Case Note & Summary
The dispute arose from an auction held in 1986 by the Tamil Nadu Housing Board for a prime commercial plot in Chennai. The respondent, S. Ganesan, emerged as the highest bidder with an offer of Rs.4,78,921/-, and the Board accepted the bid subject to payment of 25% initial deposit. The respondent failed to make the deposit, leading to cancellation of the allotment in 1987. After several representations, the Board, as a special case, revoked the cancellation in 1993-94 imposing additional terms including interest. The respondent paid the initial deposit and revocation fee but not the interest. A regular allotment order was issued in February 1994, and the respondent took possession in March 1994, agreeing to pay the balance under a hire purchase scheme over five years. In 1998, the Board inadvertently informed the respondent that the outstanding balance was only Rs.77,300/-, which the respondent paid. However, upon detecting the error, the Board recalculated the dues to Rs.15,26,023/- as of December 2002. The respondent defaulted, and the Board cancelled the allotment again in 2004. Despite an undertaking by the respondent to pay Rs.20,77,911/-, he failed to do so, and eviction proceedings were initiated. The respondent challenged the cancellation before the Madras High Court, which initially granted interim relief. The writ petition was withdrawn in 2010 upon the Board’s representation that the sale deed would be executed upon payment. When the Board again failed to act, a second writ petition was filed, leading to a remand by the High Court in 2020 for fresh consideration. The Board confirmed the cancellation in October 2020. The respondent's subsequent writ petition was dismissed by a Single Judge in November 2021, holding him to be a chronic defaulter and directing refund of the amount paid. In appeal, a Division Bench in January 2025 set aside the Single Judge’s order and directed the respondent to pay Rs.3 crore in three instalments, whereupon the sale deed would be executed. The Board appealed to the Supreme Court. The Supreme Court noted the respondent’s continued non-compliance, including failure to deposit Rs.3 crore as directed by the Court to test his bona fides. The Court emphasized that public property must be managed in the larger public interest, and that the Board, as custodian, holds such property in trust. It held that the Board’s mistake in computing the dues in 1998 did not absolve the respondent, who had paid only a fraction of the bid amount. The Court observed that the respondent had been given multiple indulgences over nearly four decades but remained a chronic defaulter. The appeal was allowed, and the impugned Division Bench order was set aside. The respondent’s right to make further payment was closed, and he was directed to vacate the plot within four months. In default, the Board was permitted to evict him with police assistance and recover the balance of Rs.2,81,890/- with 6% simple interest from the date of possession as arrears of land revenue. The Board was also free to re-auction the plot.
Headnote
A) Public Property - Custodian's Duty - Public property must be managed in public interest with transparency, fairness, and reasonableness - Not mentioned - The Tamil Nadu Housing Board, as custodian of public property, holds it in trust for the public and must take decisions serving broader public interest; indulgences to defaulters cause loss to public exchequer - Held that the Board was justified in seeking cancellation of allotment due to chronic default (Paras 29, 33). B) Administrative Law - Estoppel by Mistake - A mere clerical error in computation of dues does not estop a public authority from recovering the correct amount; allottee cannot claim benefit from such error - Not mentioned - The Board inadvertently informed the respondent that the balance was Rs.77,300/-, which was promptly corrected upon detection; the respondent, having paid only a fraction of the bid amount, could not reasonably believe the balance was so low - Held that the Board’s error did not absolve the respondent of liability (Para 30). C) Contract/Allotment - Chronic Default and Cancellation - Repeated failure to pay dues despite multiple opportunities disentitles the allottee to equitable relief and justifies cancellation of allotment - Not mentioned - The respondent was a chronic defaulter who failed to pay as per undertakings and court orders; despite numerous indulgences, he did not comply - Held that his right to make further payment stands closed, and cancellation was proper (Paras 28, 31, 33). D) Judicial Process - Compliance with Court Orders - Non-compliance with conditional orders of the court to deposit money demonstrates lack of bona fides and warrants denial of further latitude - Not mentioned - This Court directed the respondent to tender Rs.3 crore to test bona fides, but he failed to do so and sought extension - Held that such apathy disentitles him to any further indulgence (Paras 27-28). E) Property Law - Eviction and Recovery - Upon cancellation of allotment of public property, the allottee can be evicted and the outstanding balance recovered as arrears of land revenue with interest - Not mentioned - The Court directed the respondent to vacate the plot within four months; in default, the Board may evict with police assistance and recover Rs.2,81,890/- with 6% simple interest from date of possession - Held that the Board is free to re-auction the plot (Para 33).
Issue of Consideration
Whether the Division Bench of the High Court erred in setting aside the cancellation of allotment and directing execution of sale deed upon payment of Rs.3 crore, considering the allottee's chronic default and the public interest involved in management of public property
Final Decision
Supreme Court allowed the appeal, set aside the Division Bench order, and directed the respondent to vacate the plot within four months. In default, the Board may evict with police assistance and recover Rs.2,81,890/- with 6% simple interest from date of possession as arrears of land revenue. The respondent's right to make payment stands closed.
Law Points
- Legal points not extracted
- Public property management should prioritize greater public good
- Board as custodian holds property in trust for public
- auction process must be transparent fair reasonable
- indulgences to defaulters cause loss to public exchequer
- allottee cannot take advantage of Board's clerical error
- failure to comply with judicial orders disentitles relief
- need to end long-drawn litigation
