2005 (3) TMI 810 - HC - VAT and Sales Tax

Summary

Issues Involved:
1. Validity of the decision-making process by the U.P. Financial Corporation in finalizing the sale of assets.
2. Allegations of unreasonableness, unfairness, and non-transparency in the sale process.
3. Maintainability of the writ petition filed by the petitioner.
4. Validity of the sale agreement and subsequent sale deed executed in favor of the respondent No. 3.
5. Rights of subsequent purchasers (respondent Nos. 5 & 6) under the doctrine of lis pendens.

Detailed Analysis:

1. Validity of the Decision-Making Process by U.P. Financial Corporation:
The petitioner challenged the decision-making process of the U.P. Financial Corporation, arguing that it was unreasonable, unfair, and non-transparent, violating Article 14 of the Constitution of India. The court scrutinized the entire transaction, including the advertisement for sale, negotiation meetings, approvals, and the finalization of the sale. The court found that the advertisement lacked essential details and terms, and the decision to accept the respondent No. 3's offer was made before the expiry of the stipulated period, indicating a pre-determined and unfair approach.

2. Allegations of Unreasonableness, Unfairness, and Non-Transparency:
The court noted that the U.P. Financial Corporation did not disclose the terms and conditions of the sale in the advertisement or the notice to the borrower. The negotiation committee's decision was approved in undue haste, and the agreement to sell was executed without proper transparency. The court emphasized the need for maximum participation and adequate publicity to secure the best price, which was not followed in this case. The court concluded that the actions of the U.P. Financial Corporation were unreasonable, unfair, and non-transparent.

3. Maintainability of the Writ Petition Filed by the Petitioner:
The respondents argued that the writ petition was not maintainable as the petitioner was allegedly set up by the principal borrower, whose earlier writ petitions were dismissed. The court rejected this contention, stating that the petitioner's claim was independent and based on his offer to purchase the property. The petitioner was not a party to the earlier proceedings, and thus, had the right to maintain the writ petition.

4. Validity of the Sale Agreement and Subsequent Sale Deed Executed in Favor of Respondent No. 3:
The court examined the sale agreement and found that it was not a registered document, which is necessary for conveying immovable property. The court also noted the manipulation where the offer was initially made by M/s K.P. Cold Storage but was later transferred to M/s Dass Cold Storage without any offer from the latter. The court held that the entire sale process was vitiated by unfair practices and struck down the sale agreement and the subsequent sale deed executed in favor of respondent No. 3 as null and void.

5. Rights of Subsequent Purchasers (Respondent Nos. 5 & 6) Under the Doctrine of Lis Pendens:
The subsequent purchasers (respondent Nos. 5 & 6) argued that they were bona fide purchasers for value without notice of the pending litigation. The court referred to the doctrine of lis pendens, which binds subsequent purchasers to the outcome of the pending litigation. The court held that the rights of respondent Nos. 5 & 6 could not supersede the petitioner's claim, as the sale in favor of respondent No. 3 was invalid. Consequently, the sale deed executed in favor of respondent Nos. 5 & 6 was also declared null and void.

Conclusion:
The court allowed the writ petition, quashing the entire sale proceedings in favor of respondent No. 3 and the subsequent sale to respondent Nos. 5 & 6. The U.P. Financial Corporation was directed to consider the petitioner's offer and negotiate the property sale to secure the best possible price. The amount deposited by the petitioner was ordered to be released to him. The judgment emphasized the need for transparency, fairness, and reasonableness in the decision-making process of public authorities.