Rajesh Kumar vs Punjab National Bank And Ors.

Ranjit Singh, J

The Tribunal below has allowed the SA filed by respondent M/s. Deepak Handloom Industries. Aggrieved against the same, the auction purchaser and Punjab National Bank have filed two separate appeals to impugn the said order. The Punjab National Bank has filed the appeal with delay of 244 days. The Bank has accordingly filed an application (IA No. 20 of 2015) praying for condonation of this delay. It is averred that the Bank in this case had applied for certified copy of the order on 6th March, 2014, which is the date of the impugned order. The copy was supplied on 11th March, 2014. It is urged that the Bank was in the process of examining the judgment to see whether it is required to challenge the order or not. During this time, the auction purchaser instituted the appeal. This prompted the Bank to file separate appeal. The Bank had earlier instructed its Counsel to put in appearance in the appeal filed by the auction purchaser and thereafter had decided to file the present appeal.

The Counsel for respondent M/s. Deepak Handloom Industries has opposed the prayer made in the application for condoning the delay on the ground that the reasons disclosed in the application are not sufficient to condone the long delay of 244 days.

Since the appeal filed by the auction purchaser is within time and is to be decided on merits, it may not be appropriate to dismiss the appeal filed by the appellant Punjab National Bank on the ground of delay as this appeal is directed against the same order. Accordingly, the delay in filing the appeal by the Bank is condoned. The application (IA No. 20 of 2015) is accordingly disposed of.

Let the appeal filed by the Punjab National Bank be numbered. After having numbered the appeal as Appeal No. 213 of 2015, both these connected appeals are taken up for hearing.

I have heard the Counsel for the parties. The sole ground on which the SA filed by M/s. Deepak Handloom Industries has been allowed is that the reserved price fixed for conducting the auction on 21st September, 2014 was reduced unilaterally by the Officer holding the auction which action was legally impermissible.

The facts, in brief, are that the accounts of respondent M/s. Deepak Handloom Industries were classified as NPA on 1st August, 2002. The Bank issued notice under Section 13(2) on 9th January, 2003. Thereafter, a number of meetings were held to settle the matter with the Bank. It is averred that settlement on payment of Rs. 27 lacs in all accounts was reached and respondent M/s. Deepak Handloom Industries was given liberty to sell the property by entering into agreement to sell and a tripartite agreement proforma was given to the said respondent for completion of further formalities. Respondent M/s. Deepak Handloom Industries had entered into an agreement on 13th September, 2004 to sell the property for a sum of Rs. 3 lacs each and took Rs. 50,000/- as advance. The Bank thereafter had assured the respondent for completing the formalities. It is alleged that the appellant Bank instead of completing the formalities issued sale notice on 21st September, 2004 which was challenged in the SA.

The respondents seem to have approached the High Court also on the issue of Court fee. While issuing notice in the Writ Petition, the High Court issued direction not to confirm the sale. As per respondent M/s. Deepak Handloom Industries, despite this order passed by the High Court, the Bank sold the property for a sum of Rs. 14.20 lacs.

The stand of the Bank is that no compromise was effected between the borrower and the Bank though it is stated that a compromise was entered between the appellant Bank and the sister concern of the borrower, namely M/s. R.R. Textiles Industries and the said firm had deposited the entire compromise amount. To justify the sale, it is held that the High Court had not granted stay of auction proceedings and only confirmation of the sale was stayed and hence the Bank was entitled to proceed ahead with the auction on the scheduled date. After dismissal of the Writ Petition, the sale certificate was issued and accordingly the Bank has justified the sale.

It is on record that the reserved price of the property in question was fixed at Rs. 17 lacs while issuing the proclamation of sale but the said reserved price was reduced by the auctioneer on the date of sale and the property was sold for a sum of Rs. 14.20 lacs. It is, thus, clear that on the date of auction the reserved price was reduced. It was not even the case of the Bank before the Tribunal below that the reduced reserved price was published prior to the auction proceedings or before the commencement of the auction bid.

Despite repeated queries the Counsel for the appellant auction purchaser is unable to show any legal provision which can justify the action of the auctioneer to reduce the reserved price at the time of auction. The Counsel even has not been able to show any provision or law or any judgment in support of his plea to justify this action in reducing the reserved price. It can be said that if no bid was received at the reserved price, the person conducting the auction had no authority to reduce the reserved price fixed. The only option with the person conducting the auction was to send the case back with the report that the auction was unsuccessful. Instead of doing so, the person conducting the auction reduced the reserved price at the time of auction for which he had no power to do so. I am unable to locate any provision of law or any precedent to support such action. Accordingly, there is no merit in both the appeals and the same are accordingly dismissed, The Bank would be at liberty to hold fresh auction of the property in question in accordance with law. In view of the dismissal of the appeals, all the pending application (IA No. 782 of 2014) in Appeal No. 402 of 2014 shall stand disposed of as infructuous.