Supreme Court Upholds Auction Sale in Land Dispute Case, Imposes Additional Cost on Buyer
In a significant judgment that brings closure to a legal battle spanning over two decades, the Supreme Court of India has delivered its verdict in a complex land dispute involving an auction sale of agricultural property. The case, which saw multiple rounds of litigation, allegations of fraud, and repeated attempts to overturn a court-approved sale, finally reached its conclusion with the apex court upholding the auction but imposing a hefty additional cost on the purchaser for his conduct.
The dispute revolves around a piece of agricultural land measuring 5.5 acres in Survey No. 67 of Agara Village, Bangalore. The land originally belonged to G.M. Krishna, who had stood as a guarantor for a loan taken by Hoysala Thermo Farmers Pvt. Ltd. from the Karnataka State Financial Corporation (KSFC). When the company defaulted on the loan, KSFC initiated recovery proceedings and obtained a decree from the court. To recover the dues, KSFC sought to auction the guarantor’s property.
The auction was conducted by the court in 2003, and R. Raghu emerged as the highest bidder, offering Rs. 18,50,000 for the land. The sale was confirmed in 2005, and a sale certificate was issued in favor of Raghu, who claimed to be purchasing the land as a trustee for Ved Vignam Maha Vidya Peeth, a trust. This detail would later become a major point of contention.
G.M. Krishna, the original owner, challenged the sale, arguing that it was illegal because a trust was prohibited from holding agricultural land under the Karnataka Land Reforms Act, 1961. He filed an application to set aside the sale, but it was dismissed by the executing court and later by the High Court and the Supreme Court on the ground of delay. The courts held that the application was filed more than two years after the sale, well beyond the 60-day limitation period.
Despite losing the first round of litigation, Krishna did not give up. He commissioned a survey which claimed that the boundaries mentioned in the sale certificate included not only the auctioned land (Sy. No. 67) but also adjacent survey numbers that he owned. He then executed a gift deed transferring these adjacent properties to his wife. This led to a fresh wave of litigation, with Raghu challenging the survey notices and the gift deed. The High Court repeatedly quashed the survey proceedings, criticizing Krishna for trying to re-agitate the matter through backdoor methods.
In a strongly worded judgment, the Division Bench of the High Court observed: “The appellant No.2 in the garb of gift-deed cannot be permitted to set at naught the rights acquired by the Trustee in an auction, validity of which has been upheld by the Hon’ble Supreme Court.” The court also deprecated the conduct of the revenue authorities, calling it a “colorable exercise of statutory power.”
Undeterred, Krishna initiated a fifth round of litigation by filing a fresh application under Section 47 of the Code of Civil Procedure, again seeking to declare the auction sale null and void. This time, the trial court ruled in his favor, setting aside the sale on the ground of fraud, stating that Raghu had misrepresented himself by purchasing the land for a trust, which was legally barred.
Raghu challenged this order in the High Court. In a partially favorable ruling, the High Court upheld the auction sale but imposed two conditions: Raghu had to pay an additional Rs. 25 lakhs per acre to Krishna as extra sale consideration, and the district court was directed to conduct a fresh survey to fix the boundaries of the property. Both parties were dissatisfied with this outcome and appealed to the Supreme Court.
Raghu challenged the directions for additional payment and a fresh survey, while Krishna and his wife appealed against the confirmation of the auction sale. Krishna also filed a contempt petition, alleging that Raghu was violating court orders by proceeding with construction.
The Supreme Court, after hearing lengthy arguments from both sides, delivered a balanced judgment. The bench, comprising Justices Vikram Nath and Prasanna B. Varale, appreciated the High Court’s careful consideration of the long-drawn litigation and the conduct of the parties. The Supreme Court agreed with the High Court’s findings and dismissed both appeals.
On the issue of the fresh survey, the Supreme Court noted: “The fact remains that the appellant, auction purchaser had purchased Sy.No.67 comprising of three parts with total area of 5 acres and 20 guntas (5-1/2 acres). Once the area had been specified of the three parts being (a) 1 acre 24 guntas (b) 36 guntas and (c) 3 acres, totalling 5 acres and 20 guntas (5-1/2 acres), the appellant would not be entitled to hold possession of any more area than what was purchased in the auction and as mentioned in the sale certificate.”
The court further observed: “In the garb of boundaries being mentioned, the appellant auction purchaser cannot claim any more area than what was put up for auction and thereafter purchased by him. Therefore, we do not find any justification to interfere with the direction of the High Court to get the survey carried out for specific measurements of the purchased property.”
Regarding the additional payment of Rs. 25 lakhs per acre, the Supreme Court upheld the High Court’s direction, noting Raghu’s “dual role” which cast doubt on the entire proceedings. The court stated: “Insofar as the direction for payment of Rs.25 lakhs per acre as additional sale consideration to the respondent is concerned, we do not wish to interfere with the same, considering the conduct of the appellant, whose dual role casts doubt on the entire proceedings.”
However, the court refused to set aside the auction sale altogether, noting that Krishna had failed to challenge the sale in a timely manner and that the legal provisions prohibiting trusts from holding agricultural land had been retrospectively repealed in 2020. The court emphasized: “Further, the application filed under Order 21 Rule 90 read with Rule 47 CPC, wherein all such objections had been raised as far back as 2002, was rejected up to this Court. Hence, commencing a second round of objections on the pretext that the appellant had been shifting his stand as to who is the purchaser which is an issue already raised in the earlier objections, could not have been permitted and is clearly barred in law.”
The Supreme Court’s judgment brings finality to this protracted legal battle, highlighting the importance of timely legal challenges and the courts’ authority to impose costs for questionable conduct. While confirming the auction purchaser’s rights over the property, the court ensured that the original owner received additional compensation, and that the exact boundaries of the property would be properly determined through a fresh survey. The contempt proceedings were also closed, bringing an end to all pending matters in this long-standing dispute.
Petitioner Name: Sri R Raghu.Respondent Name: Sri G M Krishna & Anr..Judgment By: Justice Vikram Nath, Justice Prasanna B. Varale.Place Of Incident: Agara Village, Kengeri Hobli, Bengaluru South Taluk, Karnataka.Judgment Date: 25-08-2025.Result: dismissed.
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