Civic Body Cannot Keep Highest Bidder Waiting Indefinitely; State Approval Not Needed To Sell Municipal Land: Calcutta High Court
The Calcutta High Court has held that the Howrah Municipal Corporation (HMC) cannot indefinitely withhold execution of sale deeds in favour of a successful auction purchaser on the pretext of pending State approval, when the governing statute itself authorises the Corporation to dispose of its property. Justice Shampa Sarkar directed the State Government to grant the necessary approval...
The Calcutta High Court has held that the Howrah Municipal Corporation (HMC) cannot indefinitely withhold execution of sale deeds in favour of a successful auction purchaser on the pretext of pending State approval, when the governing statute itself authorises the Corporation to dispose of its property.
Justice Shampa Sarkar directed the State Government to grant the necessary approval within eight weeks and ordered HMC to execute the conveyance deeds within four weeks thereafter. The Court further clarified that if approval was not granted within the stipulated period, HMC would proceed with the execution of the deeds without any further reference to the State Government.
The writ petition was filed by Overseas Scrap Trading Corporation, alleging inaction on the part of HMC in executing deeds of conveyance in respect of Plot Nos. A and B at Holding No. 432, G.T. Road (North), Howrah. HMC had issued a tender notice in November 2010 for the sale of the plots on a freehold and “as is where is” basis.
The petitioner participated in the tender process, emerged as the highest bidder for both plots, and deposited approximately ten per cent of the consideration amounting to over ₹35 lakh. However, despite repeated representations and prolonged correspondence between HMC and the Urban Development & Municipal Affairs Department, the transaction was never completed.
Senior Advocate Saktinath Mukherji, appearing for the petitioner, argued that HMC had consistently shown a willingness to complete the sale and had repeatedly approached the State Government for approval. It was contended that Section 223 of the Howrah Municipal Corporation Act, 1980 empowered HMC to dispose of movable and immovable property, and since the statute did not mandate prior State approval, the Corporation's refusal to execute the deeds on that ground was contrary to law.
The State opposed the petition, contending that the challenge was barred by delay since the auction had taken place in 2010 and the writ petition was filed only in 2021. It was further argued that the petitioner was in substance seeking specific performance of a contract, for which a civil suit would be the proper remedy, and that issues relating to land records and alleged thika tenancy created complications regarding title.
Rejecting the objection on delay, the Court found that the matter had remained alive through continuous correspondence between HMC and the State authorities until 2022. It noted that the petitioner had been persistently pursuing the matter and could not be said to have slept over its rights. The Court observed that this was not a case where delay was fatal and that the delay was not attributable to the petitioner.
The Court also rejected the argument that the petitioner was merely seeking enforcement of a private contract. It held that the writ petition sought a mandamus directing HMC to discharge its statutory obligation under Section 223 of the HMC Act. The Court observed that the proceedings were not in the nature of a suit for specific performance but were aimed at compelling a statutory authority to act in accordance with law.
On the issue of State approval, the Court held that the HMC Act expressly empowered the Corporation to sell its property and the absence of procedural rules did not disable the Corporation from exercising that statutory power in a fair and transparent manner. It found that the plots had been put to public auction after due publicity in leading newspapers and four bidders had participated, with the petitioner emerging as the highest bidder. The Court ruled that an internal cabinet decision or departmental communication requiring prior approval could not override the statute or defeat rights crystallised through a valid auction process. It was observed that the cabinet's decision, even if it existed, could not curtail the vested right of the successful bidder to have the property conveyed.
The Court also rejected the State's objection that the land was thika property. Referring to the records and the communication of the Thika Controller, the Court noted that no determination had been made that the land was thika land. It further found that the property had been leased by HMC in 1953 for fifty years and contained pucca structures, circumstances which did not support the State's stand. The Court termed the objection frivolous and contrary to settled legal principles.
Allowing the writ petition, the Court held that the petitioner was entitled to conveyance of the land on an “as is where is” basis. It accordingly directed the State Government to grant approval within eight weeks, HMC to execute the sale deeds within four weeks thereafter, and clarified that in the event of continued inaction by the State, HMC would proceed with execution independently.
Case: Overseas Scrap Trading Corporation vs. Howrah Municipal Corporation and Ors
Case No: W.P.A 13525 OF 2021