BHAGWATI DEVI BALDWA v. THE STATE OF TELANGANA

Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue any writ, order or direction more particularly one in the nature of Writ of Mandamus (a) Declaring the E-auction conducted by the Respondent No.2 herein on 1010812023 in respect of the Subject Plot No.15 admeasuring 7-16 acres of land in Budwel Layout falling in Sy Nos. 2B3lP, 2841P, 2B7lP, 2BB|P, 289, 290,291 , 292, 293, 294, 295, 296, 297, 298, 2991P of Budwel Village, Rajendranagar Mandal, Ranga Reddy District culminating in the Letter of Offer, dated 1110812023 informing the Petitioner that it was a successful bidder and the Confirmation-cum-Allotment Letter, dated 2210812023 seeking payment of the balance sale consideration and further culminating in the Pre-Final Allotment Letter dated 0711012023 confirming the payment of the balance sale consideration amount of Rs.298,93,00,000/- (Rupees Two Hundred and Ninety Eight Crores Ninety Three Lakhs only) without disclosing material facts pertaining to pending title disputes concerning the Subject Plot as directed in the lnterim Orders dated 09-08-2023 passed by this Hon'ble Court in W.P No.21467 of 2023 as illegal, arbitrary and non-est and violative of Article 14 and 300-4 of Constitution of lndia (b) Consequently direct the Respondents herein to refund the entire sale consideration amount of Rs.298,93,00,000/- (Rupees Two Hundred and Ninety Eight Crores Ninety Three Lakhs only) paid by the Petitioner herein, along with interest al the rate of 18 o/o per annum from the respective dates of payment until the date of rea lizatio n. lA NO: 1 OF 2024 Petition under Section 'l 51 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the Respondent Authorities not to alienate/transfer/encum ber/create any charge, in favour of any 3rd parties in respect of the Subject Plot No.1 5 admeasuring 7-16 acres of land in "Budwel Layout" falling in Sy Nos. 283/P, 2B4lP, 287 I P, 2BB I P, 289, 290, 291, 292, 293, 294, 295, 296, 297, 298, 299 lP oI Budwel Village, Rajendranagar Mandal, Ranga Reddy District till such time the claim of the Petitioner herein is settled in full. lA NO: 2 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the Respondent Authorities to deposit the interest amount at the rate of 18 o/o per annum from the respective dates of payment until the date of filing of this writ petition as compensation for failing to disclose the pending litigation while conducting the e-auction. Counsel for the Petitioner: SRI E.AJAY REDDY, Sr. COUNSEL, REP. FOR Ms. E.ANISHA REDDY Counsel for the Respondent No.1: SRI A.SUDHARSHAN REDDY, ADVOCATE GENERAL Counsel for the Respondent No.2: SRI V.NARASTMHA GOUD, SC FOR HMDA The Court made the following: COMMON ORDER I I l I 1 IION'BLE SIII .JT]STICE K. LAKSHMAN WRIT PETITOIN Nos. 26832 AND 27310 OF 2024 COMMON ORDER The issues involved and the reliel.s soughf in the present writ petitions are similar. Therefore, they are being decided together vide the present common order.

2. Heard Sri E..Ajay Reddy, leamed Senior Counsel representing Ms. E.Anisha Reddy, learned counsel for the petitioner in W.P.No.273 l0 of 2024, Sri M.Hareesh Kurnar, leamed counsel for the petitioner in W.P.No.26832 of 2024 and Sri A.Sudharshan Reddy, learned Advocate General appearing for respondents.

3. The brief facts are that Respondent No. 2 had issued an e- auction notification dated 04.08.2023 lor sale of l7 open plots in Budvel Village, Rajendra Nagar Mandal. In the said e-auction notification, Respondent No. 2 advertised that the plots offered for sale were owned by the Govemment ol Telangana and were '100olo encumbrance free'. The notification stated that the eamest money deposit was Rs. 3,00,00,000/- (three crore only) and the first 2 installment (33% of the sale amount) was to be paid within 07 days of the date of issuance of letter of offer and the second and final installment (the balance sale amount) was to be paid within 30 (thirty) days fiom the date ofauction. Clause 14 (ii) oithe Special Terms and Conditions (annexed to the e-auction notification) stated that a pre-final letter would be issued after the fult and final payment of the sale amount. Likewise, Clause 14 (iii) stated that after the issuance of the pre-final letter, the authorised representalive of the Respondents will undertake the process of conveyance and execute a sale deed in favour of the successful bidders.

4. Pursuant to the said e-auction notifrcation, the Petitioners herein participated in the auction on 10.08.2023 and submitted their respective bids.

5. T'he Petitioner in W.P. No. 26832 of 2024 offered a bid amount of Rs. 33,75,00,000/- (thirty-three crores seventy-five lakhs only) per acre and she was selected as the highest bidder in relation to Plot No. 14 which admeasured 16.13 acres. The total sale price in relation to the Petitioner in W.P. No. 26832 of 2Q24 for Plot No' I l 3 14 was Rs. 206,88,75,000/- (two hundred and six crores eighty- eight lakhs seventy-five thousand only). According to the terms of the e-auction notification, Respondent No. 2 issued a letter of offer dated I 1.08.2023 to the Petitioner in W.P. No. 26832 of 2024. On

18.08.2023, the Petitioner in W.P No. 26832 of 2024 paid the first installment of Rs. 68,27,28,750i- (sixty-eight crore twenty-seven lakhs twenty-eight thousand seven hundred and fifty only). This was followed by Respondent No. 2 issuing a confirmation-cum- allotment letter dated 22.08.2023 with a condition to pay the balance sale consideration of Rs. 135,61,46,250l- (one hundred and thirty-five crores sixty-one lakhs forty-six thousand two hundred and filty only) within a period of 30 (thirty) days. The Petitioner in W.P. No. 26832 of 2024 paid the balance sale amount on

08.09.2023. Respondent No. 2 issued a pre-final allotment dated

07.10.2023 letter which confirmed the receipt of the entire sale consideration by the Petitioner in W.P. No. 26832 of 2024.

6. Likewise, the Petitioner in W.P. No. 21310 of 2024 offered a bid of Rs. 41,75,00,000/- (forty-one crores seventy-five lakhs only) per acre and was selected as the highest bidder in relation to 4 Plot No. I 5 rvhich admeasured 7. 16 acres. The totat sale price in relation to the Petitioner in W.l). No. 273 10 of 2024 for. Plot No. l5 was Rs. 298,93,00,000/- (two hundred and ninety-eight crores ninety-thlee lakhs only). According to the tenns of the e-auction notification" Respondent No. 2 issued a letter of offer dated

11.08.2023 to the Petitioner in W.P. No.273 l0 ol'2024. On

18.08.2023, the Petitioner in W.P. No. 27310 of 2024 paid the first installment of Rs. 98,64,69,000/- (ninety-eight crores sixty-four lakhs sixty-nine thousand only). Respondent No. 2 issued a confi rmati on-cu m-al lotment letter dated 22.08.2023 confi rming the payment o[ the first installment and stating that the balance sale consideration of Rs. 197,28,3 1,000/- (one hundred and ninety- seven crores twenty-eight lakhs thirty-one thousand only) shall be paid within 30 (thirty) days. The Petitioner in W.P. No.273 10 of 2024 paid the balance sale amount on 08.09.2023. Respondent No. 2 issued a pre-tinal allotment dated 07.10.2023 letter which confirmed the receipt of the entire sale consideration by the said Petitioner. I 5

7. While the conveyance and handing over of the plols viz., Plot No. 14 and Plot No. 15 was pending, both the Petitioners allege that, they got to know that the plots sold to them were under litigation. Both the Petitioners state that on 08.08.2023 i'e., two days before the e-auction, a writ petition bearing W.P. No. 21467 of 2023 was filed by one Korani Ravinder and his brother seeking stay of the e-auction. In the said writ petition, the said Ravinder and his brother claimed that they were the owners of land admeasuring 4. 19 acres rn Sy. No. 288/4. According to the Petitioners, Sy. No. 288/4 falls in Plot Nos. 14 and i5 which were purchased by them. On 09.08.2023 i.e., one day before the auction, a learned single judge of this Court passed an interim order in W.P. No. 21467 of 2023 permitting the e-auction to happen subject to Respondent No. 2 making an endorsement on the 'sale allotment letter' that the sale in respect of Plot Nos. 14 and 15 will be confirmed subject to the outcome of the said writ petition. The I relevant portion of the said order is extracted below: Accordingly, respondent authorities can go ahead with the e-duction proposed to be heW on 10.08.202j, however the respondent authorities are directed to 6 make an endorsement on the sale lotment letter in respect of the Plots Nos.14 and 15 stating that the said plots will be conJirmed subject to the outcome of this writ Pelition.

8. After receiving information about the pending writ petition, the Petitioners addressed multiple representations to Respondent No. 2 seeking refund of the fuIl amounts paid by them along with 18%o interest. In response to their representations, Respondent No. 2 issued a letter dated 09.11.2023 acknowledging the pendency of WP. No. 21467 of 2023 and assured them that if any unfavourable orders were passed in W.P. No. 21467 of 2023 by March 2024 or earlier, they would refund the entire amount with interest. 'fhe relevant portion of the letter dated 09'11'2023 is extracted below: In this regard, it is lo inform thal the title and possession of the petitioner(s) has not proved at all and the soid land is under the custody of HMDA since 26- l2-2007 and with regard to the above Writ Petition, the IIMDA entrusted the matter to the Advocate General owing to the importance of the Layout and necessary possible steps witl be taken for dismksal of the dbove Writ Petition at the earliest preferably before March,

2024. l l However, on careful examination of your representation submitted vide reference 7 cited, il is to inform that, if any unfavorable orders issued in thk matter k est by March, 2024 or earlier, the HMDA/Government will refund the total sale price paid by you in respect of rhe above plor along with admissible inlerest

9. Despite the above assurance, W.P. No. 21467 of 2023 remained pending. The Petitioners addressed representations but received no response. Therefore, they have filed the present writ petitions seeking a full refund of the payments made by them along with an interest of lSoh per annum.

10. The Petitioners contend that Respondent No. 2 has acted contrary to the advertisement and e-auction notiflcation which promised sale of unencumbered land. They contend that W.P. No. 21467 of 2023 was filed before the auction dated 10.08.2023 Therefore, Respondent No. 2 ought to have infonned them about the pending litigation. Fufther, they contend that Respondent No. 2 had suppressed the factum of pending W.P. No. 21467 of 2023 and the order dated 09.08.2023. According to them, Respondent No. 2 obtained full payments running into crores of rupees without informing them about the litigation. The Petitioners term the action 8 of Respondent No. 2 as illegal and arbitrary. They seek refund of the amounts paid by them along with an interest of 18oZ per annum.

11. [n response to the contentions of the Petitioners, Respondent No.2 raised a preliminary objection regarding the maintainability of the writ petition. It contended that in contractual matters, a wlit petition under Article 226 is not maintainable. It further contended that there was no suppression of either the pendency ofW.P. No. 21467 of2023 or the order dated 09.08.2023. The order copl' of order dated 09.08.2023 was received by their office only on 24.08.2023. Therefore, it could not infon.n about the pendency ol'W.P. No. 21467 of 2023 or about the order dated

09.08.2023

12. A rgu endo, Respondent No.2 contends that the order dated 09.08.2023 only states that the endorsement should be made on the 'salc allotment letter' which only comes at a later stage i.e., after payment of money and issuance of pre-final allotment letter. Further, as on the date of the issuance of e-auction notification i.e.,

04.08.2023 , the property was free from encunrbrances and 9 litigation. Therefore, it was argued that the property was unencumbered when the advertisement was made. Another contention of Respondent No. 2 was that the property was sold on 'as is where is' basis and the principles of iaveat emptor and estoppel apply.

13. The only question before this Court is whether the actions of Respondent No. 2 entitle the Petitioners to resile from the sale transaction and claim a refund.

14. Before deciding the said question, this Court would like to deal with the preliminary objection conceming the maintainability of the present writ petition. It is trite law that while exercising jurisdiction under Article 226 of the Constitution of India, the Courts shall be slow in interfering with contractual matters concerning the Govemment. However, in cases where the State has acted in an arbitrary or unfair or irrational manner or has failed to act reasonably, a writ petition will be maintainable. In this regard, it is relevant to note the following paragraphs of Unitech Ltd. v. Telangana State Industrial lnfrastructure Corpn.r: '1zozr1 to scc :s 10

39.4. If the State instrumentality violates its constitutional mandate under Article 14 to act fairly and reasonably, relief under the plenary powers of Article 226 of the Constitution would tie. -fhis principle was recognised inABL lnternationat IABL Intcrnalional Ltd. v. Export Credit Guarantee Corpn. of lndia Ltd., (2004) 3 SCC 5531 : (ABL Internotional c,tsr IABL lnternational Ltd. v. Exporr Crtdit Gtturantee Corpn. of hdia Ltd., (2004) 3 SCC 5531 , SCC p. 572, para 28) "28. However, while entertaining an objection as to the maintainability of a writ petition under Article 226 o1'tl1e Constitution of tndia, the court should bear in mind the fact that the power to issue prerogative writs under Article 226 of the Constitution is plenarv in nature and is not limited by any other provisions of the Constitution. The High Cou( having regard to the l'acts ol' thc case, has a discretion to entertain or not to ente(ain a writ petition. The Court has imposed upon itself certain restrictions in the exercise ol this pora,er. (See LI/'hirlpool Corpn. v. Registrar of Ti.ade Marks fWhirlpool Corpn. v- Registrar of Trade Marks, (1998) 8 SCC 1l .) And this plenary right of the High Courl to issue a prerogative writ u,ill not normallv be erercised hy the Court to the etclusion oJ other availuble remedies unless such action of the Stale or its i slrumentalily is arbitrary and unreasonable so os to violate the constitutional mandate of Article I 4 or .for other valid and legitimate reasons, for which the C.ourt thinks it necessary to exercise the said.iurisdiction.,' (emphasis supplied) 39.5. Thercfore, while exercising its iurisdic tion under Article 226, the Court is entitled to cnouire into whether the action of the State or its instru mcntalities is arbitrarv or unfai r and in cr)nscquen ce, in violation of Article 14. Thc I Urlsdiction under .{rticle 226 is a valuatrle constitutional safesuard asainst an arbitlan erercise of State porver or a misuse of authoritr,. '1 t1-

39.6. In determining as to whether the jurisdiction should be exercised in a contractual dispute, the Courl must, undoubtedly cschew, disputed questions of fact which rvould depend upon an evidentiary determination requiring a trial. But equally. it is well settled that the iurisdiction under Articlc 226 cannot be ousted only on the basis that the disnutc pertains to the contractual arena. This is for the simple reason that the State and its instrumentalities are not exempt from the dutv to act fairly merely bccause in their business dcalinss they have cntered into the realm of contract. Similarl y, the presence of an arbitration clause does (sic not) oust the jurisdiction under A(icle 226 in all cases though, it still needs to be decided from case to case as lo whcther recourse to a public law remedy can.justifiably be invoked. 39.7. The jurisdiction undcr Article 226 was rightly invoked by the Single Judge and the Division Bench of the Andhra Pradesh High Court in this case, when the foundational represenlation of the contract has failed. Tsiic, a State instrumentality, has not just reneged on its contractual obligation, but hoarded the refund ofthe principal and interest on the consideration that was paid by IJnitech over a decade ago. It does not dispute the entitlement of Unitech to the refund of its principal.

15. In view of the above decision and the reasons stated in the following paragraphs this Court holds that the State i.e., Respondent No. 2 herein has acted unfairly and arbitrarily. Therefore, the present writ petition is maintainable.

16. It is not disputed that Respondent No. 2 had advertised that all the propefties were owned by the Govemment of Telangana ',:: I 72 and were free from all encumbrances. The offer to sell was intrinsically linked with the guarantee that the subject plots were litigation free. It is only reasonable for the prospective bidders like the present Petitioners to believe that the title over the properties is clear, more so when huge amounts are sought to be invested. Keeping this in mind, this Court would like to point out ceftain dates. i7. On 04.08.2023, the e-auction notification rvas released. The e-auction was to be conducted on 10.08.2023. W.P. No. 21467 of 2023 rvas filed on 08.08.2023 and an interim order was passed on 09.08.2023. The said interim order notes that Respondent No. 2 was duly represented by lts standing counsel. Therefore, Respondent No. 2 cannot contend that they were not aware of the order or the pendency of W.P. No. 2 1467 of 2023 till they received the order copy i.e., on24.08.2023 cannot be accepted.

18. .{t this stage, it is apt to note that as stal.ed supra, Sri Korani Ravinder and his brother filed the aforesaid \V.P.No.21467 of2023 challenging the proposed auction scheduled on 10.08.2023. This Court granted interim order dated 09.08.2023, after hearing 13 Sri V.Narasimha Goud, learned Standing Counsel appearing for 2nd respondent.

19. In W.p.No.2t467 of 2023, Sri B.Kishan Rao, Estate Officer of HMDA (Respondent No.2 herein) fileil counter affidavit stating that on 09.08.2023, they have received e_mail from their Standing Counsel i.e. Sri V.Narasimha Goud, informing them of filing of W.P.No.2l467 of 2023 and order passed by this Court rhat the auction is scheduled on I0.0g.2023 witt be subject to the result of the Writ petition. It was further informed that fuither steps after auction may be taken after perusal of copy of the said order.

20. It is further contended that the interim order dated 09.08.2023 passed in W.p.No.21467 of 2023 was not received by 2nd respondent till the time of issuance of letter of offers/allotments to the H.l Bidders on 11.0g.2023. However, on receipt of the said order, it was informed to the successful bidders.

21. In the light of the same,2nd respondent cannot contend that they are not aware ol the order dated 09.0g.2 023 in W.P.No.21467 of 2023. The said contention of 2nd respondent cannot accepted. I I

22. lt is also apt to note that petitioners herein are into real estate business. It is their specific contention that they have participated in the auction for the purpose of development of the subject property into flats/villas on obtaining permission from the authorities concemed. Therefore, necessarily they have to register themselves in terms of Section 3 of the Real Estate (Regulation and Development) Act,2016. Section 3 (l) of the Act, 2016 says no promoter shall advertise, market, book, selr or offer for sale or invite persons in any manner any plot, apartment or building, as the case may be, in any real estate project or part of it, in any planning area, without registering a real estate project with the Real Regulatory Authority established under this Act. As per Section 3(2) of the Act, where the area of land proposed to be developed exceeds 500 sq.rneters, the promoter shall necessarily register with RERA. Section 4 deals with application for registration of real estate project and it has to disclose all the pending litigations. 23' As per Rule 3(B) of the Terangana Real Estate (Regulation and Development) Rules 2017, the promoter shall disclose pending cases/litigation if any on the subject property and a 15 I T l! as per Rule 3(B) (2) of the Rules, the promoter shall necessarily declare that it has clear title in respect of the subject property.

24.Inthe light of the same, petitioners cannot be expected to participate in the auction to purchase the propefty which is in litigation. Petitioners cannot be expected to purchase litigation by paying huge money. It is also the specific contention of the petitioners that they have quoted the aforesaid price believing that the subject propefty is free from litigation / unencumbered.

25. Being aware of the pendency of W.p. No. 21467 of 2023 and the order dated 09.08.2023, Respondent No. 2 was bound to disclose the same to the Petitioners herein. Instead of informing the Petitioners at the earliest, Respondent No. 2 remained mute and accepted full payments running into crores. It was only after the I Petitioners herein wrote to Respondent No. 2, that the pendency of W.P. No. 21467 of 2023 and, the order dated 09.0g.2023 was acknowledged.

26. Even if this Court accepts the argument of Respondent No. 2 that they got to know about W.p. No. 2 1467 of 2023 onlv on 16

24.08.2023, this Court cannot hold that the Petitioners are not entitled for a relund and have to necessarily wait till the disposal of W.P No. 21467 of 2023. As stated above, one of the essential terms of the e-auction and sale was that the property would be free from litigation. It rvas before the auction that W.P. No. 21467 of 2023 was filed. Fu(her, the averments in W.P. No. 21467 of'2023 show that the Petitioners therein claims to be in possession of the land falling in Plots Nos. 14 and 15. They also seem to claim that the land in question is an assigned land and that he has documentary proof in the lorm of assignment proceedings, pattadar passbook and title decd. Bona fide purchasers like the present Petitioners cannot be expected to invest money and be subjected to what seems like a lons-drawn litigation involving third parties

27. Respondent No. 2, arguendo, contended that the order dated 09.08.2013 stated that the endorsement should be made on 'sale allotmcnt letter' and therefore, Respondent No. 2 was not bound to inforn.r about W.P. No. 21467 of 2023. The said argument is puerile to say the least. As stated above, one of the main points of advertisement was that the plots were free frorn litigation. I i 77 Therefore, as a seller and moreover as a State instrumentality, Respondent No. 2 was to inform the Petitioners about the pending litigation at the earliest.

28. There is another reason why the acticins of Respondent No. 2 are arbitrary. As seen from the extracted portion of the letter dated 09. 1 1 .2023, Respondent No. 2 itself had stated that necessary steps will be taken to get WP. No. 21467 of 2023 dismissed by March 2024. The said letter also stated that if any unfavourable orders are passed in W.P. No. 21467 of 2023, the entire money will be retunded. Admittedly, Wp. No. 21467 of 2023 is still pending. 2nd respondent herein filed counter in the said writ petition only on

08.09.2023 and Tahsildar, Rajendranagar Mandal, filed counter on

05.09.2023 and additional counter only on IB.|O.2O24. Therefore, having stated that the money will be refunded in the absence of a favourable outcome, Respondent No. 2 cannot continue to withhold the payments made by the petitioners.

29. At this juncture, this Court would like to express its dismay over Respondent No. 2's arguments in relation to the letter dated 09.11.2023. Respondent No. 2 contended that as no \ l I I 10 'unfavourable orders' are passed in W.P. No. 21467 of 2023, the amount cannot be refunded in terms of the letter dated 09.11.2023. The argunrent of Respondent No. 2 seems to suggest that till unfavourable orders are passed, they will not refund the payments made by the Petitioners. The said argument cannot be accepted. As stated above. the Petitioners cannot be expected to wait and part with such huge sums of money till a pending titigation, of which they were not aware, is resolved.

30. 'I'he other argument of Respondent No. 2 was that the subject plots u,ere sold on 'as is where is' basis. T'herefore, the principle o1'caveat emptor will apply and the Petitioners having satisfied themselves regarding the suitability of the properties cannot challenge the auction sale. The said argument, which at the first blush seems convincing, is untenable. Even if the subject plots were sold on'as is where is'basis, the Petitioners could not have known about the pendency ofW.P. No. 21467 of2023. 3l. Iurther, the 'as is where is'clause in Annexure II of the e-auction notification deals with the physical aspects and suitabiiity 19 of land. lt does not speak of cautioning the buyer regarding any encumbrances. The said clause is extracted below:

8. The open plot notified for sale will be sold through c-Auction on "as is where is" basis. Hence the bidders should inspect the lots / open plots and satisfy themselves in all aspects before bidding, as otherwise it is deemed that the bidder has inspected the land parcel(s) and satisfied himself/herself regarding the suitability ol plots in all respects for construction and no claims of any nature are maintainable against HMDA/SELLER.

32. It is relevant to note that where State or its instrumentalities are involved in the auctioning propefties, there is a presumption that such properties are free from encumbrances. There is also a reasonable and legitimate expectation that encumbrances, if any, will be informed to the participants in the auction. The State when participates in a commercial activity is expected to act like a scrupulous businessman. The commercial considerations should be balanced with the duty to act fairly. Bonafide auction purchasers cannot be made to run from pillar to post to enjoy the fruits of the property. Likewise, where the properfy was not free from encumbrances and the same was never informed to the buyer or where the buyer was not cautioned about the possibility of existing encumbrances, the State shall refund the 20 payments made by such a buyer. Using'as is where is'clauses to try to sell encumbered properties does not bode-well lbr the State. In this regard, the following paragraphs of Mandava Krishna Chaitanya v. tlCO Bank2, are relevant:

23. ['urthe thc concept of'as is rvh ere is' and 'as is what is' basis has lost its sienificance in the current cornmercial milieu and the nrincinle of cayeal yqlditor is more on the rise as compared to the out(luted nrinci Dle of caveat emDlar. The 'fransfi:r of Propcrtv Act , 1882. rcquires the seller to own uD to ccrtain dutics and it is not oDen to a rcsponsiblc bank to takc an innocent auction Durchaser for a ride bv selling to him a taintcd nro fierh'and thrrcafter claim protection under the principlcs of 'truvcr beware'. The counter-affidavit filed b1, the bank clearly demonstrates that the bank undertook no excrcise whatsoever to verify and ascertain as to what encumbrances attached to the subject property at any stagc. No details are forthcoming of any efforts having been made by the bank, be it before the registration aullrolities or any other authority at any stage. NoW it has come to light that the property in question is tainted on grounds more than one. It falls within the full tank levcl ol a lake and, surprisingly, it is also treated as a ceilinq surplus land. That apart, the possession of the propcrty cannot evcn be handed over by the bank to the petitioner as the sale was effected without the bank securing actual physical possession thereof and the bank does not deny the factum of a lease having been creatcd by the borrower in relation thereto. The bank there lbre carurot comply with the statutory mandatc of delivering aclual possession of the property sold under the sirle certificate. The decisions of various Courts 22018 ScC OnLineHyd 196 i I I zL refened to supra would come to the aid of the petitioner in this regard. That apart, the registration authorities already indicated to the petitioner that the subject land is noted as a ceiling surplus land. Therefore, even if they do entertain the sale certificate issued by the bank for registration, it would be subject to this cloud and would not amount to clear conveyance of title. It is therefore manifest that the bank made the innocent petitioner a victim by failing to cxercise due diligence, not only in terms of the slatutory scheme of the SAR-FAESI Act and the Rules of 2002, but also in its own commercial interest, let alone public interest, when it accepted this property as security for the loan sanctioned by it. This utter carelessness on the part ol the bank in sanctioning loans, by use ol public monies, on the strength of secured assets which are not even worthy of being mo(gaged, requires to be deprecated in the strongest terms. Banks necessarily have to exercise more care and caution while using public monies available with them, be it through deposits by customers or otherwise, when sanctioning loans without caution or worse and cannot be permitted to claim protection under outdated legal principles so as to victimize innocent auction purchasers, such as the petitioner. This Court therefore has no hesitation in holding that the auction sale held by the bank, without even exercising minimum care to ascertain the encumbrances attaching to the subject property and without inlorming the petitioner or other bidders of the same, vitiates the sale proceedings, culminating in issuance of the sale certificate which is yet to be registered.

33. 1'herefore, this Cou( holds that Respondent No. 2 failed to act in a fair and reasonable manner. The petitioners are entitled to i'fu1l refund of the amounts paid by them. In Mandava Krishna _t 22 Chaitanya (supra), uniform rate of interest in like cases was noted to be l8% per annum. The Petitioners are entitled to the same from the date of deposit till the date of realization.

34. In light of the aforesaid discussion, the present writ petitions are allowed and the following directions are passed: i. In W.P. No. 26832 of 2024, Respondent No. 2 is d irected to refund the total amount of Rs.206,88,75,000/- (two hundred and six crores eighty-eight lakhs seventy-five thousand only) along u,ith 18% interest per annum from the date of deposit tillthe date of realization; lt. In W.P. No. 273 l0 of 2024, Respondent No. 2 is directed to refund the total amount of Rs. 298,93,00,000/- (two hundred ancl ninety-eight crores ninety-three lakhs only) along with 18% interest per annum from the date of deposit till the date of realization; 23 llr. Respondent No. 2 shall refund the said amounts within a period of six (6) weeks from the date of receipt of copy of this order. As a sequel, the miscellaneous petitions, if any, pending in these Writ Petitions shall stand closed I To, //TRUE COPY//

1. The Principal Secretary, Municipal Administration Secretariat, Telangana, State Of Telangana. SD/.T. TIRUMALA DEVI EPUTY REGISTRAR SECTION OFFICER d Urban Development,

2. The Metropolitan Commissioner, Hyderabad Metropolitan Development Authority, Swarna Jayanti Complex, Sanjeeva Reddy Nagar, Srinivasa Nagar, Ameerpet, Hyderabad 500038 Telangana State

3. One CC to SRI M.HAREESH KUMAR, Advocate [OPUC] 4. One CC to Ms. E.ANISHA REDDY, Advocate IOPUC] 5. One CC to SRI V.NARASIMHA GOUD, SC FOR HMDA [OPUC] 6. Two CCs to ADVOCATE GENERAL, High Court for the State of Telangana at Hyderabad [OUT]

7. Two CD Copies BSR BS U-' --<*r!Fir-\-- l: .T HIGH COURT DATED: 0210512025 COMMON ORDER WP.Nos.26832 and 27310 ot 2024 ( q :l o rlE Srar t c) t' o// 2 7 l{AY 2025 t O5 s pATc rr€O ALLOWING THE WRIT PETITIONS, WITHOUT COSTS 4 CI @*.(