Supreme Court of India
CHENCHU RAMI REDDY & ANR.versusGOVERNMENT OF ANDHRA PRADESH & ORS.
- Citation
- 1986 INSC 55
- Decided
- 1 April 1986
- Disposal
- Appeal(s) allowed
- Bench
- E S VENKATARAMIAH
Holding
The Government order is invalid because it does not satisfy the statutory pre‑conditions of being in the interest of the institution and recording the reasons, and therefore must be set aside with the lands to be sold by public auction.
Summary
The Government of Andhra Pradesh authorised the sale of lands belonging to Sri Bugga Math, Tirupati to certain respondents by private negotiation at Rs.62,500 per acre under the proviso to clause (c) of s.74(1) of the Andhra Pradesh Charitable & Hindu Religious Endowments Act, 1966. The appellants challenged this order, contending that the statutory pre‑conditions – that the sale be in the interest of the institution and that the reasons for such satisfaction be recorded – were not complied with. The Supreme Court held that the order failed to demonstrate any satisfaction of the interest test nor did it record any reasons, amounting to a non‑application of mind. Consequently, the order was quashed and the lands were directed to be sold by public auction. The Court also noted the need for vigilance in disposing of property of charitable and religious institutions and set procedural safeguards for the auction.
Issues considered
- The order of the State Government permitting private sale complied with the mandatory pre‑conditions of s.74(1)(c) proviso of the Andhra Pradesh Charitable & Hindu Religious Endowments Act, 1966.
- Whether the order should be set aside for non‑application of mind and lack of recorded reasons.
- Whether the lands should be sold by public auction instead of private negotiation.
Legislation cited
- Andhra Pradesh Charitable & Hindu Religious and Endowments Act, 1966s. 74(1)(c) proviso, s. 79(1)
Subjects
sale of religious endowment propertypublic auctionprivate negotiationstatutory compliancenon‑application of mindAndhra Pradesh Actcharitable institutionsland sale
Judgment
989
CllENCHU RAMI REDDY & ANR. A
v.
GOVKRNMENT OF ANllHRA PRADESH & ORS.
APRIL 1, 1986
[E.S. VENKATARAMIAH AND M.P. THAKKAR, JJ.] B
Andhra Pradesh Charitable & Hindu Religious and
Endowments Act, 1966, s.74 - Sale of lands belonging to Math
by Private negotiation. - When permissible.
Section 74(1) of the Andhra Pradesh Charitable & Hindu
Religious and Endowments Act 1966 by clause (c) provides : C
"(c) Every sale of any such immovable property
sanctioned by the Commissioner under clause (b)
shall be effected by public auction in the
prescribed manner subject to the confirmation by
the Commissioner within a period prescribed: D
Provided that the Government may, in the interest
of the institution or endowments and for reasons to
be recorded therefore in writing, permit the sl\le
of such immovable property, otherwise than by
public auction." E
Respondent Nos. 5 to 24, purchased certain lands
belonging to Sri Bugga Math, Tirupathi by private negotiations
at the rate of Rs.62,500 per acre. The Government of Andhra
Pradesh passed an order dated 12th February, 1982 according
its permission to the said sale under the· proviso to clause F
(c) of sub-s.(l) of s.74 of the act. The appellants
challenged before the High Court the legality apd validity of
the Government Order granting such permission, but the .same
was upheld by the High Court.
In appeal to the Supreme Court,. it was contended on G
behalf of the appellants that the impugned order of the State
Government manifests total non-application of mind to the
essential pre-condition embodied in the proviso to s. 74(l)(c)
and therefore, it should be struck down. The appellants also
offered their bid to purchase the said land @Rs. 2,50,000 per
acre and deposited Rs. 20 lacs as earnest money. H
990 SUPREME COURT REPORTS [19861 1 s.c.R.
A.
Allowing the appeal,
lll!Lll ·: 1. The essential pre-condition embodied in
proviso to s;74(l)(c) are : (a) that the Government 11118t be
satisfied that it is in the interest of the institution or
endowment to permit the sale of these lands otherwise than by
B public auction; and (b) that reasons for reaching this
satisfaction 11118t be recorded in the order. [993 F-G]
2, The impugned order deserves to be quashed; (i) as it
suffers from the vice of non-application of mind to essential
matters; and (ii) as there is no compliance with the relevant
c statutory provision. The impugned order, far from recording
the satisfaction that it is in the interest of the
institution to sell the lands otherwise than by public
auction, does not even reveal awareness (1) as regards the
necessity for being so satisfied and (2) as regards the
mandatory obligation imposed by the statute to record the
D reasons for forming such an opinion in the order itself. In
· the instant case, there is nothing to show that the authority
which passed the impugned order was even aware of the
essential pre-conditions envisioned by the statute. On the
other hand, it is clear that if the concerned authority had
even stolen a casual glance at the relevant statutory
E provision it could not have failed to say, what it was bound
to say, if it was so satisfied, that the departure from the
prescribed llllde of selling by public auction was in the
interest of the 'Math'. Nor could it have failed to record its
reasons in support of this conclusion, for the statute in so
many words, casts an obligation on the concerned authority to
F record such reasons in the order itself. The inference is
therefore irresistible that the competent authority had failed
to direct its mind to the requirements of law before passing
the impugned order. [995 C-D; 994 C-G]
3. What belongs to 'many', collectively, does not cause
G pangs to 'any', for no one is personally hurt directly. That
is why public officials and public minded citizens entrusted
with the care of 'public property' have to show exemplary
vigilance. What is true of 'public property' , is equally true
of property belonging to religious or charitable institutions
or endowments. · Properties of religious or charitable
H institutions or endowments 11118t be jealously protected. A
CHENC!Ill RAM1 REDDY V• STATE [THAKKAR, J.] 991
large segment of the co1111111nity has beneficial interest in it A
(that is the raison d'etre of the Act itself). The
authorities exercising the poWers under the Act 1111&t not only
be moat alert and vigilant in such matters but also show
awareness of the ways of the present day world aa also the
ugly realities of the, world of today. 'l'hey cannot afford to
take things at their face value or make a less than the II
closest-and-best-attention approach to guard against all
pitfalls. The approving authority 11118t be aware that in such
matters the trustees, or persons authorised to sell by private
negotiations, can, in a given caae, 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 C
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 give rioe to public suspicion unless
there are special reasons to justify doing so? and care 1111St
be taken to fix a reserve price after ascertaining the market
value for t.he sake of safeguarding the interest of the D
endowment. [991 G-11; 998 E-ll; 999 A]
[The Court directed the lands in question to be sold
in public auetion and indi~ted the manner.]
CIVIL APPELLATE Jll)lISDICTION : Civil Appeal No. 1147-48 E
of 1986.
From the Judgment and Order dated 24.12.1984 of the
Andhra Prade8h High Court in W.P. No. 5138/82 and 545 of 1982.
C.S. Vaidyanathan for the Appellants. F
P.P. Rao and R. Venkataramani for the Respondents.
The Judgment of the Court was delivered by
TllAUAll., J. More often than not detriment to what G
belongs to 'many', collectively, does not cause pangs to
'any', for no one is personally hurt directly. That is why
public officials and public minded citizens entrusted with the
care of 'public property' have to show exeq>lary vigilance.
What is true of 'public property' is equally true of property
belonging to religious or charitable institutions or H
992 SUPRl0:1F. COURT REPORTS [1986] I S.C.R.
A
endowments. The fact.s of the present. cas1~ involving the sale
of lands which have been sanctioned to be sold for about Rs.
20 lakhs by private negotiations, instead of by public
::iuction, which the appellants are prepared to pt1rchase for
about Rs. 80 lakhs, ii.lust.rate this point i.n a telling mannf•r.
B
Background ; The legality and validity of a Goverrunenl Order
according permission 'to "Bug~.3. ~th", Tirupathi, a tt;!l igious
endowment, in exercis.e of powers llnder proviso to clause (c)
of sub-section (1) of Sect\on 74 of Andhra Pradesh Charitable
and Hindu Religions and Endowments Act, 1966 ·(Act) to sell
cert::ii_n lands belone;ing t.11 the Math hy private negotiations to
c Respondents 5 to 24, ::i.t the pri.ce of Re;. 62,500 pP.r acre has
br~cn questioned by the Appellant'>. The impugned order, in so
fa: ~s material, rearls :-
''R.evr.!nUf~ (Endowment s-111) Department,
G.n. R~. No. 212 Dated: 12.2.1982.
Read the follflWing
I. FrrJm t.he C0mrniss i.0n,.!r, Endowments Department, Lr. No.
M3/M.A. 4/81 dated l~.4.1981.
2 •. From the C0mmissioner, Endowments Department, Lr-. No.
143/M.A. 4/81 dated 1. 12.81.
F
Order
In the circumstances reported by the Cormnissioner,
Cndowmenl Department. i.n the references read above, the
Government heceby accord permission under proviso to clause
(c) of the sub-section (1) of Section 74 of the Andhra Pradesh
Cha.!'itable and Hindu Religious and Endowments Act 1966 (Act 17
0f l 966) f0r the s.:3.le of the lands belonging to Sri Bugga
:1A.th, Tirurathi, Chandragiri Taluk, Chittoor dt., in favour of
t.he ~itting tenants as detailed by private ne~otiations :
H
CHENCHU RAMI REDOY v. STATE [THAKKAR, .J.] 993
A
S.No. Name Sy.No. Extenl Cost per
At:.. Cts. acre
·------
1. Sri K. Subrarnanya Reddy 268/lA 1.81 62' 500 B
(Rupees Sixty
x x x x x x x x two thousands
fl ve hundred
only)
20. Smt. K. Alamala!lllla 268/lF 2.00
c
Total 32.01
(BY OROER AND I~ TIIE NAME OF THE GOVERNOR OF ANDHRA PRADESH).
D
Shravan Kumar
Second Secretay;y to GQvernment."
The Appellants, who are willing to purchase the said lands, at
a price four time• the price offered by Respondents 5 to 24,
that ls to say at Rs. 2,50,000 per acre, as agalnst Rs. 62,500 E
. p~r acre offered by the latter, have chal le·nged the impugned
order dated 12th February, 1982 (G.O. Rt. No. 232) pagqed by
the Govet'tlment of Andhra Pradesh inter alia on the ground that
it manifests total non-application of mind to the essential
pre-condltions embodied in ·proviso to section 74 (1 )(c). The
pre-conditions are :- F
(1) That th.e Government must be s.1t lsf led th.at it ls ln
the interest of the institution or endowment !..o
p~rmil the sale of these lands otheNise than by
public a11ction.
(2) 'That reasons for reachin.g this sat is fact i.on r.111<::t.
be recorrled in the orde~.
The afores.1. f.<l two p-:e-con<l it. lons rtre clearly sµel led 1)ut
by the rel~vant pr()v-ision (proviso to Section 74(1 )(c) which
may be quoted in extenso :- H
994 SUPREME COURT REPORTS [1986] 1 s.c.R,
A
"(c) Every sale of any such immovable property
sanctioned by the Commissioner under clause (b)
shall be effected by public auction in the
prescribed manner subject to the confirmation by
the Commissioner within a period prescribed :
B Provided that the Government may, in the interest
of the institution or endowment and for reasons to )
be recorded therefore in writing, permit the sale
of such inmovable property, otherwise than by
public auction."
c 'lbe Problem : The question has arisen whether the High Court
was justified in upholding the impugned order in the face of
the fact that ex-facie there is no compliance with the
pre-cond!.tions engrafted in the relevant provision inasmch as
the order in question, far from recording the satisfaction
that it is in the interest of the institution to sell the
D lands otherwise than by public auction, (which is the normal
mode prescribed by the legislature) does not even reveal
awareness (I) as regards the necessity for being so satisfied
and (2) as regards the mandatory obligation imposed by the
statute to record the reasons for forming such an opinion in
the order itself.
E
Whether there is compliance : Now what is there to show
that the authority which passed the impugned order was even
aware of the essential pre-conditions envisioned by the
statute? Nothing. On the otherhand, it is clear that if the
concerned authority had even stolen a casual glance at the
F relevant statutory provisions it could not have failed to say,
what it was bound to say, if it was so satisfied, that the
departure from the prescribed mode of selling by public
auction was in the interest of the 'Math'. Nor could it have
failed to record its reasons in support of this conclusion,
fOr, the statute in so many words, casts an obligation on the
G concerned authority to record such reasons in the order
itself.
The inference is therefore irresistible that the
competent authority had failed to direct its mind to the
f '-..._
requirements of law before passing the impugned order. It was
H argued that the impugned order reveals that the competent
authority had 'read the two conm11nications (dated 16.4.1981
. CHENCHU RAMI REDDY v. STATE [THAKKAR, J,] 995
A
and 1.12.1981) emanating from the Commissioner of endowments
·'Department, and the reasons mentioned therein 1111St be deemed
to have been app,rcived by the competent, authority. We are not
impressed by the submission. The report do not advert to the
pre-con4itions enjoined by the statute. The Collllliseioner
cannot and did not tell the State Government 'What' it should B
do and 'how' it should do it i.n order to discharge its
statutory . function of forming the opinion as to whether
departure from the normal.mode of sale by public ·auction was
called for in the interest of the institution. Or 118 to what
guidelines .or tests the competent authority should apply for
forming its opinion. There is therefore no substance in this
apology offered on behalf of the State Government. This 111.1ch c
is more than sufficient to reverse the iligh Court and to hold
that the .impugned order deserves to be quashed (I) as it
suffers from the vice of non-application of mind to essential
matters and (2) as there . is no compliance with the relevant
statutory provision. But it is not sufficient to do so. Ende
of Justice demand that we advert to some.other facets of the D
case and issue appropriate directions to protect the interest
of the Math.
Other facets ..: The following facts have emerged :-
·. (I) A .scheme for matiaging the Math was framed in E
1929. Since 1943 there is no Mahant and an
Executive Officer of the Endowments Department is
managing the affairs of the Math.
(2) The lands in question belonging to the Math are
dry lands admeasuring 32-01 acres. F
( 3) The lands were given on lease to Original
Respondent No. 8 (A. Munaswamy : Now deceased :
represented by his Legal Representatives) in. 1964.
(4) The lands are in occupation of respondents 5 to G
7 and 9 to .24. Their Legal capacity. and legal
right, if any, ·to be in possession of the land, has
yet to be established.
(5) Respondent No, 8 who claims to be a sitting
tenant obtained a decree from the Court of District H
996 SUPREME COURT REPORTS (1986] 1 s.c.R.
A
Munsiff, Tirupati, in O.S. No. 361/76 restraining
the Manager from auctioning the lease hold rights
bef~re evicting him from the land.
(6) The income derived by the Math from these lands
is Rs. 1,225 per annum as at present.
B
(7) The proposal to sell the lands to respondents 5
to 24 at Rs. 60,000 per acre would have fetched Rs.
19,20,000 and yielded an annual income of
approximately Rs. 1,90,000 (at 10% p.a.) from the
sale proceeds.
c
(8) The Commissioner, endowment, has accorded
sanction to the proposed transaction of sale at Rs;
62,500 per sere on his forming the opinion that the
transaction is ( i) necessary or beneficial to the
institution (ii) consistent with the objects of the
D institution and (Hi) that consideration therefore
is reasonable and proper in the context of Section
79(1) of the Act.
That it would be beneficial to the institution or the
endowment to sell the land cannot. be gainsaid provided the
E price is a reasonable and fair price, since in place of an
annual income of Rs. 1,225 the institution would be earning an
annual income of Rs. 1,90,000 or more which can be put to use
for the benefit of the COlll!lllnity in a manner consistent with
the objects of the Math. More so, as for more than 40 years
there is no ''Mahant" and the institution is being managed by
F a Government official. Still more so, as respondent 8 has
dragged the institution to a Court of Law as a result of which
the "sword of Damocles" of the uncertainties of litigation
remains hanging and the purchaser would be purchasing not only
the land but a litigation. Being fully aware of this aspect
and the need to protect the institution, this Court had passed
G an Order in the following terms when the Special Leave
Petition came up for hearing on September 2, 1985 :-
"Issue notice.
Learned counsel for the petitioners, states that
H the petitioners are . willing to buy the land in
CllEN<;HU RAMI REDDY v. STA.TE [TIW<KAR, J.] 997
question at the rate of Rs. 2,50,000 per acre and
would deposit in this Court a sum of Rs. 10 lacs
within three months from today and another Rs. 10
lacs within three months thereafter as earn.est
money with the condition that the amount of Rs. 20
lacs so deposited would be forefeited if the B
petitioners failed to purchase the land at the rate
of Rs. 2,50,000 per acre. All further proceedings
including execution of sale· deed are stayed. This
case be listed for hearing in the first week of
March, 1986."
In compliance with this Order the appellants have deposited c
the sum of Rs. 20,00,000 (Rupees Twenty Lakhs) in due course
subject to the condition that the said amount of Rs. 20,00,000
will be liable to be f oref eited if they back out of the firm
offer to purchase the land at the rate of Rs. 2,50,000 per
acre which will fetch a total sale price of approximately Rs •
.80,00,000 (Rupees Eighty Lakhs) and an annual income of Rs, 8 D
Lakhs. The appellants have reaffirmed this firm offer at the
time of the hearing of this appeal. If the Commissioner,
Endowments, considered Rs. 10 Lakhs and odd as a fair and
reasonable sale price he cannot but cohsider Rs. 80 Lakhs
likewise for it will fetch a yield of about Rs. 8 lakhs as
against a yield of about 2 lakhs in respect of the transaction E
already approved by him. But then s0me one .else. may offer a
still higher price at a public auction (which is . the mode
prescribed by the Legislature).
We, therefore, direct that the lands in question may be
sold by public auction in the following manner :- F
(1) sale llllst be on the basis of "as-is-where-
is-whatever-is" subject to the rights, if any, of
any of the respondents and of the· other occupants,
if any, in regard to the claim for alleged tenancy,
sub-tenancy, possession or of any other nature. G
(2) wide publicity shouid be given to the date,
time and place of public auction to ensure that
maximm number of intending purchasers attend the
auction in order to offer their bids.
H
998 SUPREME COURT REPORTS [19861 I s.c.R.
A
(3) The terms and conditiona tlllSt inter alia
provide for deposit of atle89t 15% oftiie sale
price in cash within a week (or two weeks) which
will be liable to be forfeited if the tranaaction
is not coq>leted.
(4) special notice shall be given to the appellants
B
and the concerned respondents herein.
(5) the appellants' offer made in this Court for
purchase at the rate of Rs.2,50,000 per acr~ on the
condition specified in clause (!) herein will be
c treated as the minitlllm bid of the appellants and
the sum of Rs. 20,00,000 deposited in this Court
(which will be transmitted to the Commissioner,
Endowment in due course), shall be treated 89 the
deposit made by them in pursuance to clause (3)
herein.
D
(6) The other terus and conditiona may be such as
are usually incorporated in such public auctiona by
the Commissioner who shall specify them along with
the above mentioned terms in the public notice.
E
We cannot conclude without obs~rving that property of
such inatitutiona or endowments tlllst be jealously protected.
lt tlllst be protected, for, a large segment of the colll!lllnity
has beneficial interest in it (that is the raison d'etre of
the Act itself), The authorities exercising the powers under
the Act flllst not <>nly be most alert and. vigilant in such
F
matters but also show awareness of ehe ways of the present day
world 89 also the ugly realities of the world of today. They
cannot afford to take things at. their face value or make a
leas than the closest-and-best-attention approach to guard
againat all pitfalls. The approving authority tlllst be aware
that in such matters the trustees, or persons authorised to
G
sell by private negotiationa, 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
H
sale by private negotiations which will not be visible to the
CllENCHU RAMI REDDY v. STATE [THAKXAR, J,) 999
A
public-eye and may even give rise to public suspicion unless
there are special reasons to justify doing so? And care DISt
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:
B
Appeal is allowed, order of the High Court l.s set aside,
order in the aforementioned terns be and is passed.
M.L.A. Appeal allOlled.
Search Indian case law
Ask in plain English, not just keywords. 25,000 AI words free, no card.
Try "sale of religious endowment property"Sign in to search