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Judgment
S. Ravi Kumar, J
These two Appeals are disposed of by common order as they arise out of the orders passed in Appeal No. 4/2013 on the file of Debts Recovery Tribunal No. II, Ahmedabad (D.R.T.). Brief facts leading to these Appeals are as follows.
Parties are hereinafter referred to as Certificate Creditor (Bank of Baroda), Certificate Debtor (M/s. Vision Organics Ltd.) and Auction Purchaser (Mr. Fatehsinh M. Chauhan).
Certificate Creditor filed two Original Applications (O.As.) against Certificate Debtor and D.R.T. allowed those two O.As. and issued Recovery Certificates (R.Cs.). In pursuance of the R.Cs. the Recovery Officer (R.O.) issued Sale Proclamation for sale of Naroli property and Daman property for the first time on 09.12.2011, for the sale to be held on 27.12.2011. As some objections were raised that sale could not take place and thereafter E-auction notice was issued fixing the action date as 09.07.2013, in which the Auction Purchaser became successful bidder for Rs. 260.10 Crores. Auction Purchaser deposited the initial deposit of 25% of the bid amount and for deposit of 75% bid amount, he moved an application on 23.07.2013 to extend the time and the R.O. by order dated 24.07.2013 extended time for payment of 75% of the bid amount upto 08.08.2013. Auction Purchaser deposited 75% of the bid amount within extended time. On 08.08.2013 Certificate Debtor filed an application under Rule 87 of the Second Schedule to Income Tax Act (the said Rule/s) to review the order dated 24.07.2013 to the extent of Naroli property and to declare the auction sale held on 09.07.2013 as nullity. Action Purchaser also filed an application requesting the R.O. to confirm the sale. On 04.09.2013 R.O. rejected Review Application dated 08.08.2013 of Certificate Debtor and confirmed the auction sale dated 09.07.2013 and ordered for issue of Sale Certificate. R.O. also directed the Ex-Officio Court Receiver to hand over possession of the said secured property to Auction Purchaser. On 10.09.2013 Sale Certificate was issued to Auction Purchaser recording that possession was handed-over prior thereto. On 11.09.2013 the sale proceeds were released in favour of Certificate Creditor and on 19.09.2013 Certificate Creditor filed Affidavit before the R.O. showing appropriation of the money. Certificate Debtor filed Appeal No. 4/2013 on 19.09.2013 before the Presiding Officer, D.R.T. No. II, Ahmedabad, questioning order dated 04.09.2013 of the R.O. In the said Appeal Certificate Creditor raised a preliminary objection as to maintainability of the Appeal without depositing any money and Ld. P.O. rejected that preliminary objection and held that Appeal is maintainable without making any pre-deposit by order dated 27.06.2016. Thereafter Ld. P.O. decided the Appeal and accepted the contention of the Certificate Debtor and allowed the Appeal by order dated 01.11.2017 through which auction held on 09.07.2013 which was confirmed on 04.09.2013 is quashed and set aside with a direction to R.O. to re-auction the property. Ld. P.O. also directed Certificate Creditor to refund money deposited by Auction Purchaser. Aggrieved by order dated 27.06.2016 Certificate Creditor preferred Appeal No. 217/2016 and aggrieved by order dated 01.11.2017 Auction Purchaser preferred Misc. Appeal No. 5/2018, that is how these two Appeals are before me for consideration.
Heard both sides.
Auction Purchaser submitted when the Auction Purchaser filed petition seeking extension for deposit of remaining 75% of the bid amount, Certificate Debtor was present and no objection was raised for extending such time, thereby the Certificate Debtor has waived his right. He submitted that R.O. published General and Technical Terms & Conditions of E-auction Sale for the proposed E-auction dated 09.07.2013 and one of the conditions incorporated is that the purchaser shall deposit the balance purchase price within 15 days from the date of auction sale or within such a period as may be extended for the reasons to be recorded by R.O. and the Auction Purchaser invoking that condition filed application dated 23.07.2013 and the R.O. for the reasons recorded in the order dated 24.07.2013 extended the time for payment of 75% of the bid amount upto 08.08.2013. He further submitted Certificate Debtor has not challenged General and Technical Terms & Conditions of E-auction Sale. It is further submitted that once the sale is knocked down, it can only be set aside either under Rules 60 or 61 of the said Rule/s and the Certificate Debtor has not availed these two Rules, but has availed Rule 87 of the said Rule/s. He submitted that in the very same decision of the Hon'ble Supreme Court relied on by Certificate Debtor which was considered by Tribunal below, it is clearly held that Rules 86 and 87 of the said Rule/s are not applicable to RDDB&FI Act and in view of that, application filed by Certificate Debtor is not maintainable and the Ld. R.O. has rightly rejected the said application. He submitted Tribunal below i.e. Ld. P.O., D.R.T. No. II, Ahmedabad, without examining the same has allowed the Appeal which is contrary to the ruling of the Hon'ble Supreme Court and on that ground itself the impugned order is liable to be set aside. It is further submitted that in the decision of Hon'ble Supreme Court relied on by Certificate Debtor, the issue was in respect of application of the phrase "as far as possible" used in Section 29 of the RDDB&FI Act and Hon'ble Supreme Court held that Rules 57 and 58 of the said Rule/s are mandatory in nature and the issue before the Hon'ble Supreme Court was not in respect of extension of time for payment of bid amount. He submitted that as the Review Application is not maintainable, the Tribunal below ought not to have interfered with orders of the R.O. and, therefore, impugned order dated 01.11.2017 of P.O., D.R.T. No. II, Ahmedabad in Appeal No. 4/2013 is liable to be set aside by confirming the order of R.O. dated 04.09.2013.
Advocate for Certificate Creditor supported arguments of Auction Purchaser and submitted that prayers in the Review Application, particularly prayer B is not permissible because such a relief has to be availed only by filing application u/s. 60 and 61 of Second Schedule to Income Tax Act. She further submitted as per Rule 63 it is mandatory for the R.O. to make an order confirming the sale where no application is made for setting aside the sale under Rules 60 and 61 of Second Schedule to Income Tax Act, in this case as Certified Debtor has not filed any application u/s. 60 and 61 of Second Schedule to Income Tax Act, R.O. has rightly confirmed the sale. It is further submitted that remedy of the Certificate Debtor is to prefer an Appeal against order dated 24.07.2013 passed by R.O., though no such Appeal is filed the Ld. P.O. has dealt with the correctness of order dated 24.07.2013 and as such the order dated 01.11.2017 is not sustainable. It is further submitted that as the main Appeal is disposed of by Ld. P.O., D.R.T. No. II, Ahmedabad, the Appeal preferred challenging the preliminary objection has virtually become infructuous.
Certificate Debtor in person submitted that order dated 04.09.2013 is challenged only to the extent of clause 3 i.e. confirmation of sale and issue of Sale Certificate. He submitted there is no need to file application under Rules 60 and 61 of the said Rule/s as the sale itself is nonest in the eye of law. It is submitted that as the R.O. failed to implement the said Rule/s, the Tribunal below rightly set aside the order dated 04.09.2013 of the R.O. He submitted that General and Technical Terms & Conditions of E-auction Sale are contrary to the provisions, therefore, they have to be treated as void and the R.O. has no power to extend statutory limit of 15 days. He submitted when the balance money is not deposited within statutory period, R.O. has no other power except re-sell the property and as the R.O. has not followed that Tribunal below gave such a direction. It is submitted that the order dated 01.11.2017 in Appeal No. 4/2013 of D.R.T. No. II, Ahmedabad, is a well reasoned order and it is in consonance with the judgment of Hon'ble Supreme Court in C.N. Paramsivam & Anr. V/s. Sunrise Plaza Tr. Partner & Ors. [reported in AIR 2013 SC 2941].
Now coming to the Appeal of the Certified Creditor i.e. Bank of Baroda, as rightly pointed, as the main Appeal is disposed of, Appeal of the Bank which is preferred challenging rejection of preliminary objection has virtually become infructuous. However in respect of legal point namely whether any deposit is required for an Appeal to be preferred u/s. 30 of the RDDB&FI Act, as rightly pointed by Certificate Debtor, a plain reading of Section 30 the RDDB&FI Act would disclose that a right is given to the aggrieved party against the orders of the R.O. unlike in Section 21 of RDDB&FI Act, there is no condition of deposit for entertaining an Appeal filed u/s. 30 of the RDDB&FI Act. Therefore, Ld. P.O. was right in rejecting the objection of Certificate Creditor.
As already referred to above, Appeal No. 4/2013 is filed challenging order dated 04.09.2013 of the Ld. R.O. in R.P. Nos. 90/2010 and 91/2010. It is not in dispute that Certificate Debtor filed application invoking Rule 87 of the Second Schedule to Income Tax to review order dated 24.07.2013 of the Ld. R.O. and that Review Application is rejected through order dated 04.09.2013. So basis for this Appeal and the Appeal filed before the Tribunal below is the Review Application of Certificate Debtor. As per Rule 87 of the Second Schedule to Income Tax, review power is given to the Tax Recovery Officer only on the limited ground of any mistake apparent from the record. Now, it may be relevant to examine the application of the Certificate Debtor to know what mistake he pointed out for availing since remedy of review. It is stated in the application as the Auction Purchaser did not deposit 75% of the balance amount on or before 24.07.2013, the sale automatically stood cancelled and the office of R.O. is bound to re-sell the property. It is stated that without applying the law and following condition no. 14 of the General and Technical Terms & Conditions of E-auction Sale and without knowledge of the Certificate Debtor, application of Auction Purchaser which was moved on 19.07.2013 was kept for orders to 24.07.2013. It is also stated that copy of the application dated 19.07.2013 was not served on the Certificate Debtor and the R.O. passed order without hearing Certificate Debtor, that is the main aspect focused as a mistake apparent on the face of record. As seen from the record Auction Purchaser moved application seeking extension of time on 23.07.2013 but not on 19.07.2013 as contended by Certificate Debtor. From endorsement appearing on the said application, it appears copy of the application moved by Auction Purchaser is not served and to that extent endorsement is made on the very same application on 23.07.2013. That shows the person endorsing on the application has notice of the application, but only objection is that copy of the application is not served. Though Certificate Debtor contended that Auction Purchaser moved this application on 19.07.2013 and the R.O. posted the matter to 24.07.2013 for orders, he has not produced any material in support of said contention. On the contrary record would show that application is filed on 23.07.2013 and it was taken on 24.07.2013 and on the same day orders are passed. As seen from the order, Certificate Debtor in person was also present when the order dated 24.07.2013 is passed. It is also clear from the record that copy of order dated 24.07.2013 is provided to all the parties concerned. Nothing is whispered in the Review Application about receipt of order dated 24.07.2013 by Certificate Debtor as indicated in the order and about his presence at the time of passing of the order. During course of argument, Certificate Debtor in person mainly referred to judgment of Hon'ble Supreme Court which was relied on by Tribunal below that was reflected in the impugned order dated 01.11.2017. Referring to submissions of Certificate Debtor, Advocate for Auction Purchaser submitted that judgment of Supreme Court is not on the point of powers of R.O. to extend time for deposit of bid amount or on the powers of R.O. to incorporate a condition contrary to the rules as contended by Certificate Debtor. It is submitted on the other hand, it is laid down in the very same judgment that Rule 87 of the said Rule/s has no application to RDDB&FI Act thereby the application filed for review is not maintainable.
I have perused the above referred judgment of the Hon'ble Supreme Court, as rightly pointed by Advocate for Auction Purchaser the issue before Hon'ble Supreme Court was not on the power of R.O. to extend time for depositing 75% of the amount. In that case while dealing with the meaning of word as far as possible, Hon'ble Supreme Court referring to various judgments recorded its observation and findings in para 21 of the judgment and held that "as Rules 57 and 58 of the said Rule/s deal with process of recovery of amount due, there cannot be any difficulty in enforcing those Rules for recoveries under RDDB&FI Act." While clarifying it as an example, the Hon'ble Supreme Court made it clear that Rules 86 and 87 of the said Rule/s do not have any application to the provisions of RDDB&FI Act. This aspect was recorded by the R.O. in his order dated 04.07.2013. But the ld. P.O. without looking at these aspects simply carried away with submissions of the Certificate Debtor and allowed the Appeal by setting aside the sale dated 09.07.2013 even without there being any application to set aside the sale under Rule 60 and 61 of the Second Schedule to Income Tax Act.
One of the arguments of Certificate Debtor is there is no need to file any application under Rules 60 and 61 of the said Rule/s since the sale itself is nonest in the eye of law as observed by Hon'ble Supreme Court in the above referred decision. In the decision relied on by Certificate Debtor, such an observation is made while dealing with the rights of a bonafide purchaser get curtailed on account of sale conducted on the basis of ex parte decree which ultimately was set aside. So as rightly pointed by Advocate for Auction Purchaser, without availing remedy under Rules 60 and 61 of the Second Schedule to Income Tax Act, it is not open to Certificate Debtor to question the sale on the ground that R.O. has not followed Rules 57 and 58 of the Second Schedule to Income Tax Act. It is not open for the R.O. to set aside sale without there being proper application availing statutory remedy. When Rules 60 and 61 of the said Rule/s provide statutory remedy and without availing that Certificate Creditor has availed remedy of review which according to decision of Hon'ble Supreme Court that it is not available. Here evidently Certificate Debtor was present when order dated 24.07.2013 is passed. It is not in dispute that a right of Appeal is provided under Section 30 of the RDDB&FI Act to challenge every order of the R.O. that remedy is not availed by Certificate Debtor. Order dated 24.07.2013 is only as per condition no. 30 of General and Technical Terms & Conditions of E-auction Sale, which was also not challenged by Certificate Debtor.
During the course of arguments, Certificate Debtor in person repeatedly contended that he filed Appeal No. 4/2013 with a prayer to quash and set aside order dated 04.09.2013 of the R.O., D.R.T. No. II, Ahmedabad, to the extent of paras 3 and 4 of the order and to declare E-auction sale dated 09.07.2013 as nonest and void. Order dated 04.09.2013 contains 4 clauses: first clause is about rejection of review application dated 08.08.2013 for reviewing order dated 24.07.2013, second clause is about of rejection of review application dated 21.08.2013 for reviewing order dated 26.06.2013, third clause is about confirmation of sale dated 09.07.2013 and for issue of Sale Certificate and fourth clause is about directing the Ex-Officio Court Receiver to hand-over possession of the property to auction purchaser. So in the Appeal before the P.O., D.R.T. No. II, Ahmedabad, the prayer was to set aside confirmation of sale and issue of Sale Certificate. Rule 63 of the said Rule/s Tax mandates the R.O. to confirm the sale if no application is filed under Rules 60 and 61 of the said Rule/s after expiry of the period provided to avail remedy under Rules 60 and 61 of the said Rule/s. If any application is filed, he has to confirm the sale after disposal of such application. Here admittedly, no application under Rules 60 or 61 of the said Rule/s is filed, therefore, the R.O. is bound by Rule 63 of the said Rule/s to confirm the sale. As seen from the said Rule/s, no statutory remedy is provided for Certificate Debtor to challenge confirmation of sale. The other prayer is only consequential prayer directing Ex-Officio Court Receiver to deliver the property to the Auction Purchaser. So when the statute does not provide any right to challenge the confirmation of sale, how Certificate Debtor can pray for such a relief and without examining that Ld. P.O. granted the relief. In fact, the P.O. quashed both sale and its confirmation, which in my view is not empowered under the provision that was availed by Certificate Debtor viz. Rule 87 of the said Rules. It may not be out of place to mention that duty of Appellate Tribunal is to examine correctness and legality of the orders passed by R.O. Review is not to examine the merits of the case, it is only to correct the order if the same is on account of any mistake apparent on the face of record. But without examining that Tribunal below examined the merits and passed the impugned order forgetting basic fundamentals and travelled beyond the scope and power as appellate authority.
For the above reasons, I am of the considered view that order dated 01.11.2017 of Ld. P.O, D.R.T. No. II, Ahmedabad, in Appeal No. 4/2013 is not sustainable and liable to be set aside.
In view of above, Appeal of Auction Purchaser i.e. Misc. Appeal No. 5/2018 is allowed and the impugned order of Ld. P.O., D.R.T. No. II, Ahmedabad, in Appeal No. 4/2013 is set aside and the order of the R.O., D.R.T. No. II, Ahmedabad, dated 04.09.2013 in R.P. Nos. 90/2010 and 91/2010 is confirmed. Appeal of the Certificate Creditor i.e. Appeal No. 217/2016 filed by the Bank is dismissed as infructuous. There shall be no order as to costs.
All Miscellaneous Applications, if any, are dismissed as infructuous.
By a separate order, Appeal of Auction Purchase i.e. Misc. Appeal No. 5/2018 is allowed and the impugned order dated 01.11.2017 of the Ld. P.O., D.R.T. No. II, Ahmedabad, in Appeal No. 4/2013 is set aside and the order dated 04.09.2013 of the R.O., D.R.T. No. II, Ahmedabad, in Recovery Proceeding Nos. 90/2010 and 91/2010 is confirmed. Appeal of Certificate Creditor i.e. Appeal No. 217/2016 is dismissed as infructuous. There shall be no order as to costs.
All Miscellaneous Applications, if any, are dismissed as infructuous.