Appeal Nos. 22 and 23 of 2013. Case: Chandra Kumar Galani Vs Smriti Talkies, Chhindwara (MP) and Ors.. Allahabad DRAT DRAT (Allahabad Debt Recovery Appellate Tribunals)
| Case Number | Appeal Nos. 22 and 23 of 2013 |
| Counsel | For Appellant: Mr. Wajid Hyder, Advocate. and For Respondents: Mr. Rajesh Maindiretta, Advocate for the Borrower, Mr. M.K. Srivastava, Advocate for the Bank |
| Judges | R.K. Gupta, J. (Chairperson) |
| Issue | Code of Civil Procedure, 1908 (CPC) - Order XXI Rule 90(2); Limitation Act, 1963 (36 Of 1963) - Section 3; Recovery Of Debts Due To Banks And Financial Institutions Act, 1993 - Sections 19, 29, 30 |
| Citation | IV (2013) BC 51 |
| Judgement Date | May 20, 2013 |
| Court | Allahabad DRAT DRAT (Allahabad Debt Recovery Appellate Tribunals) |
Judgment:
R.K. Gupta, J. (Chairperson)
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These are two appeals which are decided by a common order because the question in the present case is a common. Appeal No. R-23/13 has been filed by the appellant challenging the order passed by the Tribunal on 30th November, 2012 in Appeal No. 03/10, by which the Tribunal has allowed the appeal so preferred by the Bank in exercise of the powers conferred under Section 30 of the RDDBFI Act, 1993. Appeal No. R-22/13 has been filed by the appellant against the order passed by the Tribunal on 30th November, 2012 in appeal No. 02/10, by which the Tribunal has allowed the appeal of the borrower.
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Before the Tribunal two appeals were preferred one by the borrower and another by the respondent-Bank challenging the order passed by the Recovery Officer on 7th January, 2010. Appeal preferred by the borrower has been allowed by the Tribunal and as a consequence of the order passed in appeal preferred by the borrower, the Tribunal has also allowed the appeal preferred by the Bank which is reflected from the orders impugned passed by the Tribunal.
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Before the Tribunal the borrower as well as the Bank preferred the appeals under Section 30 of the RDDBFI Act, 1993 challenging the order passed by the Recovery Officer on 7th January, 2010. By this order the Recovery Officer rejected the objections of the Bank as well as the borrower and other persons against the auction sale and the Recovery Officer has also confirmed the auction.
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The relevant facts for the adjudication of the present case are that against the borrower an Original Application under Section 19 of the RDDBFI Act, 1993 was filed by the Bank which ultimately was allowed by the Tribunal. After issuance of the Recovery Certificate, the Recovery Officer proceeded towards the recovery and the Bank submitted the relevant information with regard to the property alongwith the reserve price. Accordingly the property was put to auction and the auction was scheduled for 2nd September, 2009. In the auction three bidders participated and bid of the appellant for Rs. 20.00 lacs was accepted being a highest bid. In addition to the appellant, two other bidders i.e. National Constructions and Sanjay Agrawal participated in the auction.
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It is stated that after the auction was conducted, an objection was raised by the respondent No. 1 before the Recovery Officer that two other bidders namely Hari Kishan Das Jaikishan Rathi and Mr. Bhagwan Prasad Khandelwal could not prepare the demand drafts, therefore, they were not permitted to participate in the auction.
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An objection was also filed by the respondent-Bank before the Recovery Officer that after the auction the respondent No. 1 borrower submitted a compromise proposal on 24th September, 2009 for an amount of Rs. 25.00 lacs along with a cheque amounting to Rs. 5.00 lacs. The said proposal was accepted by the Bank on 2nd October, 2009. On this ground the respondent-Bank sought setting aside the auction dated 2nd September, 2009.
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It is submitted that the appellant submitted reply to the said objection stating that along with the proposal the judgment debtor has not deposited the amount as per requirement of the Second Schedule of Rule 61 of the Income-tax Act, 1961 to set aside the auction sale, therefore, the objection was not maintainable.
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It is stated that the publication of me auction notice dated 23rd July, 2009 in respect of the auction sale of the property in question was issued by the Recovery Officer-II. The reserve price of the said property was fixed at Rs. 18.00 lacs and the earnest money, which was deposited, was for Rs. 1.80 lacs. The auction was to be held on 2nd September, 2009 at 12.00 p.m. in the open premises of the respondent-Bank.
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It is contended on behalf of the respondent-borrower that no time for closure was mentioned in the auction notice, which was published. On the date of auction itself one Harikishandas Jaikishan Rathi submitted an objection that he applied for preparation of Demand Draft of Rs. 1.80 lacs towards the earnest money for participating in the auction but due to non-functioning of the draft printer, the draft could not be prepared timely, with the result Harikishandas Jaikishan Rathi was not permitted to participate in the auction. It is further stated on behalf of the respondent-borrower that the said objection was filed at 2.20 p.m. on 2nd September, 2009.
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Similarly, another objection was submitted by one Shri Bhagwan Prasad Khandelwal to the effect that due to some technical reason the draft could not be prepared from the Bank of Maharashtra, Parasia Branch and he called on the premises of the Bank at 12.30 p.m. on 2nd September, 2009. It is farther submitted that before that the entire auction was concluded. One bidder offered an amount of Rs. 24.00 lacs for the property in question and also enclosed the Demand Draft amounting to Rs. 6.80 lacs along with the objection, but he did not say that he submitted the Form alongwith the earnest money.
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It is further stated on behalf of the respondent-borrower that the auction was conducted by the Advocate Commissioner appointed by the Recovery Officer. The bid was finalized in favour of the appellant for a sum of Rs. 20.00 lacs. It is further submitted that no other bidder was permitted to participate in the auction in spite of the fact that there was no closure time mentioned in the publication of the auction notice.
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It is further submitted that the respondent-Bank also wrote a letter on 29th September, 2009 to the Recovery Officer that Shri Bhagwan Prasad Khandelwal offered the bid of Rs. 24.00 lacs and also deposited Rs. 6.80 lacs but the said bid was not accepted by the Advocate Commissioner appointed by the Recovery Officer despite the fact that the said offer was Rs. 4.00 lacs over and above the bid amount or Rs. 20.00 lacs, as the Bank had to realize Rs. 35.00 lacs from the borrower. It was also the grievance of the borrower that the reserve price fixed was on a very lower side, whereas the market value of the land together with building is approximately Rs. 1,08,70,000/-. It is further stated that nobody was permitted to take part in the auction proceedings except the appellant who has been declared as successful bidder.
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It is further submitted that during the pendency of the proceedings an offer was submitted, by the respondent-borrower on 24th September, 2009 with the respondent-Bank for a sum of Rs. 25.00 lacs towards full and final settlement of the claim. The said proposal was accepted by the Bank vide its letter dated 26th October, 2009 subject to the decision of the Recovery Officer. The Recovery Officer by an order dated 7th January, 2010 considered the objection and ultimately rejected the same and directed the confirmation of the sale of the property in question, against which the Bank as well as the borrower both preferred the appeals under Section 30 of the RDDBFI Act, 1993. The Tribunal has allowed the appeals preferred by the Bank and the borrower. The relevant paragraphs of both the judgments passed by the Tribunal in both the appeals are as under:
Appeal No. 02/2010
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It is revealed from the pleadings that the sale of the property was for Rs. 20.00 lacs as per auction held on 2nd September, 2009 in which the property was bid by respondent No. 1. Annexures A-1 and 2 reveals that the other bidders were not allowed to participate in the bid and therefore the auction conducted is found to be illegal.
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So also it is revealed that after the illegal auction, the appellant had lodged A-7 proposal for settlement on 24th September, 2009 for settlement of dues at Rs. 25.00 lacs along with cheque of Rs. 5.00 lacs which was duly accepted by the Bank as per A-8 dated 26th November, 2009 subject to the decision of respondent No. 3. In spite of such settlement, the R.O. is seen to have confirmed the illegal sale in favour of respondent No. 1 vide A-9 order dated 7th January, 2010. When the dues are admittedly settled between the creditor and debtors for an amount higher than the auction price, the RO should not have confirmed the sale in favour of the auction purchaser. When there is illegality in the conduct of auction, the provision for deposit as required under Rule 61 is not applicable.
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The respondent-Bank has accepted the settlement at Rs. 25.00 lacs out of which Rs. 5.00 lacs was already deposited by the appellant who has submitted that he is willing to compensate the auction purchaser by paying the interest on the purchase price of Rs. 20.00 lacs remitted by him.
Appeal No. 03/2010
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Vide judgment dated 30th November, 2012, in appeal No. 2/10, this Tribunal had set aside the auction held in O.A. Ex. 92/04 by setting aside the order of R.O. dated 7th January, 2010 since the auction...
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