in the contract, formed by the fall of the hammer and both the vendor and his agent the auctioneer is bound thereby unless the acceptance of the bid is subject to reserved price or confirmation by the vendor or some other person or authority as it was in the present case. Furthermore, the terms and conditions of the contract may well be specified as they were in this case by the rules and or instructions issued by the vendors who were, in the present case, the Settlement authorities. Therefore a valid contract could only have been brought into being if the auction had been held in accordance with those rules and conditions. Where the rules and conditions were not fulfilled, there could be no question of a valid contract being formed. We have carefully considered the arguments advanced on behalf of the appellant and the last contention raised on the basis of the inordinate delay in having the auction of the 13th May 1960 set aside, particularly, since in the meantime the appellant claims that he has incurred considerable expenditure and put up structures on the disputed premises. In this regard it seems to us that the appellant has been somewhat hasty and has not acted it accordance with the rules of prudence. There is nothing on the record to show that any Permanent Transfer Deed was ever issued in his favour. Until such a Permanent Transfer Deed is issued, full proprietary rights do not vest in the purchaser, but in the meantime he can make additions or alterations in the premises provided he does so with the consent of the Settlement Authorities. There is again nothing on the record to show that any such consent was ever taken. Indeed, before the auction in his favour could be finalized by the issuance of a Permanent Transfer Deed, the matter was re‑opened and ultimately decided in favour of the respondent No.

3. In the circumstances, the appellant himself is in a large measure responsible for bringing about this unfortunate state of affairs under which he now finds himself. The fact that he may now have to demolish a portion of the structures constructed by him to give possession of the disputed portion to the respondent No. 3 cannot be allowed to defeat the right of the respondent, who was not at fault. The appellant ought at least to have taken the precaution of obtaining the consent of the Settlement Authorities before putting up the new struc tures. As for the question of possession, again there is nothing on the record to show as to when the appellant actually got possession. He claims that he was in possession from even before the auction but does not state as to how or on which exact date he got possession. The respondent No. 3 on the other hand, strenuously maintains that the appellant even on his own admission, made during the hearing of the revisional matter before the Settlement Commissioner, was not in possession in 1963. Even the alleged possession, therefore, is not established and does riot assist the appellant. If he had wrongfully entered into possession of the premises even before he acquired any right thereto under the auction of the 13th May 1960 then his possession was clearly wongful and he cannot now be permitted to take advantage of his wrongful possession. This does not debar him, however, from recovering the auction price that he has already paid to the Settlement Department and if he has any genuine cause against the Settlement Department, he may, if he is so advised, even take appropriate steps to recover damages from the said Department. But he cannot set up his wrongful possession or unauthorized construction as a plea in bar to the claim of the respondent No. 3 to have the auction in his own favour finalized. Learnd counsel has also contended that even after the inti mation of the acceptance of the bid was given to respondent No. 3 on the 24th October 1963 he did not pay the balance of the auction price either in accordance with the terms and conditions of the auction or the terms of the notice itself. But this default has already been condoned by the Settlement Authorities, who have, by extending the time, accepted the auction price from the respondent No. 3, although they could have, on that ground, set aside the auction. This is a matter, therefore which is purely between the respondent No. 3 and the Settlement authorities and can be of no assistance to the appellant. For these reasons we have come to the conclusion that the Settlement authorities as well as the High Court have rightly held that the auction in favour of the appellant was an invalid auction and no right accrued to him as a result of that auction. This appeal is, accordingly, dismissed but having regard to the special facts of this case, we make no order as to costs. Appeal dismissed.