MUHAMMAD AKHLAQ MEMON vs CAPITAL DEVELOPMENT AUTHORITY through its CHAIRMAN
This matter arises from a petition for leave to appeal against a Lahore High Court Division Bench judgment passed in an Intra Court Appeal, which upheld an order disposing of the petitioner's writ petition. The petitioner had offered the highest bid for certain orchard plots in an auction conducted by the Capital Development Authority and deposited 25 percent of the bid amount, but the authority failed to issue an acceptance letter or hand over vacant possession due to actual physical occupation by encroachers and an interim restraint order passed by the High Court. The High Court had directed the Capital Development Authority to refund the deposited amount with profit. The core legal question concerned whether the authority could be compelled to deliver possession despite legal impediments or whether refund with markup was the appropriate relief, and whether the authority failed in its contractual and legal obligations. The Supreme Court granted leave to appeal to consider these questions of law, observing that while possession was barred by court orders, the authority should have promptly refunded the bid money with reasonable markup. The key principle laid down is that where performance of a public auction contract becomes impossible due to legal restraints, the authority is obligated to act fairly and make an immediate refund of deposited monies with reasonable mark-up.
- Whether the Capital Development Authority is bound to deliver vacant possession of auctioned plots when the land is subject to adverse occupation and court restraint orders?
- Is an auction purchaser entitled to demand specific performance of a contract when delivery of possession is beyond the power of the authority in the foreseeable future?
- Whether an auction purchaser is entitled to mark-up or profit on the refund of bid money when the authority fails to fulfill its obligations under the auction?
ORDER
Rana Bhagwandas, J.--Petitioner seeks leave to appeal against Lahore High Court Division Bench judgment dated 16.2.2004 passed in Intra Court Appeal against order dated 16.1.2004 passed by learned Single Judge in Chambers disposing of petitioner's writ petition.
2. Petitioner offered the highest bid for the purchase of Plot No. 17-A and Plot No. 18 Orchard Farms Main Murree Road, Islamabad in the auction conducted by Capital Development Authority on 18.11.1999. He deposited a sum of Rs. 10,500,000/- on account of 25% of the bid amount in respect of both the plots but the Capital Development Authority failed to issue acceptance letter to him. It was the case of the petitioner that the latter failed to abide by the terms and conditions for auction of plots. At the stance of the petitioner and his demand for allotment of the plots, a Summary was moved before the Board of Directors of Capital Development Authority meeting held on 15.2.2001, which was conditionally approved as it was found on ground that some inhabitants of the area were in actual and physical occupation of the plots and they had filed writ petitions before the High Court against Capital Development Authority, in which an interim order was passed restraining the, respondent from dispossessing such persons from the land in dispute. Petitioner was, therefore, obliged to file a Constitutional petition before the Lahore High Court, Rawalpindi Bench seeking a direction to the respondent to perform its duty in accordance with law and to hand over the vacant and quiet possession of the plots to him in addition to any other relief deemed fit and proper.
3. The writ petition was contested and disposed of with the direction to respondent-Capital Development Authority to refund the amount deposited by the petitioner within a period of one month alongwith profit at admissible rates commensurate with such rates as given by the Banks. It was held by learned Single Judge that the question of handing over possession of the plots in question was beyond the power of Capital Development Authority in near foreseeable future in view of restraint order passed by the High Court.
4. Petitioner being dissatisfied with and aggrieved by the disposal of his writ petition assailed it in Intera Court Appeal, which has been dismissed in limini, hence this petition.
5. We have heard learned counsel for the petitioner at some length and Mr. Arif Chaudhry, learned ASC who has entered caveat on behalf of the Capital Development Authority.
6.It has been vehemently contended that respondent-Capital Development Authority was, in law, bound to honour its commitment and abide by the terms and conditions on which the land was offered for disposal through public auction and to act fairly, justly, reasonably and equitably.
Learned counsel made a grievance of the fact that Capital Development Authority remained quiet by not following the proceedings of the writ petition filed by encroachers on the land and getting the stay vacated and not pursuing the Court to expedite its disposal. According to the learned counsel, had the Capital Development Authority been live and conscious to its obligations under the contract, it would have been able to perform its obligations arising out of auction proceedings but no concrete steps were taken for disposal of the writ petition; vacation of the interim order or even refund of the bid money to the petitioner. It may be observed that even if it be accepted that the Capital Development Authority was restrained by Court order from dispossessing the encroachers, it did not bar or disable them to make immediate refund of the amount along with reasonable amount of mark-up thereon as was being charged by it from buyers of the property who defaulted in payment within time.
7. Learned counsel appearing on caveat has seriously resisted the grant of leave and contended that petitioner had himself made an admission in the memo of appeal before the Division Bench that though the Capital Development Authority was prepared to refund his amount, he had refused to accept the same. It may be clarified that Capital Development Authority actually remitted the amount by way of two cheques to the petitioner vide letter dated 16.6.2004 long after the direction by the High Court, which was too late in the day.
8. Leave to appeal is, therefore, granted to consider the aforesaid questions of law, which have important bearing on the issues raised.