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Judgment
S.N.H. Zaidi, J
This appeal impugns the order dated 4.4.2012 of DRT-I, Delhi dismissing Appeal No. 20/2011 filed against the order dated 8.3.2011 of the Recovery Officer (R.O.) under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short, the RDDBFI Act). The circumstances of the case indicate that in the proceedings of R.C. issued in O.A. No. 12/2007, the R.O. of DRT-I, Delhi had issued notice for auction sale of property bearing premises No. 201-203 (comprising in Holding No. 50, Block VI, North Division of Kolkata), Old China Bazar Street, Kolkata (West Bengal) to be conducted on 14.9.2010 at 11 a.m. at the site on 'as is where is basis' for a reserve price of Rs. 200 lacs. The sale notice was published on 14.8.2010 in two newspapers, namely, 'The Assam Tribune' in English and 'Purvanchal Prahar' in Hindi of Guwahati, where the borrowers were residing as well as in 'The Statesman', Kolkata in English and 'Sanmarg', Kolkata in Hindi. The sale was to be conducted by the Court auctioneer appointed by the R.O. The respondent No. 3 offered a bid of Rs. 200.01 lacs and it was declared the highest bidder. It had duly deposited the entire bid amount with the R.O.
On 24.9.2010, the appellant filed an application before the R.O. for setting aside the sale and for holding the auction sale of the property afresh with the averments that upon being induced by the publication of the notice in the newspapers inviting the interested persons to participate in the auction sale for purchasing the property in question, the appellant's representative had visited the auction site on 14.9.2010 to participate in the auction with an offer letter of a better price and a cheque of Rs. 20 lacs towards the earnest money deposit (EMD) but the Court auctioneer did not accept the same. It was further averred that he was forcibly prevented from bidding/participating in the auction sale by some unknown persons, who had arrived at the spot and threatened the Court auctioneer from accepting the bid of any person other than respondent No. 3, as such the appellant's representative was not allowed to submit the bid whereas the bids of other parties were received and the Court auctioneer acted in a dictatorial manner compelling him to leave the site. It was also averred that the appellant lodged a complaint/FIR with the Hare Street Police Station, Kolkata in the afternoon of that very day and also informed the R.O. at Delhi by sending a letter dated 14.9.2010 with a request to consider its offer.
A similar application was filed before the R.O. by respondent No. 4 also. While hearing on those applications, the R.O. directed the applicants to deposit the amounts of their offered bid so that they could come at par with the auction purchaser who had already deposited the bid amount. However, neither the appellant nor respondent No. 4 deposited any amount. The R.O. dismissed the aforesaid applications by a common order dated 8.3.2011.
Feeling aggrieved with the above order, both the appellant and respondent No. 4 filed separate appeals (Nos. 20/2011 and 12/2011 respectively) before the DRT. The learned Tribunal below has dismissed both the appeals by a combined order dated 4.4.2012. The appellant has come up in appeal against the aforesaid order. This Tribunal, while admitting the appeal, has directed for the maintenance of the status quo of the property in question on deposit of the amount of the offered bid and the appellant has deposited a sum of Rs. 2.01 crore with this Tribunal. The respondent No. 1 (the certificate holder) and respondent No. 3 (the auction purchaser) have opposed the appeal by filing the replies, to which no rejoinder has been filed by the appellant. No reply to the appeal has been filed by respondent No. 4.
I have heard Mr. A.K. Matta, the learned Sr. Advocate for the appellant, Mr. Amir Khan, learned Counsel for respondent No. 1, Mr. Pallav Saxena, learned Counsel for respondent No. 3 and Mr. S.K. Tekriwal, learned Counsel for respondent No. 4. The appellant has filed a synopsis of its written arguments, which has also been gone through.
Before considering the contentions of the parties, it is pertinent to mention that the appellant, an alleged prospective bidder, has assailed the sale only on the ground that its offer letter and cheque of the EMD were not accepted by the Court auctioneer and it's representative was not allowed to participate in the auction, but surprisingly it had not disclosed the amount of its offer before any forum. The deposit of Rs. 2.01 crores by it with this Tribunal, however, indicates that its alleged offer was higher by only Rs. 99,000/- than the highest bid of the auction purchaser.
Mr. Matta has contended that as per the requirement of Rule 52(2) of the Second Schedule to the Income Tax Act, the proclamation of sale should have been published in Bengali, which is the language of district Kolkata, where the property is situated but since it was not published in that language, the entire sale process has been vitiated. He has relied upon the judgment of Orissa High Court in Gobinda Chandra Pattnaik v. Presiding Officer, Debts Recovery Tribunal and Ors., MANU/OR/0259/2009, wherein it has been held that non-compliance of a mandatory requirement vitiates the proceedings. This plea has, however, been taken for the first time in the arguments before this Tribunal and was neither taken before the R.O. nor in the appeal filed before the Tribunal below. The R.O. or the Tribunal below, therefore, had no occasion to consider this plea. The order impugned has also not been assailed on this ground in the appeal memo. The object of publication of the proclamation of sale in the newspaper, particularly in the vernacular language, is that more and more people of the locality may know about it and participate in the sale process and the property may fetch the best price. In my opinion, the plea qua the non-publication of the sale notice in Bengali language is not available to the appellant who, according to its own case, had come to know about the intending sale of the property form the notice published in the newspapers and had gone to the auction site to participate in the auction proceedings. He, therefore, cannot be said to have been prejudiced or aggrieved by the non-publication of the sale notice in Bengali language. Failure of publication of the sale notice in the language of the district can never be a cause of grievance to a bidder who had already come to participate in the auction on knowing about it from the publication of the notice in the newspaper. In the case of Gobind Chandra Pattnaik (supra) the proclamation of sale was challenged by the owner of the property on the ground of failure of compliance of Rules 52 and 53 of the Second Schedule to the Income Tax Act for not publishing it in the language of the district. The view taken by the Hon'ble Court, being on different facts, does not apply to the present case. In my opinion, failure of publication of the sale notice in the language of the district was an irregularity. The Hon'ble Supreme Court, in Ram Mourya v. Kailash Nath & Ors., (1999) 9 SCC 276, has held that unless the party objecting to the sale of the suit property on the ground of material irregularity and fraud clearly pleads that he was put to any substantial injury as a result of such material irregularity or fraud, it would not be open to the executing Court to set aside the auction sale of the suit property under Order 21 Rule 90(2), CPC. Since in the instant case also the appellant has not pleaded of having been put to any injury, what to say of substantial injury, on account of failure of publication of notice in Bengali language, as such in the light of the aforesaid proposition of law, the sale in favour of the auction purchaser is not liable to be set aside.
Though Rule 61 of the Second Schedule to the Income Tax Act also provides for setting aside the sale of an immovable property on the ground of failure of service of notice or irregularity, yet since, as stated above, there is no pleading of irregularity in conducting the sale on account of non-publication of the sale notice in Bengali language, the sale cannot be set aside on such ground unless, as per Clause (a) of the proviso to that rule, it is sufficiently established that the appellant has suffered any substantial injury by reason of such irregularity. As already observed, the appellant has failed to show that he was put to any injury on account thereof, therefore, I am of the considered view that in view of the facts and circumstances of this case, the sale of the property in question cannot be set aside on this ground.
So far as this contention of the appellant is concerned that it was illegally prevented from participating in the auction proceedings as the Court auctioneer was threatened by certain persons, who had arrived on the spot, from receiving any bid from any person other than respondent No. 3 and he had not accepted its offered bid of a better price and the EMD, both the R.O. and the Tribunal below have observed that as per the terms of the sale, the intending bidders were required to deposit the EMD of Rs. 20 lacs by way of Pay Order/Demand Draft favouring the R.O., DRT-I, Delhi, payable at Delhi, whereas the appellant's representative had instead of depositing the amount of EMD by way of Pay Order or Demand Draft had tried to give the cheque, which was rightly refused by the Court auctioneer. It is pertinent to quote here paragraph 7 of the report of Court auctioneer dated 18.9.2010, filed as Annexure D-1 to the reply of respondent No. 1 (pages 227-229), which says that:
That two other persons, who have not disclosed their names, have insisted to take cheques in respect of earnest money, but their candidature was not accepted as they have not deposited any DD for Rs. 20 lacs as required. They have not even shown the cheque also as well as the PAN Card/identity proof. However, they were advised to bring the draft of Rs. 20 lacs and till then I shall wait so that their names will also be considered as a bidder for taking part in the auction. Since they have not deposited the drafts of the required amount though they were present till the end of the proceedings.
The said report fully justifies the reasons as to why cheque of the EMD sought to be given by some persons, may be by the appellant's representative, was not accepted by the Court auctioneer. I find no illegality in it. The learned Tribunal below has thus rightly held that no legal right of the appellant was curtailed by not allowing it to participate in the auction proceedings on the basis of trying to deposit the cheque instead of Pay Order or DD of the EMD amount as per the terms of sale notice.
The aforesaid report of the Court auctioneer also does not show that he was threatened by any one qua the acceptance of the bids of other persons than that of respondent No. 3, as alleged by the appellant. The appellant, except filing its affidavit, which has been duly controverted by the respondents, has not filed any evidence in support this allegation. Thus in the absence of any evidence, the allegation is not proved and it cannot be accepted as a ground for setting aside the sale.
Mr. Matta has further contended that, as per the terms of the auction sale, 25% of the bid amount was to be deposited by the highest bidder on the fall of hammer, but the respondent No. 3 had not deposited the said amount as per the said terms, which did not give any power to the auctioneer to enlarge the time. He has pointed out that the auction proceedings were ended with the highest bid of respondent No. 3 at 12.30 p.m. and immediate deposit of 25% of the bid amount was mandatory but since it was not duly deposited, therefore, it was not a sale in the eye of law. He has cited the judgments of the Supreme Court in Manilal Mohanlal Shah & Ors. v. Sardar Sayed Ahmed Sayed Mohammed & Anr., AIR 1954 SC 349 and Balram v. Ilam Singh, 1996(5) SCC 705 in support of this contention. The facts and circumstances of the instant case, as emerged from the report of the Court auctioneer, however, show that the bids were closed at 12.45 p.m. after the same was announced in advance and since the only bid of Rs. 2,00,01,000/- of Mr. Anil Kumar Goel (Director of respondent No. 3 company) was received, he was declared as the highest successful bidder and was asked to deposit 25% of the bid amount with the adjustment of the amount of EMD already deposited and at about 2.15 p.m., the highest bidder had deposited four DDs dated 14.9.2012 totalling Rs. 30,00,250/- towards 25% of the bid amount after adjusting the EMD amount (20,00,000/-). The 25% of the bid amount was thus deposited within 1 1/2 hours of the closure of the bids, which shall be deemed to have been deposited in terms of the conditions of sale. The requirement of immediate deposit after the fall of the hammer means that the amount should be deposited without any delay. A deposit within 1 1/2 hours from the time of closure of the bid cannot be said to have been made with delay and was, therefore, immediate and in conformity of the terms of auction sale. The case laws cited at the bar by the appellant, being different on facts, do not apply to the facts and circumstances of this case. The sale in question, therefore, is not liable to be set aside on this count as well.
Another contention of the appellant is that the market value of the property in question was about Rs. 10 cores but it was sold to the respondent No. 3 at a throw away price of Rs. 2 crore and odd, which shows that there existed a nexus between the Court auctioneer and the auction purchaser as such the sale is not sustainable in law. This contention is not tenable in view of the fact that even the appellant's alleged offer was for Rs. 2.01 crores only which, as stated above, was higher by only Rs. 99,000/- than the highest bid of respondent No. 3 and there was no substantial increase in that offer. If the property in question was worth about Rs. 10 crores, as alleged, then the appellant should have made its offer accordingly. Failure on the part of the appellant to offer a bid as per its alleged value of the property, falsifies its own contention. Moreover, there is nothing on record to suggest that the market price of the property in question was about Rs. 10 crores. The appellant has not adduced any evidence or filed any valuation report in support of this contention. In the absence of any evidence to the contrary there appears no reason to disregard the reserve price of the property fixed by the R.O. in the sale notice. In Navalkha & Sons v. Ramanya Das & Ors., MANU/SC/0614/1969, cited by the appellant's Counsel in this regard, the Hon'ble Supreme Court, while dealing with the confirmation of sale by the Court, has held that there must be a proper valuation report which should be communicated to the judgment debtor and he should file his own valuation report and after confirmation of sale and issuance of sale certificate, the Court cannot interfere unless it is found that some material irregularity in the conduct of sale has been committed and it is the duty of the Court to satisfy itself that having regard to the market value of the property, the price offered is reasonable. There is no dispute to the fact that before fixing the reserve price of the property, the R.O. had obtained the valuation report of the property in question. It was a distress sale. The vacant possession of the property in question was not taken by the R.O. and it was sold on 'as is where is basis' and, as per the reply of respondent No. 1, the property was under the occupation of several tenants. In view of these circumstances, I do not find any reason to doubt the correctness of the reserve price fixed by the R.O. The sale of the property in question, therefore, does not appear to be violative of any rule.
The learned Counsel for the appellant has though cited the judgments of D.J. Enterprises v. IFCI Ltd., W.P. (C) No. 1029/2009 of the Hon'ble Delhi High Court, decided on 4.5.2010, allegedly affirmed by the Supreme Court in SLP No. 26075/2010 on 27.9.2010 and reviewed on 28.3.2011, S.L. Kapoor v. Jagmohan & Ors., MANU/SC/0036/1980, State of U.P. v. Shatrughan & Anr., 1998 (3) SCR 939 and A. Subbaraya Mudaliyar v. K. Sundarjan, MANU/TN/0321/1951, but since the text of these judgments have not been filed/provided by him, no view can be expressed qua its applicability to this case.
The learned Counsel has also relied upon the judgments of Swastik Agency v. SBI, AIR 2009 Orissa 147, PCS Software Solutions Ltd. v. La Medical Devices Ltd. & Ors., I (2009) BC 18 (SC)=VIII (2008) SLT 396= (2008) 10 SCC 440, Valji Khimji & Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors., VII (2008) SLT 621=IV (2008) BC 536 (SC)=MANU/SC/3408/2008, Divya Manufacturing Co. Pvt. Ltd. v. Union of India & Ors., V (2000) SLT 397= 2000 (6) SCC 69 and State Bank of India v. Debts Recovery Appellate Tribunal, III (2010) BC 38 (DB)= AIR 2010 Delhi 83 but, as would appear from the following, the ratio of these cases or the observations made therein, being on different facts and circumstances, these cases do not apply to the instant case or support the appellant case.
In Swastik Agency v. SBI (supra), when the borrower petitioner approached the Bank for one time settlement, it was asked to deposit 25% of the offered amount by the given date, which was deposited by it in three parts before the date of auction. In spite of acceptance of the money which was more than 25% of the offered amount, the Bank proceeded with the auction sale and the property was sold to respondent No. 4 for Rs. 14 lacs for the recovery of a sum of Rs. 4 lacs and after adjusting the outstanding dues a sum of more than double of the outstanding dues was remitted to the borrower, which was not accepted by it. The objections filed by the borrower before the Bank authorities were dismissed in view of the fact that the property had already been sold to respondent No. 4. The borrower petitioner approached the DRT but the application was dismissed and the appeal was also dismissed by the DRAT. The Orissa High Court has held that the difference between the value of the property assessed and the value received is more than three times, therefore, it cannot be held that the valuation had been made correctly, as a consequence the reserve price was found to be fixed at lower side and the auction on the basis of such report was found to be unfair and unreasonable.
The Hon'ble Supreme Court has set aside the sale after its confirmation in PCS Software Solutions Ltd. v. La Medical Devices Ltd. & Ors. (supra) where it was found that the valuation of the movable and immovable properties, fixation of reserve price and inventory of plant and machineries had not been made in the proclamation of sale, nor disclosed at the time of sale notice.
In Divya Manufacturing Co. Pvt. Ltd. v. Union Bank of India & Ors., (supra), the Hon'ble Apex Court while upholding the order of the High Court has held that if there was fraud then even after the confirmation, sale can be set aside because it is well settled that fraud vitiates everything. On the facts of the case, the Court was of the view that confirmed sale deserved to be set aside.
It has been held by the Apex Court in Valji Khimji & Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors. (supra) that objections after the confirmation of sale should not be allowed to be entertained except on limited grounds like fraud. It has also observed that if it is held that every confirmed sale can be set aside the result would be that no auction safe would ever be complete because somebody can always come after the auction or its confirmation offering a higher amount. The auction (sic) should be set aside only if there is fundamental error in the procedure of auction, (sic), if wide publicity is not given or if, on evidence, it is found that property could have fetched more value or if there is somebody who has offered substantially increased amount and not a little over the auction price, then it can by itself suggest that some fraud has been done in holding the auction properly.
The case of State Bank of India v. Debts Recovery Appellate Tribunal (supra) relates to a matter under the SARFAESI Act wherein the mortgagor had challenged the auction sale of the secured asset and the Hon'ble Delhi High Court, while interpreting the rules of the Security Interest (Enforcement) Rules, has held that "....before a sale can be set aside beside establishing a material irregularity or fraud will not do. The applicant must go further and establish to the satisfaction of the Court that material irregularity or fraud has resulted in substantial injury to the applicant. A charge of fraud or material irregularity under Order 21 Rule 90, CPC must be specifically made with sufficient particulars. Bald allegations would not do. The facts must be established which could reasonably sustain such a charge...."
In view of the above discussion, I am of the considered view that the auction sale of the property in question was conducted in accordance with the relevant rules and the R.O. or the learned Tribunal below have committed no error in upholding the same, as such the order impugned does not suffer with any illegality or infirmity and this appeal being devoid of any force is liable to be dismissed with cost.
The appeal is accordingly dismissed with cost. Interim order stands vacated. The amount deposited by the appellant with this Tribunal in terms of the order dated 25.4.2012 be released in its favour.
Copy of this order be furnished to the parties as per law and be also sent to the DRT concerned.