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Judgment
J.M. Malik, J
Both the subsequent purchaser and the highest bidder are up in arms in respect of agricultural land measuring 24 canals out of Khewat No. 164, Khasra Nos. 74 and 78, Village Gaval Pahari, Tehsil Sohna, Gurgaon, Haryana. Mrs. Promila Ghai wife of Shri Gurcharan Ghai purchased the said property vide registered sale deed dated 25.9.1995 from one Shri Hemant Vij, certificate debtor. She claims that she is the bona fide purchaser of the said land. On the other hand the Oriental Bank of Commerce, respondent No. 1 claims that the above said property was mortgaged in its favour on 12.9.1993. The appellant claims that after the purchase of the above said land she is in continuous and uninterrupted possession of the above said land. She was also recorded as owner of the land in the revenue record. In the year 1997, the respondent Bank filed OA against three defendants namely M/s. Machine Tools, B.S. Tanwar and Hemant Vij, who was arrayed as defendant No. 3 and subsequently as CD No. 3 and was impleaded in his capacity as alleged guarantor and mortgagor. The Bank claimed recovery of Rs. 1317420.70 besides interest. The OA was decided in favour of the Oriental Bank of Commerce on 17.4.2002 and the Recovery Certificate was issued on 31.7.2002. In the meantime the CDs tried to compound the matter with the Bank but it appears that their efforts to make a compromise failed.
On 8.10.2002, the property in question was attached. The grievance of the appellant is that no demarcation of the land in question was carried out. Although, it came to the notice of the Bank that the land in question stood mutated in the name of the appellant, yet, no notice was issued to the appellant for making lien in the revenue record.
In the year 2005 the appellant saw an advertisement of public auction in respect of the above said property which was stated to be auctioned on 6.5.2005 vide the order passed by the learned RO, DRT I, Delhi. Thereafter, it transpired that M/s. Machine Techno Sales had received credit facilities from OBC and in order to secure the repayment of the loan, it had created equitable mortgage of the property in dispute and Shri Hemant Vij had stood as guarantor. The auction took place on 6.5.2005. Shri H.C. Nanda. respondent No. 2 along with Shri Sumeet Nanda on behalf of Shri Puneet Nanda, respondent No. 3 were declared as highest bidder at Rs. 47.10 lacs.
The appellant filed objections before the learned Recovery Officer which were dismissed vide order dated 14.10.2005. Aggrieved by that order the appellant had filed an appeal under Section 30 of the RDDB & FI Act, 1993 which was also dismissed vide impugned order dated 25.9.2007. Aggrieved by that order this second appeal has been preferred before this Court.
The key argument urged by the Counsel for the appellant was that Smt Promila Ghai is not the only registered owner of the property in dispute but also got her name mutated in the revenue record. It was argued that the Bank did not bother to check the revenue record before mortgaging the property in question but also failed to mark its lien over the property after getting the same mortgaged from Sh Hemant Vij. It was argued that the impugned judgment, wherein reliance was placed on the celebrated judgment of I.D. Malhotra v. Dhanwant Singh, AIR 1985 Delhi 83, wherein it has been held that the appellant is not a bona fide purchaser on the basis that "Had she been vigilant, she would have come to know about the charge, even by minor investigation". It was argued that it was well settled that the aforesaid judgment on which the learned Presiding Officer has placed reliance has dealt with only Section 48 of the Transfer of Property Act, 1882 and the judgment did not consider at all the rights vested with the bona fide purchasers as defined in Section 53 of Transfer of Property Act, 1882.
It was also argued that as per Sections 31, 34 and 35 of Punjab Land Revenue Act, 1887, it is apparent hat the Bank was under an obligation and duty-bound to get the mortgage registered in the revenue record and to further get its mutation done in the record. Consequently the appellant is to be held as bona fide purchaser under Section 53 of the Transfer of Property Act.
It was also argued that the Bank has already compromised the matter with the appellant. The appellant had moved an application dated 23.1.2007 to this effect. In the reply the Bank had denied the contents of the application. It was also argued that the officer of the Bank on 11.5.2007 also admitted that the matter had already been settled by the Bank on payment of Rs. 47,50,000/- by the appellant to the Bank from Rs. 50 lacs already deposited by it. As a matter of fact, the appeal was filed by the appellant before the learned Trial Court and the Trial Court had directed the appellant to deposit Rs. 50 lacs by 7.10.2005 vide order passed on 6.10.2005. The appellant had complied with the said order and the learned Trial Court had stayed the confirmation of sale auction subject to above said condition.
It was further submitted that the auction purchaser had himself moved the application for inter se bidding in order to oppose the above said compromise. It was argued that before the confirmation of the sale, auction purchaser does not have any vested right in the property. It was argued that the auction purchaser had deposited the money with the Bank, which is lying in fixed deposit as per the directions of learned Recovery Officer, which can be returned to him and as such no loss in terms of money will be caused to the auction purchaser.
The learned Counsel for the appellant has invited the attention of this Court towards few authorities. In Sri Mohan Wahi v. Commissioner, Income-Tax, : III (2001) SLT 274 : (2001) 4 SCC 362 in para 10, it was held:
10...Rule 56 in Second Schedule of the Income Tax Act. 1961 is neither a redundant nor a formal provision. It casts an obligation on the Tax Recovery Officer to pass an order confirming the sale consciously and with due application of mind to the relevant facts relating to sale by public auction which is to be confirmed. Under Rule 63, confirmation of sale is not automatic. An order confirming the sale is contemplated to make the sale absolute. Ordinarily, in the absence of an application under Rules 60, 61 or 62 having been made, or having been rejected if made, on expiry of 30 days from the date of sale the Tax Recovery Officer shall pass an order confirming the sale. However, between the date of sale and the actual passing of the order confirming the sale if an event happens or a fact comes to the notice of the Tax Recovery Officer which goes to the root of the matter, the Tax Recovery Officer may refuse to pass an order confirming the sale. The fact that sale was being held for an assumed demand which is found to be fictitious or held to have not existed at all, in fact or in the eye of law, is one such event which would oblige the Tax Recovery Officer not to pass an order confirming the sale and rather annul the same...
He has also cited another authority reported in Desk Bandhu Gupta v. N.L. Anand & Rajinder Singh, 1994 SCC (1)131, wherein it was held:
5....The application to set aside the execution sale is primarily against the decree-holder since he is a person at whose instance and benefit the execution proceedings were initiated and the sale was held to discharge his decree debt. Therefore, primarily he is the person entitled to be heard and since he is in-charge of publishing the notices and to conduct the sale, it is he that lays before the Court the steps taken or the procedure followed in service of notice or conducting the sale and to establish that they have been done properly, regularly and in accordance with the law. The auction-purchaser gets a right only on confirmation of sale and till then his right is nebulous and has only right to consideration for confirmation of sale....
He also referred to another authority reported in Bombay Salt and Chemical v. L.J. Johnson and Ors., : AIR 1958 SC 289, wherein it was held:
8....We are unable to agree that because the section permits a sale by auction, whenever there is an auction the sale must be deemed to be complete. Whether there is a transfer or not depends on the conditions of the auction and these have to be examined to find out when a transfer of the property auctioned takes place. There may be a sale by auction where the sale is not complete till, for example, a document is executed....
It is clear from the rules and the, conditions of sale set out above that the declaration that a person was the highest bidder at the auction does not amount to a complete sale and transfer of the property to him. The fact that the bid has to be approved by the Settlement Commissioner shows that till such approval which the Commissioner is not bound to give, the auction-purchaser has no right at all....
Lastly, he cited another authority reported in Anand Finance Pvt. Ltd. v. Bank of Baroda, : 17 (1980) DLT 334, wherein it was held:
15....Will it make any difference in principle of the Company instead of paying the amount to the Bank before the auction sale takes place pays it after the sale but before the confirmation? In our opinion there would be no difference in principle in such cases. The auction purchaser has no vested right in the property, except to receive compensation if the sale is set aside. If the Bank has received the amount due, it would not be interested in the sale of the mortgaged property....
All these arguments lack conviction. Even if it is assumed that the appellant is a bona fide purchaser of the land in question it does not come to her rescue. Section 48 of the Transfer of Property Act runs as follows:
Priority of rights created by transfer.-Where a person purports to create by transfer at different times rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created.
This section reproduces the well-established equitable maxim qui prior est tempore potior est jure and lays down that the transferor cannot prejudice the rights of the transferee by any subsequent dealing with the property. In other words, if there are successive transfers of the same property, the later transfer is subject to the prior transfer. It follows that in the case of two successive mortgages, the later or puisne mortgage is subject to the prior mortgage.
In the case reported in Sh. Ishar Dass Malhotra v. Dhanwant Singh and Others (supra), Their Lordships, HMJ Dalip K. Kapur and HMJ D.P. Wadhwa were pleased to hold:
8....It will thus be seen that a mortgage by deposit of title deeds is like any other mortgage and there is a transfer of interest in the property mortgaged to the mortgagee. The question, therefore, of the subsequent purchaser having bought the property subject to a mortgage by deposit of title deeds bona fide, with or without notice, is of no relevance. The subsequent purchaser cannot avoid the mortgage by leading evidence to show that he made all reasonable inquiries to find out if the property was subject to a mortgage by deposit of title deeds or not. Section 48 of the Transfer of Property Act does not admit of any such exception. According to this section, when a person purports to create, by transfer at different times, rights in or over the same immovable property, and such rights cannot all exist or be exercised to their full extent together, each later created right shall in the absence of a special contract or reservation binding the earlier transferees, be subject to the rights previously created. Further, proviso to Section 48 of the Registration Act enacts that a mortgage by deposit of title deeds shall take effect as against any mortgage deed subsequently executed and registered relating to the same property. Thus, a subsequent sale cannot have priority over a mortgage by deposit of title deeds created before the sale. In my view, therefore, the Trial Court fell in an error in holding that Harjeet Singh Dhanjal the subsequent purchaser of the mortgaged property; was not liable on the ground that he took all reasonable care and acted in good faith.
In Mohan Lal v. Anandbai, : AIR 1971 SC 2177, it was held in Para 13:
13....Both those Courts also lost sight of the fact that, on the record, the appellant was shown to be the only creditor of Bhiwa; there were no other creditors. As a creditor, he could not be defrauded, because his loans was secured by the mortgage deeds dated 23rd March, 1949 and 26th June, 1949. A gift by Bhiwa in respect of properties already mortgaged could not in any way defeat or delay the mortgagee's right, because the donee under the gift deed could only take the properties subject to the mortgages. The transfer by the deed of gift could not in any way affect the mortgagee's rights under the mortgages.
In The State v. Rajah Ram Varu, : AIR 1966 AP 233 (DB), it was held in Para 20:
Thus, the foregoing discussion makes it clear that where a specific charge is created on immovable property, an equitable charge or a floating charge if any, created cannot have priority. Even if there be any other specific charge created on the same property, the specific charge which is the first in point of time taken priority over the second. In a case where buildings are constructed or machinery is fixed to the earth for its beneficial use after mortgaging the land, the buildings and the machinery or plant would constitute immovable property as an accession to the land, and form pat of mortgagee's security. So that, the mortgagee can claim security not merely in respect of the land mortgaged but also the buildings and the machinery fixed to the earth subsequently.
In a recent authority reported in T. Vijendra Dass v. M. Subramanian, IX (2007) SLT 210 : IV (2007) CLT 182 (SC) : 2007 Rajdhani Law Reporter 585 (SC), it was held that sale to subsequent buyer during the pendency of the case was not valid.
In this case law of "caveat emptor" i.e. buyer beware is a settled doctrine of law. This is indisputable fact that the appellant had not initiated any proceedings against the alleged vendor in respect of concealment of mortgage prior to alleged sale of land to the appellant. Again, even when the appellant came to know all this no such steps were initiated by her. Even the appellant had not made vendor a party in this appeal thus making the connivance between them conspicuous. It is also not able that the appellant had never called upon the vendor for production of original title deed which was admittedly with the respondent Bank. Although, the auction purchaser was ready to participate in any inter se bidding, yet, the appellant did not show any interest.
The order passed by the learned Presiding Officer dated 11.5.2007 is reproduced as follows:
Dt. 11.5.2007
IA Nos. 57/07, 675/06, 676/06, 760/06, 718/05, 885/05 in
Appeal 19/05 (B.S. Tanwar v. OBQ
Present: Sh. Anuj Jain, Counsel for applicant
Sh. P. Ramdas, officer of respondent No. 1 Bank
Mr. Anil Kumar Counsel for third party/Auction Purchaser
On behalf of appellant it has been stated through her Counsel that the appellant has entered into the compromise with the Bank. It is further stated that appellant has deposited Rs. 50.0 lacs in this Tribunal during the pendency of this appeal by way of drafts. Now appellant has taken back these drafts and now he undertakes to deposit this amount by way of FDR with the Tribunal in compliance of order dated 16.3.2007 and shall submit the FDR during the course of the day.
On behalf of respondent No. 7 Bank, Mr. P. Ramdas officer of Bank, states that respondent Bank has approved the proposal for compromise moved on behalf of appellant subject to out come of this appeal. At this stage Mr. Sanjeev Bhandari, learned Counsel for respondent Bank appeared and stated that, in fact, Bank has not approved the proposal and therefore the statement made above should not be taken as such. However, Mr. Bhandari stated that respondent Bank shall comply the directions of this Tribunal passed in this appeal.
In this appeal an application bearing IA No. 885/05 has been moved on behalf of third party/Auction Purchaser seeking impleadment and for vacation of interim stay order granted by this Tribunal and the same is pending for disposal. Reply to this application may be filed before the next date of hearing.
Case be listed on 31.5.2007 for disposal of IAs.
Sd/- Presiding Officer
The above said order must be read holistically. It does not show that there was a compromise between the Bank and the appellant B.S. Tanwar. Counsel for the Bank had left to the Court and had stated that the respondent Bank would comply with the directions of the Presiding Officer passed in that appeal. There was no settlement as such.
Now the mere non-compliance of Sections 31, 34 and 35 of Punjab Land Revenue Act, 1887 does not make the mortgage invalid. My learned Predecessor Mr. Justice M.C. Jain in case reported in Santokh Singh & Ors. v. Central Bank of India & Ors., : IV (2008) BC 98 (DRAT) : 2008(2) DRTC 661 (DRAT, Delhi) was pleased to hold:
As to the validity of entry in revenue records, the Hon'ble Supreme Court held in the case Suraj Bhan v. Financial Commissioner, : (2007) 6 S.C.C. 186, that an entry in revenue records does not confer title on a person whose name appears in record-of-rights. Entries in the revenue records or Jamabandis have only 'fiscal purpose', i.e., payment of land revenue, and no ownership is conferred on the basis of such entries. So the appellants could not insist to be taken to be the bona fide purchasers on the basis of non-recording of the factum of the equitable mortgage in revenue records.
In Suraj Bhan v. Financial Commissioner, : II (2007) CLT 461 (SC) : V (2007) SLT 215 : (2007) 6 S.C.C. 186 it was held that an entry in revenue records does not confer title on a person whose name appears on records of rights. It was further held that entry in the revenue record or Jamabandi have only fiscal purpose i.e. payment of land revenue and no ownership is conferred on the basis of such entries.
It is apparent that the appellant was aware of the sale notice before the auction was conducted on 6.5.2005. She did not participate in the auction proceedings. Her husband was present and aware of the auction proceedings. She moved an application for cancellation of auction held on 6.5.2005 and stay of the recovery proceedings with respect to the property in question vide application moved on 16.5.2005. Para 2 of the application moved by her runs as follows:
That the applicant was shocked and surprised to see an advertisement public auction where it was mentioned that the said property measuring 24 canals out of Khewat No. 164, Khasra Nos. 74 and 78, Village Gaval Pahari, Tehsil Sohna, Gurgaon, Haryana is scheduled to be auctioned on 6th May, 2005. Thereafter, she came to know that the said property was purportedly mortgaged by Mr. Hemant Viz in lieu of some credit facility granted to M/s. Machine Techno Sales.
She should have paid the debt due on behalf of the mortgagor under Rule 60 of Schedule II of the Income Tax Act, 1961 within thirty days from the date of sale. She missed the bus and could not do the needful.
Moreover, Hon'ble Delhi High Court in State Bank of India v. Hon'ble Debts Recovery Appellate Tribunal & Ors., 169 (2010) DLT 212 (DB): 2010(115) DRJ 304 (DB) was pleased to hold in para No. 11:
Learned Counsel for the petitioners seeks to draw strength from the observations of the Supreme Court in Saheb Khan v. Mohd. Yousufuddin & Ors., (2006) 4 SCC 476, wherein the Apex Court while dealing with an auction under the Civil Procedure Code, 1908 (for short, 'the Code') observed as under
'12. We are unable to sustain the reasoning of the High Court. Order 21 Rule 90 of the Code of Civil Procedure allows, inter alia, any person whose interest are affected by the sale to apply to the Court to set aside a sale of immovable property sold in execution of a decree on the ground of 'a material irregularity or fraud in publishing or conducting' the sale Sub-rule (2) of Order 21 Rule 90 however places a further condition on the setting aside of a Court sale in the following language-
(2) No sale shall be set aside on the ground of irregularity or fraud in publishing or conducting it unless, upon the facts proved, the Court is satisfied that the applicant has sustained substantial injury by reason of such irregularity or fraud.
Therefore, before the sale can be set aside merely establishing a material irregularity or fraud will not do. The applicant must go further and establish to the satisfaction of the Court that the material irregularity or fraud has resulted in substantial injury to the applicant. Conversely even if the applicant has suffered substantial injury by reason of the sale, this would not be sufficient to set the sale aside unless substantial injury has been occasioned by a material irregularity or fraud in publishing or conducting the sale. (See Dhirendra Nath Gorai v. Sudhir Chandra Ghosh, : (1964) 6 SCR 1001: AIR 1964 SC 1300; Jaswantlal Natvarlal Thakkar v. Sushilaben Manilal Dangarwala, : 1991 Supp (2) SCC 691 and Kaiyala Rama Rao v. Gutala Kahna Rao, : (2000) 3 SCC 87).
The offer made by the appellant after the auction has been conducted is of no relevance. The Hon'ble Apex Court in the case reported in K. Sadananda Rao v. K. Murari Rao and Ors., : 1987 (Supp) SCC 334 was pleased to hold:
1....Mr. C. Vishwanatha Iyer, learned Counsel appearing for the plaintiff however contends that instead of accepting the bid so offered, a re-auction should be held as directed by the High Court on March 9, 7987 with a view to get a higher price. We do not think that that would be a proper course to adopt. There must be some finality to these proceedings. Admittedly, the plaintiffs did not participate in the auction held on June 23, 1986 pursuant to this Court's direction and now it is too late to ask for a re-auction. The order of the High Court directing a re-auction is accordingly set aside. The High Court shall proceed to accept the bid of the aforementioned defendants subject to the condition that they shall deposit 25 per cent of the amount of Rs. 90 lakh offered by them within ten days from today before the High Court after adjustment of the amount already deposited. The balance amount after effecting a set-off as per orders of this Court dated February 18, 1986, shall be deposited within one month from today. In the event the defendants aforementioned fail to comply with these terms, the property shall be put to re-auction with an upset price of Rs. 90 lakh.
All these arguments urged by the Counsel for the appellant must be eschewed out of consideration.
The next submission made by the Counsel for the appellant was that no notice of the attachment and sale proclamation was served upon the defaulter. It was pointed out that as per Section 2 of Part I and Sections 49 to 53 of Part III of Second Schedule of Income Tax Act the notice of attachment and sale of the property in question should have been served upon the defaulter. The attention of the Court was also invited towards Section 29 of the RDDBFI Act.
Counsel for the appellant has also cited two authorities. The first is reported in Desh Bandhu Gupta v. N.L. Anand & Rajinder Singh (supra) wherein g it was held:
...A sale made, therefore, without notice to the judgment-debtor is a nullity since it divests the judgment-debtor of his right, title and interest in his property without an opportunity. The jurisdiction to sell the property would arise in a Court only where the owner is given notice of the execution for attachment and sale of his property...
The last authority is reported in Sri Mohan Wahi v. Commissioner, Income-
Tax (supra) wherein it was held:
We are, therefore, clearly of the opinion that service of notice of demand on the assessee under Section 156 of the Act, is mandatory before taking steps for recovery under Second Schedule. Non-service of notice of demand goes to the root of the validity of subsequent proceedings for recovery. A sale held in recovery proceedings initiated without serving the notice of demand shall be invalid and hence shall be liable to be annulled on being called in question.
All these arguments have left no impression upon this Court. This objection was not raised before the Recovery Officer. This objection was also not raised during the appeal filed before the learned Trial Court. This plea was raised for the first time before this Court in the written submissions. The appellant cannot be permitted to raise pleas out of blue and take the respondent auction purchaser and the Bank by surprise. No affidavit of the defaulter/judgment debtor saw the light of the day to the effect that no notice of attachment and sale proclamation was served upon him. This plea raised at a late stage is not even supported by any evidence. Even if it is assumed that appellant had stepped into the shoes of the mortgagor, there must be some evidence to substantiate its contentions. Consequently, the plea raised by the respondent deserves no consideration. On the contrary, the record reveals that the sale notice was sent to Mr. Hemant Viz on 15.10.2003 issued by the Recovery Officer.
The next logic trotted by the learned Counsel for the appellant was that the property in question was neither identified nor demarcated. It was explained that report of the Court Auctioneer and the valuation report are contradictory. Both gave different boundaries.
This argument, too, is lame of strength. The copy of the sale deed filed by Promila Ghai dated 25.9.1995 itself clearly mentions the property in question. This property is the same which was mortgaged with the Bank. The said property was described in the order passed by the learned Recovery Officer dated 22.3.2005. Both these properties are the same. The order passed by the learned Recovery Officer was never challenged. The property was correctly demarcated by the Recovery Officer vide order passed by him on 9.3.2004. The said order is reproduced as follows:
Dated: 9.3.2004
R.C. No. 229/2002
Present: Mr. Sanjeev Bhandari, Counsel for CH Bank
The Counsel for the CH Bank has filed an application vide diary No. 1046 dated 9.3.2004, the same is on record. It is prayed in the application that.directions may be given to Tehsildar/Naib Tehsildar, Gurgaon to mark entry/ lien in respect of land measuring 24 kanals out of Khewat No. 164, Khasra No. 78 situated at Village Gowal Pahadi, Sub-Tehsil Sohna, District Gurgaon in the name of Oriental Bank of Commerce (OBC), 63, 59-B, Kalu Sarai, Sarvapriya Vihar, New Delhi. The request of the Counsel for CH Bank is allowed. Tehsildar. Naib Tehsildar is directed to mark entry/lien in respect of aforesaid property in the name of OBC and copy of the same record be supplied to the CH Bank as well as this Tribunal. The Counsel for CH Bank states that Tehsildar has already demarcated the property and record to this effect would be filed before the next date of hearing. Copy of this order be given to CH Bank for serving the same on Tehsildar/Naib Tehsildar, Sohna District, Gurgaon.
Matter be listed on 19.4.2004.
Sd/- (RANEN KUMAR) RECOVERY OFFICER
Thereafter, the needful was done. It is crystal clear that the property in question was demarcated by the Tehsildar and as such no dispute regarding the same survives. This order was not challenged anywhere. Consequently, this argument was raised without any merit.
The next submission made by the Counsel for the appellant in his written synopsis is that the lower reserve price was fixed. It was argued that the reserve price of the property was fixed in the most mechanical way as a routine job. The reserve price was fixed on the basis of the valuation report filed by the Bank on 28.8.2003 and the auction was conducted on 6.5.2005. It was argued that the price worth Rs. 1.40 crores was put to auction at a meagre price of Rs. 42 lacs in collusion and connivance of the Bank officials. Again, the valuation report does not inspire any evidence.
I see no merit in these arguments. I have perused the report of the Court auctioneer It goes to show that four persons had participated. The reserve price was Rs. 42,10,000/- and it was sold for Rs. 47,10,000/-. There is no evidence of any cartel being formed by the bidders. Moreover, the highest bidder had himself thrown the challenge before the subsequent buyer to enter into an inter se bidding. Had there been any mala fide on the part of the auction purchaser, he would not have taken such a risk. However, the subsequent purchaser did not take up the gauntlet and did not go for inter se bidding. This very fact itself establishes that there was no mala fide intention on the part of the highest bidder.
In Valji Khimji & Co. v. O.L. of Hindustan Nitro Product Ltd. & Ors., VII (2008) SLT 621 -IV (2008) BC 536 (SC) took the following view:
Of course, the situation may be different if an auction sale is finalized say for Rs. 1 crore, and subsequently somebody turns up offering Rs. 10 crores, in this situation it is possible to infer that there was some fraud because if somebody subsequently offers 10 crores, then an inference can be drawn that an attempt had been made to acquire that property/ asset at a grossly inadequate price. This situation itself may indicate fraud or some collusion. However, if the price offered after the auction is over which is only a little over the auction price, that cannot by itself suggest that any fraud has been done.
Nobody in this case offered to make offer of more than Rs. 47.10 lacs.
It was also emphasised that the highest bidder participated without any authority. It was argued that as per the report of the Court auctioneer, Shri H.C. Nanda and Shri Sumeet Nanda participated in the auction on behalf of Shri Puneet Nanda. Whereas throughout the present appeal in each and every pleading Shri H.C. Nanda himself was posing as highest bidder and misrepresented this Court. It is explained that they did not produce any power of attorney, though one photocopy of power of attorney dated 2.4.2003 attested by notary on 13.7.2004 was given at the time of auction but the same was in favour of Shri H.C. Nanda alone and not in favour of Shri Sumeet Nanda who also participated in bidding process on behalf of Shri Puneet Nanda. Again, the power of attorney did not authorise Shri H.C. Nanda to go for bidding for the auction purchaser in respect of immovable property. Again, a show cause notice was issued against the highest bidder dated 23.6.2005.
Since the entire money stands paid, therefore, the arguments advanced in this context pale into insignificance. The report of the Court auctioneer itself goes to show that Shri H.C. Nanda had deposited Rs. 15 lacs by way of Banker's cheque towards the bidder price which is more than 25% of the bid amount. The rest of 75% was also paid within the stipulated period. Shri H.C. Nanda had produced the power of attorney. The power to bid was an implied authority which has never been challenged till now. Consequently, all these arguments do not in any way whittle down the value of auction sale.
The learned Counsel for the appellant has also explained that there were some material irregularities in the alleged auction. It was explained that no photographs of the auction were either taken nor the same were placed on record. Again, no closing time was mentioned in the auction report which clearly goes to show that the auction was not conducted at the site. It was pointed out that as per the report of Court auctioneer, husband of the appellant had arrived at the spot. The attention of the Court was invited towards the following observations made by the Court auctioneer:
In the meantime, one Mr. Kulbhushan Ghai came at site and started threatening all the bidders including the undersigned and Bank officials. His contention was that he is the purchaser of the property from Mr. Hemant Vij and started dissuading the bidders from participating in the bid. In his endeavour to stop the proceedings he also threatened the person who had erected the tent at site and on his instructions the tent was removed from the site. Mr. Ghai also made a phone call and thereafter about a dozen people from the surrounding villages came to the site and started creating disturbance in the auction proceedings. The undersigned tried to convince them that whatever their objections are, cannot be entertained by the undersigned. The job of undersigned is to carry out auction at the instructions of Recovery Officer. The scene at sight became so chaotic that there was likelihood of some major disturbance being created by Mr. Ghai and his henchmen. Although Mr. Man Mohan Singh, Chief Manager, Oriental Bank of Commerce, Sarvpriya Vihar Branch, New Delhi had informed the SHO and the Superintendent of Police, Gurgaon in advance and has been assured that necessary police assistance would be provided at site. A copy of letter dated 4.5.2005 addressed to SHO, Sector 29, Gurgaon by the Chief Manager, Oriental Bank of Commerce, Sarvpriya Vihar Branch, New Delhi is annexed hereto and marked as ANNEXURE A-3. In spite of the said request no police assistance was available at the site. In spite of the hindrance created by Mr. Ghai and his henchmen, the undersigned has been successful in carrying out the auction and after recording the bid amount, finally Mr. Puneet Nanda was declared as successful bidder who had bid for the said property at Rs. 47,10,000/-(Rupees forty-seven lakh ten thousand only).....
It was argued that it was not explained that under these circumstances how the auction was conducted successfully. It was argued that it is apparent that no auction was conducted at all and the above said report was prepared in collusion with the Bank officers and highest bidder.
I see no merit in these arguments. The Court auctioneer was Mr. A.K. Thakur, Advocate. It is clear that Mr. Kulbhushan Ghai tried to indulge in criminal activities. There were four bidders present. Nobody was produced to support him. Mr. Kulbhushan Ghai or the appellant also failed to participate in the inter se bidding. All the facts and circumstances show the mala fide intentions on the part of the appellant and her husband.
When the judgment was in the process of being dictated today itself, Counsel for the appellant Mr. Dincur Bajaj appeared and informed the Court that there is stay of the Hon'ble Supreme Court in respect of the said property and had filed some revenue documents in respect of the same. The order passed by the Hon'ble Supreme Court was not produced before this Court. The executing Court will take care of any order of the Hon'ble Supreme Court, if produced before it, and will act in accordance with that order and law.
No other argument was urged. It is thus clear that the appellant has no crow to pluck with the respondents. The appeal filed by her is meritless and is, therefore, dismissed with costs. Counsel fee as per Bank's norms. Copies of this order be furnished to the parties as per law and one copy be sent to the learned DRT forthwith.