Misc. Appeal No. 150 of 2008. Case: Uttam Foma Techno Cast Pvt. Ltd. Vs Industrial Development Bank of India and Ors.. Mumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Case NumberMisc. Appeal No. 150 of 2008
Party NameUttam Foma Techno Cast Pvt. Ltd. Vs Industrial Development Bank of India and Ors.
CounselFor Appellant: Mr. Naushad Engineer, Advocate and For Respondents: Mr. V.V. Chandavale, Advocate, Mr. N.M. Pawar, Advocate and Mr. Deepak Thakkar, Advocate
JudgesS. S. Parkar, J. (Chairperson)
IssueCode of Civil Procedure, 1908 (CPC) - Order XXI Rules 90, 91
Judgement DateSeptember 19, 2008
CourtMumbai DRAT DRAT (Mumbai Debt Recovery Appellate Tribunals)

Judgment:

S. S. Parkar, J. (Chairperson)

  1. By this appeal the order dated 16th April, 2008 passed by the Presiding Officer, D.R.T. Pune ordering fresh auction of the property is under challenge. The point which arises in this appeal is whether ordering re-auction of the property was proper in the facts and circumstances of the case at the instance of the party which had not given bid at the time of the auction held on 24th January, 2008.

  2. The facts leading to this appeal are as follows.: The decree had been obtained by the respondent No. 1-bank against the defendants on 1st January, 2003 and the recovery certificate was issued in favour of the said bank on 13th January, 2004 by the Presiding Officer in the D.R.T. Pune. In the recovery proceedings the property of the judgment-debtor consisting of land, building and machinery was put for auction sale by issuing public notice initially 28th September, 2006 where the reserve price was fixed at Rs. 8,46,55,000/-. Auction was scheduled to take place on 1st November, 2006, but since no bids were received the respondent bank applied for splitting the property in two lots, one lot of land and building and another lot of machinery and other assets. On 1st December, 2006 the D.R.T. directed issuance of fresh public notice and sale proclamation. Accordingly public notice was given on 4th December, 2006 fixing auction on 29th December, 2006 but no bids had been received though 5 parties had taken inspection of the suit property.

  3. On 18th April, 2007 the respondent No. 3, at whose instance fresh bid was ordered by the Presiding Officer, gave bid of Rs. 5,60,00,000/- for both lots to the Recovery Officer. The property could not be sold though the public auction after 1st November, 2006 was postponed on 5 occasions. Hence the respondent-bank applied on 24th April, 2007 to the Recovery Officer for revaluation of the property as the property could not fetch the reserve price of Rs. 8,46,55,000/- fixed on previous occasions. On the same day the respondent No. 3-company also wrote to the respondent-bank stating that reserve price which was fixed was too high. Accordingly in May, 2007 the reserve price of the property was reduced to Rs. 8.11 crores. Thereafter, also no bids were received for the aforesaid reduced reserve price in the auction held on 25th June, 2007.

  4. On 9th July, 2007 the respondent No. 3-company again filed an application before the Recovery Officer for reducing reserve price to Rs. 5 crores which application was rejected. Thereafter, the auction was held but no bids were received for the property.

  5. Finally when auction was held on 24th January, 2008 the appellant-company was the only bidder who gave bid for a sum of Rs. 8.11 crores and therefore, its bid was accepted. The appellant-company deposited Rs. 80/- lacs towards the earnest money on that day and it was allowed to deposit balance of 25% of the bid amount i.e. a sum of Rs. 1.23 crores which along with E.M.D. of Rs. 80/- lacs constituted 25% of the bid amount. The balance of 75% being Rs. 6.08 crores was deposited by the appellant-company on 7th February, 2008

  6. An application was filed by the respondent No. 3-company before the Recovery Officer on 22nd February, 2008 stating therein that the said respondent company was interested in purchasing suit property and as the said party could not give bid on 24th January, 2008 the auction sale may be kept open without confirming the same in favour of the appellant-company. The Recovery Officer called upon the respondent No. 3-company to deposit Rs. 80 lacs before its application could be heard. The said amount was deposited by the said party on 25th February, 2008. The appellant company opposed the said application by filing reply on 27th February, 2008. After hearing the parties the Recovery Officer rejected the said application by the order dated 19th March, 2008 on ground that the respondent No. 3 company had not applied for setting aside the auction in favour of the appellant- company and the application made by the said party did not fall under the provisions of Rules 60 and 61 of the Second Schedule to the Income-tax Act which were the only provisions under which the application could have been made to challenge the auction sale by complying with certain conditions laid down in the said rules. Accordingly the appellant company was allowed to pay the poundage fees of Rs. 8,11,101/- on that day.

  7. Aggrieved by the rejection of the application by the Recovery Officer the respondent No. 3 company filed appeal before the Presiding Officer on 25th March, 2008 on which date the Presiding Officer passed ex-parte order staying the confirmation of sale in favour of the appellant-company.

  8. On 9th April, 2008 the Presiding Officer granted time up to 16th April, 2008 to the respondent No. 3 to deposit a sum of Rs. 8.20 crores which was offered by the respondent No. 3 on 22nd February, 2008 by an application made to the Recovery Officer. The said amount was to be deposited in addition to the sum of Rs. 80 lacs which was already deposited by the respondent No. 3 on 25th...

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