@JUDGMENTTAG-ORDER
Navaniti Pd. Singh, J.@mdashThe present dispute relates to settlement of right to collect tolls at Behat Bus Stand in the district of Madhubani.
Being a right to collect tolls, it is a Sairat which is vested in the State. Pursuant to newspaper advertisements and notice on Notice Board, the said
right was taken up for public auction on the 20th of August, 2007. Six persons participated after depositing earnest money. Auction was carried
out and ultimately one Nand Kumar Jha bid the highest being Rs. 13,50,300/-. He was then asked to deposit 50% of the amount as required on
the knocking down of the hammer. He backed out. His earnest money was forfeited. One by one, the others in seriatim, backed out and ultimately
the petitioner agreed to take the settlement on his highest bid. The settlement was so accepted. He deposited the requisite amount on demand
immediately. On 23.8.2007, an agreement was executed as between the State and the petitioner in relation to acceptance of the said settlement.
Agreement, inter alia, provided for payment schedule of the balance amount. It clearly provided that the agreement would be fully binding on both
the parties. It provided that actual collection would start after permission (Parwana) is granted. It appears respondent No. 5 who had not at all
participated in the said bid then approached the authorities stating that there was no publicity of the settlement to be made and he was ready to
offer Rs. 9,00,000/- as against Rs. 4.50 lacs offered by petitioner. Persuaded by the said two grounds, the Collector directed the Sub-Divisional
Officer to hold a fresh auction after due publicity and notice to all but conspicuously no order cancelling the settlement and the agreement made
thereafter was passed. It appears pursuant to the said orders on 25.9.2007, reauction was held in which undisputedly only respondent No. 5
appeared and the bid was knocked down in his favour for Rs. 9,00,000/- as he had undertaken earlier. Thereafter, petitioner was informed to take
his money back. It is all these actions subsequent to the bid being knocked down in favour of the petitioner an agreement having been entered into
between the petitioner and the State that are challenged in this writ application. Respondent No. 5 relies on a Circular No. 2526 dated 12.9.1978
issued by the Revenue Department wherein in paragraph-6 after earlier deprecating reauctions, an exception was carved gut, inter alia, providing
that if a person subsequently comes and offers 25% more than the settlement amount reauction can be done. With reference to the said Circular, it
is submitted that in interest of revenue, such a course was permissible for the State. The same is the stand of the State as against the petitioner.
2. As affidavits have been exchanged and pleadings are complete, with consent of parties, this writ application is being disposed of at this stage
itself.
3. Having given my anxious consideration to the facts, as noted above, I am of the opinion that the Circular, as issued, is wholly illegal and contrary
to law and cannot be acted upon. All the actions of the respondents, after agreement was executed, are equally unsustainable.
4. From the facts as noted above, it would first be seen that the contention of respondent No. 5 that there was no adequate publicity before the
first auction was made was palpably false inasmuch as newspaper publication was made of the intended auction. This was sufficient to reject the
application of respondent No. 5 but it appears that the authorities were persuaded by his high offer and the Circular. The question is whether the
subsequent higher offer or the Circular for that matter is of any consequence.
5. The law in this regard is well settled. I may only notice the principles enshrined in Section 64 of the Sales of Goods Act which deals with auction
sale. The said Section clearly provides that if the acceptance of the bid is unreserved, the sale is complete the moment the hammer is knocked
down. Therefore, if this be the common law and the law makes no exception or distinction between the citizen and the State. State not being
exempt from the common law aforesaid, the law equally applies to the State or State''s action. There may be justifiable reasons but if it is not
permissible in law, it cannot be done. This is moreso because if such steps are permitted on the plea of loss of revenue, there would be no sanctity
in the auction process and the law in that regard. I may only refer to two judgments in this regard being in the cases of Zila Parishad, Muzaffarnagar
& Another vs. Udai Veer Singh, AIR 1989 Allahabad 64 with regard to similar settlements and Sri P. V. K. Satyanarayana vs. The Government
of Andhra Pradesh & Others, AIR 1993 Andhra Pradesh 42 wherein this principle of auction settlement has been elaborately discussed and the
law is what I have stated above. If this be the law then the Circular being contrary to law and a mere executive fiat can have no validity or sanctity
in law. Once the bid was knocked down unreservedly and an agreement executed between the parties, it is the agreement that binds the party for
under the Law of Contract an agreement reduced in writing becomes a contract enforceable in law. Once it is a contract enforceable in law, the
parties are bound by the terms of the agreement and no party can unilaterally relieve himself of the obligation thereunder may it be the State itself.
6. I may also at this stage refer to the manner in which the second auction was done. The Collector of the district ordered that before second
auction is done, there should be wide publicity. In fact, there was no publicity except a so-called attempt to notice petitioner of the date of second
auction. The publicity factor or the lack of it is evident from the fact that on the 25th of September, 2007, it was respondent No. 5 alone who
appeared. If respondent No. 5 alone appeared, there was no sense in holding the auction because auction itself predicates competitive bidding.
7. In view of all the aforesaid, the actions of the respondents cannot be sustained and is quashed accordingly. The settlement, as originally made in
favour of the petitioner, would continue, also because I have not been shown any order whatsoever of whomsoever ordering its cancellation. The
settlement, as made with respondent No. 5, cannot be countenanced and is quashed as such. The writ application is, thus, allowed.