Case: Kumar Housing and Land Development Ltd. Vs Indian Bank and Ors.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Party NameKumar Housing and Land Development Ltd. Vs Indian Bank and Ors.
JudgesS. S. Parkar, J. (Chairperson)
IssueBanking
Citation2008 (IV) BC 119
Judgement DateApril 28, 2008
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Judgment:

S. S. Parkar, J. (Chairperson)

  1. By this appeal the appellant has challenged setting side the sale of the property held at public auction in favour of the appellant for non-deposit of the sale price. The appeal arises in the following circumstances:

    The auction of the immovable property of the respondent No. 2-borrower firm in execution proceeding was held on 23rd May, 2007 when the highest bid of the appellant in the sum of Rs. 34 crores was accepted. Initially, the appellant was given time to deposit 25% of the bid amount till 25th May, 2007. On that day the appellant gave a letter to the Recovery Officer seeking time up to 31st May, 2007 to make payment of 25% of the bid amount. Accordingly, the appellant was allowed to deposit the said amount by 31st May, 2007. On 31st May, 2007 instead of depositing the amount the appellant gave a letter to the Recovery Officer and sought extension of time by two weeks. In that letter the appellant had stated that before parting with money following points should be cleared; (1) the exclusive title/ownership of the property of the respondent No. 2 should be confirmed by the Recovery Officer, (2) right of the Indian Bank, i.e. respondent No. 1 to bring the said property for sale by auction or otherwise should be confirmed, (3) any third-party rights, title or interest should not be created by the borrower firm in respect of the property, and (4) if there are other encumbrances on the property those should be brought to their notice. Then, it is stated in para 8 of the said letter that until the above issues are cleared the time to make the deposit of 25% of the bid should be extended by reasonable time or at least by two weeks without forfeiture Clause being resorted to. The last condition put in the said letter was that in case the said property did not turn out to be free from any encumbrance or was not found to be in complete ownership of the borrower firm the appellant shall be entitled to claim right for refund of the E.M.D. amount.

  2. After addressing the aforesaid letter dated 31st May, 2007 the appellant forwarded pay orders in the sum of Rs. 7.40 crores to the Recovery Officer along with a letter dated 6th June, 2007 of their Advocate being 25% payment of the bid amount minus E.M.D. amount of Rs. 1.10 crores which was already deposited by the appellant. That amount was declined to be accepted by the Recovery Officer and, therefore, the pay orders were returned to the appellant on the following day, i.e. 7th June, 2007. It may be mentioned here that the record shows that on 6th June, 2007 the Recovery Officer had allowed the appellant to deposit the sum of Rs. 7.40 crores by directing his office to deposit the said pay orders in the Recovery Officer's account on which reliance is placed on behalf of the appellant. Curiously enough, though those pay orders were returned to the appellant on the following day under the direction issued by the same Recovery Officer on 7th June, 2007, he had altered his endorsement dated 6th June, 2007 on the letter of the appellant's Advocate by adding word "not" before the word "allowed" and cancelled the direction/ endorsement "Deposit in the Recovery Officer's account" by adding his initials but without altering the date 6th June. The said alteration was made on the original letter dated 6th June, 2007.

  3. However, the appellant has produced Xerox copy of the certified copy issued by the office with the endorsement, "Allowed. Deposit in the Recovery Officer's account". On verification of the record, I found that the Xerox copy of that letter along with the original endorsement accepting the pay orders is there in the original record of the said recovery proceeding along with the acknowledgement or receipt for having received the copy thereof by the appellant.

  4. The fact that the order was passed allowing payment by pay orders cannot be disputed in view of the fact that the appellant's Advocate had obtained an official certified copy of that original order; a copy of which is also available in the original record. In such circumstances, the Recovery Officer could have passed a separate order instead of altering the earlier endorsement dated 6th June, 2007 particularly so when the decision not to accept and return the pay orders, seems to have been taken by the Recovery Officer on the following day and the certified copy of the endorsement dated 6th June, 2007 allowing the deposit of pay orders was already issued to the appellant's Advocate. By making alteration in the original endorsement the Recovery Officer was trying to create impression that alteration was made then and there which cannot be true because in that case the certified copy of the original endorsement allowing deposit could not have been issued to the appellant. On the basis of the certified copy of the original endorsement allowing the deposit, on behalf of the appellant it is contended that the subsequent return of the pay orders was improper.

  5. On that very day, i.e. 6th June, 2007 when the pay orders were deposited towards 25% of the bid amount the appellant had filed miscellaneous application dated 6th June, 2007 seeking direction for immediately taking physical possession of the auctioned property by the Recovery Inspector and directing the Bank to place on record the title deeds, lease deeds and other documents pertaining to the auctioned property. It was also prayed that the original defendants should place on record the title deeds and...

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