JUDGMENT
K.A. Swami, C.J.
1. This appeal is preferred against the order dated 11th October, 1994 passed by the learned single Judge in W.P. No. 5243 of 1993.
2. Learned single Judge has set aside the order passed by the State Government in the appeal and remitted the matter to the State Government with a direction to dispose of the appeal afresh and in the light Of the observations made in the order. Though in the course of the order, learned single Judge has referred the appeal as revision, but what was preferred before the State Government, was an appeal under the provisions of Section 34 of the Tamil Nadu Hindu Religious and Charitable Endowments Act, 1959 (hereinafter referred to as the Act).
3. The question for consideration is as to whether the property belonging to a temple governed by the Act, can be directed to be said by public auction.
4. The contentions of the 1st respondent is that having regard to the provisions contained in Section 34 of the Act, it is not permissible to direct the Authority empowered to accord permission for sale that the property should be sold by public auction.
5. On the contrary, it is the contention of the appellant as well as respondents 2 to 5 that the property can be directed to be sold by public auction, that it is only when the property belonging to the temple is sold by public auction, the real market value can be obtained and the Temple can be benefited.
6. This case has a chequered history. An extent of 4.84 acrs comprised in T.S. Nos. 2750/1, 2750/2 and 2751 in Cuddalore Town belonging to Sri Varadarajaperumal Temple at Thirupathiripuliyur in Cuddalore Taluk, was proposed to be sold for a sum of Rs. 2,30,000 to the 1st respondent. The Executive Officer of the Temple in question, in the first instance, confirmed the sale.
7. Aggrieved by the said order, there was an appeal preferred by the 6th respondent before the State Government under Section 34(4) of the Act. Even after preferring the appeal the appellant therein filed W.P. No. 6423 of 1987 before this Court, challenging the order according permission to sale the aforesaid lands having potentiality for non-agricultural purpose, in favour of the 1st respondent herein.
8. During the course of hearing of the petition, the petitioner therein offered to purchase the lands for a sum of Rs. 3 lacs, whereas the present 1st respondent offered to purchase it for a sum of Rs. 3,05,000 Accordingly, learned single Judge by the order dated 27.1.1988 directed that the sale be confirmed for a sum of Rs. 3,05,000 as it would be in the interest of the institution.
9. The writ petitioner who is the present 5th respondent, went up in Writ Appeal No. 2550 of 1988. A Division Bench of this Court took a view that sale by private negotiation was not in the interest of the institution, that at any rate the present sale for a sum of Rs. 3,05,000 was no commensurate with the value of the property and therefore, the Division Bench observed as follows:
After hearing the learned Counsel for all the parties, one thing is crystal clear and that is the price already offered does not reflect the correct market value and that the lands will certainly fetch a higher price if the mode of sale is different from private negotiation. It is also brought to our notice by Mr. Thiruvengadam, learned Counsel for the appellant that Section 34(1) of the Tamil Nadu Hindu Religious and Charitable Endowments Act contemplates the sale of property belonging to religious institution in open auction so as to benefit the institution. The learned Counsel again sought permission to withdraw the writ petition and prosecute the appeal before the Government. Mr. S. Sampath Kumar, learned Counsel appearing for respondents 2 and 3 vehemently opposes the request of the learned Counsel for the appellant to withdraw the writ petition. On the other hand, he wants the courts to decide the case on merits.
After giving our anxious consideration to the matter, we are of the view taking into account the interest of the institution and also taking note of the fact that the price already offered by the 3rd respondent does not reflect the correct market value, the parties must be directed to agitate the matter before the statutory appellate authority in the statutory appeal preferred by the appellant herein. In that way, we feel that the order of the learned Judge accepting the offer and confirming the sale in favour of the 3rd respondent cannot be sustained as, in our view, the sale in the circumstances must not be by private negotiation. Accordingly, the order of the learned Judge is set aside and we dismiss the writ petition on the ground that the petitioner having already availed of the alternative remedy, must prosecute the same. The Appellate Authority will dispose of the appeal at an early date having regard to the pendency of the matter for a long time and having regard to the fact that the 3rd respondent has already parted with a large amount, after giving proper notices to all the parties concerned.
Thus, having regard to the fact that the appeal was pending before the State Government, the Court eventhough came to the conclusion that the sale of the land in public auction would be in the interest of the institution, set aside the order of the learned single Judge, directed the State Government to decide the appeal on merits and in accordance with law and it also further directed that in the event the appellate authority were to direct that the property should be sold by public auction, the upset price should be fixed at Rs. 3,05,000.
10. Thereafter, the State Government heard the parties and decided the appeal, set aside the order of the Executive Officer and directed that the property be sold in public auction, fixing the upset price at Rs. 3,05,000 as per the direction of this Court dated 3.3.1988. It is the validity of this order that is challenged in the present appeal.
11. Learned single Judge appears to suggest that Section 34 of the Act does not comprehend that the Authority empowered to accord sanction for sale is also entitled to direct that the property should be sold in public auction. Learned single Judge has also further taken a view that the decision of the Supreme Court in Chenchu Rami Reddy v. Government of Andhra Pradesh be applied to the case on hand, because the matter is governed by Section 34 of the Act, which does not provide for sale of temple property by public auction. The relevant portion of the order of the learned single Judge is as follows:
So it appears to me that Section 34 of the Act only contemplates giving or not giving sanction to a proposed sale, lease etc., If the sale, lease, etc. is necessary or beneficial to the institution, the Commissioner can sanction it if not, he can say ‘no’ to it. I do not think that Section 34 of the Act contemplates that the Commissioner could instead of the proposed sale, suggest sale by any other mode, viz., sale by public auction. The term proposed transaction’ used in the proviso therein would also corroborate my above said view. No doubt if sanction is not granted for a particular negotiated sale and the trustee comes forward to request for sanction for a sale by a different mode, that is, sale by public auction, then no doubt the Commissioner could consider the same in the light of what is contained under Section 34 of the Act. But, that is not the case here. No doubt, learned Counsel for one of the respondents drew my attention to one of the Rules under Section 116(2)(xiii) of the Act, saying that lease of immovable property belonging to a religious institution shall be made by public auction. But, that Rule only provides for a lease and not for a sale. It can also be argued that the fact that there is no such similar rule with reference to sale, shows that sale need not necessarily be by public auction.
12. Section 34 of the Act deals with alienation of immovable trust property. Sub-section (1) thereof provides that any exchange, sale or mortgage and any lease for a term exceeding five years of any immovable property belonging to or given or endowed for the purposes of any religious institution shall be null and void, unless it is sanctioned by the Temple Administration Board as being necessary or beneficial to the institution. Therefore, it is clear that the temple property cannot be sold without the prior sanction of the Temple Administration Board. The Temple Administration Board can accord sanction only if it is of the view that sale of the property is necessary and such sale is beneficial to the institution. The proviso thereto provides for the manner in which the proceedings are to be taken out for the purpose of sale of immovable property of the temple. The Rules framed under Section 34 of the Act known as, ‘alienation of Immovable Trust Property Rules’ provide for issuing notice of the proposed sale, which shall contain the nature of the proposed transaction, correct description of the properties relating to the proposed transaction with information regarding the survey number, extent and boundaries and ward number and door number also in the case of properties within the limits of municipalities and the City of Madras, the revenue assessed on the properties relating to the proposed transaction by way of land revenue, cess, quit-rent, ground rent, property tax, etc., and any encumbrance to which the properties relating to the proposed transaction are subject and the purpose for which the amount so raised, is to be utilised. The Rules also further provide that reasonable time has to be allowed for those who are interested in the welfare of the Temple and also to purchase the temple property to come forward and file their objections or suggestions, if any. The notice has to be punished as per he provisions contained in the aforesaid Rules. It is thereafter, the matter comes up before the Temple Administration Board for considering the issue as to whether the proposed sale is necessary or beneficial to the institution. The Rules referred to above have been framed pursuant to the proviso contained in Section 34 of the Act. When the Temple Administration Board is required to be satisfied about the necessity of sale and whether such sale is beneficial to the institution, necessarily, it is required to find out whether the sale proposed to be effected by way of private negotiation has fetched the proper price, if not, whether it would be in the interests of the Temple to have the property sold otherwise than by way of private negotiation so that the temple can be benefited. In addition to this, it has to be satisfied about the use to the sale proceeds. If it is held that the Temple Administration Board has no power except to accord or refuse sanction for the proposed sale then, the very object of the power vested in the Temple Administration Board to ensure that the property is sold only when there is a necessity for sale and it is sold for the benefit of the temple, would be frustrated, because the power is exercisable only if the proposed sale is found to be beneficial. There fore, it would lie within the power of the Board of Trustees to manipulate the matter. Moreover, it is an established position of law that Government properties and trust properties when they are to be sold, the best price can be obtained only by sale in public auction.
13. This aspect of the matter is no more res Integra. It is already a covered field. The Supreme Court in more than one case has pronounced upon the subject. In Chenchu Rami Reddy v. Government of Andhra Pradesh , no doubt, there was a specific provision contained in Section 74(1)(c) of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act that the immovable property of the charitable trust if it all it has to be sold, it should be sold by way of Public auction in the prescribed manner. The Supreme Court while considering the said provision has also laid down the general principle apart from the provisions contained in Section 74(1)(c) of the Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act in paragraph No. 6 of the Judgment as follows:
We cannot conclude without observing that property of such institutions or endowments must be jealously protected. It must be protected for a large segment of the community has beneficial interest in it (that is the raison ‘D’ metre of the Act itself). The authorities exercising the powers under the Act must not only be most altert and vigilant in such matters, but also show awareness of the ways of the present day world as also the ugly realities of the world of today. They cannot afford to take things at their face value or make a less than the closest- and – best – attention approach to guard against all pitfalls. The approving authority must be aware that in such matters the trustees, or persons authorised to sell by persons authorised to sell by private negotiations, can in a given case enter into a secret or invisible under-hand deal or understanding with the purchasers at the cost of the concerned institution. Those who are willing to purchase by private negotiations can also bid at a public auction. Why would they feel shy or be deterred from bidding at a public auction? why then permit sale by private negotiations which will not be visible to the public eye and may even give rise to public suspicion unless there are special reasons to justify doing so? And care must be taken to fix a reserve price after ascertaining the market value for the sake of safeguarding the interest of the endowment. With these words of caution we close the matter.
14. Again, in Committee of Management of Pachaippa’s Trust v. Official Trustees of Madras (1994)1 L.W. 198, the question as to the sale of trust property by public auction or otherwise was considered and it was held that the observations contained in the various decisions as to sale of property by public auction were equally applicable to public property and property belonging to religious and charitable endowments and institutions. The relevant portion of the judgment is as follows:
20. In this regard it may be mentioned that in view of Section 9 of the Act when the Officials Trustee has been appointed trustee under a will he holds the property Vested in him upon the trust expressed in the will. Under Section 7 of the Act, the Official Trustee acts as an ordinary trustee and has the same powers, duties and liabilities and is entitled to the same rights and privileges and is subject to the same control and orders of the court as any other trustee acting in the same capacity. According to the Indian Trust Act, 1882, a trustee, is bound to deal with the trust property as carefully as a man of ordinary prudence would deal with such property if it were his own (Sec. 15) and a trustee can do all acts which are reasonable and proper for the realisation, protection of benefit of the trust property (Sec. 36) Describing the standard of fiduciary conduct expected from a trustee, Cardoza, J. has said: “A trustee is held to something stricter than the morals of the market place. Not honesty alone but the punctilio of an honor the most sensitive is then the standard of behaviour. Only thus has the level of conduct for fiduciaries been kept at a higher level that trodeen by the crowd (See: Meinharal v. Salman (1928)249 N.Y. 458 at 464).
21. In Committee of Management of Pachaippa’s Trust v. Official Trustees of Madras (1994)1 L.W. 198, while referring to the duties of official Trustee, it has been held).
So long as the property is vested in the Official Trustee, it will be the duty of the official Trustee to take such steps and conduct himself in such a manner as to make the trust get the maximum advantage of any transaction without prejudice to the security and safety of the trust property held. In the said case, it has been further held that if the official trustee himself wants to lease out the property the normal procedure to be adopted is by public auction. The said view is in consonance with the law laid down by this Court in the context of alienation of public property.
22. In K.N. Guruswamy v. State of Mysore and Ors. , the court has dealing with the sale of liquor contract. It was observed that matters of consequence to the State revenue cannot be dealt with arbitrarily and in the secrecy of an office. The court has emphasized the need for publicity so that people at large have notice. It was held that the furtive method adopted of settling a matter of this amount behind the backs of those interested and anxious to compete is injustified.
23. In Fertilizer Corporation, Kamgar Union (Regd.) v. Union of India , it has been observed (Chandrachud, C.J.), “We want to make it clear that we do not doubt the bona fides of the authorities but as far as possible, sales of public property when the intention is to get the best price, ought to take place publicly. The vendors are not necessarily bound to accept the highest or any other offer, but the public at least gets the satisfaction that the Government has put all the cards on the table.”
24. Relying on the said observations, this Court in State of U.P. v. Shiv Charan Sharma and Ors., etc. has held that public action with open participation and a reserved price guarantees public interest being fully subserved.
25. In Ram & Shyam Co. v. State of Haryana and Ors. , it has been laid down. “On the other hand, disposal of public property partakes the character of a trust in that in its disposal there would be nothing hanky panky and that it must be done at the best price so that large revenue coming into the coffers of the State administration would serve public purpose viz., the welfare State may be able to expand its beneficient activities by the availability of larger funds…. But where disposal is for augmentation of revenue and nothing else, the State is under an obligation to secure the best market price available in a market economy. An owner of private property need not auction it nor is he bound to dispose it of at a current market price. Factors such as personal attachment or affinity, kinship, empathy, religious sentiment or limiting the choice to whom he may be willing to sell may permit him to sell the property at a song and without demur. A welfare State as the owner of the public property has no such freedom while disposing of the public property.
26. In Chenchu Rami Reddy and Anr. v. Government of Andhra Pradesh and Ors. , while dealing with sale of property of a religious endowment governed by the Andhra Pradesh Charitable and Hindu Religious Institution and Endowments Act, 1966, this Court has held that what is true of public property is equally true about the property belonging to the religious institutions and endowments and has further pointed out, the trustees or persons authorised to sell by private negotiations can, in a given case, enter into a secret or invisible under hand deal or understanding with the purchasers at the cost of the concerned institution. Those who are willing to purchase by private negotiations can also bid at a public auction. Why would they feel shy or be deterred from bidding at a public auction? Why then permit sale by private negotiations which will not be visible to the public eye and may even give rise to public suspicion unless there are special reasons to justify doing so? And care must be taken to fix a reserve price after ascertaining the market value for the sake of safeguarding the interest of the endowments (pp 307. 308).
The aforesaid observations in the context of public property and property belonging to religious and charitable endowments and institutions would equally apply to trust property as in the present case.
Therefore, it is not possible to agree with the learned Single Judge that the principle laid down in Chenchu Rami Reddy’s case, (1986)3 S.C.C. 391 : 99 L.W. 1158 : (1986)3 S.C.C. 391 : (1986)2 S.C.J. 43, which has been affimed in Committee of Management of Pachaippa’s Trust, (1994)1 L.W. 198, is not applicable to the sale of the property belonging to endowments governed by the Act. Therefore, we are of the view that the direction issued by the learned single Judge cannot be sustained.
15. However, it is contended by learned Counsel appearing for the 1st respondent that the Appellate Authority has not considered the matter independently and has not recorded any finding of its own, therefore, learned single Judge is justified in interfering with the order of the appellate authority.
16. In this regard, we may point out that there was very little scope left to the appellate authority in this matter, in view of the specific observations and directions contained in the judgment of this Court in Writ Appeal No. 225 of 1988. In more than one place, this Court has observed that sale by private negotiation is not in the interest of the institution. In order to put beyond the pale of controversy, we once again quote the relevant portion:
After hearing the learned Counsel for the parties, one thing is crystal clear and that is, the price already offered does not reflect the correct market value and that the lands will certainly fetch a higher price, if the mode of sale is different from private negotiation…. In that way, we feel that the order of the learned Judge accepting the offer and confirming the sale in favour of the 3rd respondent cannot be sustained as, in our, view, the sale in the circumstances, must not be by private negotiation.
These observations were binding upon the parties and the appellate authority. Therefore, the Appellate Authority could not have done anything better than what it has done.
17. It is next contended that a sum of Rs. 2,30,000 has been lying in deposit with the appellant herein and it has now almost doubled. Further the 1st respondent is also prepared to pay a further sum of Rs. 75,000 as he had agreed before the learned Single Judge in Writ Petition No. 6423 of 1987, therefore, in the event, this Court were to direct that the property should be sold in public auction, a condition may be imposed that if the said auction sale were to fetch more than the amount that would become refundable to him plus Rs. 75,000 on the date the sale by public auction would take place, when only the sale may be confirmed in favour of the highest bidder; otherwise, it may be directed that the sale deed as already executed, may be registered on receiving a further sum of Rs. 75,000 plus the lease amount that is due to be paid the 1st respondent.
18. For the reasons stated above, the writ appeal is allowed, the order dated 11.10.1994, passed in W.P. No. 5243 of 1993, by the learned single Judge is set aside and the writ petition is disposed of in the following terms:
The temple property in question as directed by the State Government, be sold in public auction, In the event the sale fetches an amount higher than the amount deposited by the 1st respondent with interest that would accrue upto the date of auction, plus Rs. 75,000 the same may be confirmed in favour of the highest bidder and the amount deposited by the 1st respondent be refunded with interest accrued thereon, after deducting the lease amount due from the 1st respondent. Due publicity of the auction sale should be given. The auction notification shall be published in the local Newspapers as well as in the vernacular Newspapers which have a wider circulation in the area, apart from publishing it in other places as per the rules. Sufficient time should be allowed between the date of publication of the notification and the date of the public auction. In the event the auction sale fetches less than the aforesaid sum, the sale deed may be registered in favour of the 1st respondent, on condition that the 1st respondent, apart from the amount deposited by him, with interest accrued thereon, pays a further sum of Rs. 75,000 and the lease amount due from him. The C.M.Ps. are also disposed. There will be no order as to costs.