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Judgment
Brijesh Sethi, Chairperson
This is an appeal under Section 20 of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 filed by the Appellant against the order dated 18.03.2020 passed by the learned Presiding Officer, Debts Recovery Tribunal-II, Delhi in Appeal No. 21 of 2019 titled as Kamal Garg Vs. Corporation Bank & Ors.
By the Impugned order dated 18.03.2020, the Ld. Presiding Officer has dismissed the Appeal filed by the Appellant challenging the order dated 28.11.2019 passed by the Recovery Officer forfeiting the 10% of amount deposited by the Appellant being the Highest Bidder.
It is submitted that the appellant is neither the borrower nor mortgagor of loan account availed by Respondent No. 2 to 4 but is a Highest Bidder in respect of properties i.e. (1) Khasra No. 833, Plot No. 224, admeasuring 334 sq. meter at Doon Height, Mauza Kansawli Kothari, Vikas Nagar, Dist Dehradun, (2) Khasra No. 786, Plot No. 224, admeasuring 635 sq. meter, at Doon Height, Mauza Kansawli Kothari Kothari, Vikas Nagar, Dist Dehradun, (3) Khasra No. 556, Plot No. 224, admeasuring 518 sq. meter, at Doon Height, Mauza Kansawli Kothari Kothari, Vikas Nagar, Dist Dehradun, (4) Khasra No. 786, Plot No. 224, admeasuring 845 sq. meter, at Doon Height, Mauza Kansawli Kothari Kothari, Vikas Nagar, Dist Dehradun put for auction vide Sale Notice dated 27. 02.2019 issued by the Ld. Recovery Officer in Recovery Certificate No. 6/2016.
It is further submitted that the Respondent No. 1 Bank filed the Original Application against the Respondent No. 2 to 4 in order to recover their dues. It is submitted that the Ld. Presiding Officer vide final orders dated 01.03.2016 allowed the captioned Original Application in favour of the Respondent No. 1 Bank and in pursuant of the said final orders, the Recovery Certificate No. 6/2016 was issued for a sum of Rs. 1,37,45,742.50/- (Rupees One Crore Thirty Seven Lacs Forty Five Thousand Seven Hundred Forty Two and Fifty Paisa Only) together with costs and pendent lite and future simple interest @ 12% per annum from 04.02.2014 till its realization in full against the Respondents No.2 to 4 i.e. S.R.S. Advertising & Marketing Pvt. Ltd. & Ors. and in favour of the Respondent No.1 Corporation Bank.
It is further submitted that the during the pendency of the Recovery Certificate proceedings, the Ld. Recovery Officer issued the Sale Notice on 27.02.2019 qua the aforesaid properties.
It is next submitted that in compliance of the directions passed by the Recovery Officer, the Respondent No.1 Bank served the sale notice through advertisement in the news paper. It is submitted that the Appellant being interested to purchase the properties scheduled to be auctioned, participated in the auction held on 12.04.2019.
It is further submitted that as per sale notice dated 27. 02.2019, the details for any encumbrances for which the property is liable and against the details of claim, if any, which have been put forward to the property and any other known particulars bearing on its nature and value, the Respondent No.1 Bank had stated that no such encumbrances or particulars are known.
It is further submitted that the aforesaid auction was conducted on 12.04.2019 wherein the appellant was declared as the Highest Successful Bidder for purchasing the Properties. Accordingly, the Appellant deposited 25% of the bid price for aforesaid four properties. Details of the deposited amount are as under:
Sl. No
.
Property Details
Bid Value of property
10%
amount
15%
amount
Total amount
1.
Khasra No. 833,
Plot No. 224, admeasuring 334 sq. meter at Doon Height, MauzaKansawli Kothari, Vikas Nagar, Dist Dehradun
15,00,000/
-
80,000/-
2,95,000/-
375,000/-
2.
Khasra No. 556, Plot No.
224,
admeasuring
518 sq. meter, at Doon Height, Mauza Kansawli Kothari Kothari,
Vikas Nagar,
Dist Dehradun
19,00,000/
1,20,000/
3,55,000
4,75,000
3.
Khasra No. 786,
Plot No. 224, admeasuring 635 sq. meter, at Doon Height, Mauza Kansawli Kothari Kothari, Vikas Nagar, Dist Dehradun
2300000/-
150,000/
4,25,000
5,75,000
4.
Khasra No. 786,
Plot No. 224, admeasuring 845 sq. meter, at Doon Height, Mauza Kansawli Kothari Kothari, Vikas Nagar, Dist Dehradun.
28,00,000/
1,90,000/-
5,10,000
7,00,000
Total
21,25,000/
It is further submitted that after making his bid for the aforesaid four properties, the Appellant came across an article on the internet, according to which there is a prohibition of purchasing agricultural land in the State of Uttrakhand, in excess of 250 sq. meter for an outsider i.e. a person who is not a resident of Uttarakhand.
It is further submitted that the State of Uttrakhand, vide notification dated 16.07.2007 amended The Uttrakhand (The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007 whereby as per Section (1)(4)(1)(a) of the above Act, there was a bar on purchasing land exceeding 250 sq. meters by any non-resident of Uttrakhand.
It is further submitted that the above notification, passed by the Government of Uttrakhand, was challenged before the High Court of Uttrakhand, Nanital in W.P.(C) No.3 of 2011. The Hon‟ble High Court of Uttrakhand vide judgment dated 22.09.2011 struck down the said provision.
It is further submitted that the Government of Uttrakhand assailed the decision of the Hon‟ble High Court of Uttrakhand before the Hon‟ble Supreme Court of India by preferring Civil Appeal No.6302 of 2013. The Hon‟ble Supreme Court of India set aside the decision of the High Court of Uttrakhand, vide its order dated 06.08.2013 and remanded the matter back to the High Court of Uttrakhand.
It is further submitted that the matter, being remanded back to the High Court of Uttrakhand, was dismissed by the Hon‟ble High Court of Uttrakhand vide order dated 11.04.2014. Hence, in view of the aforesaid decision of the Hon‟ble High Court of Uttrakhand as well as Hon‟ble Supreme Court of India, the provisions of the said Act, imposing a bar on purchase of land beyond 250 sq. meters by non residents of Uttrakhand, stands in force.
It is further submitted that it was incumbent upon the Respondent No.1 Bank to have mentioned this fact in the sale notice and apprised the intended bidders / purchasers of the said legal bar. However, the Respondent No.1 Bank with malafide and dishonest intention, deliberately concealed the said fact in the sale notice dated 27.02.2019.
It is further submitted that as per the terms of the sale notice dated 27.02.2019, Appellant being the highest bidder deposited 25% of the bid amount by the next bank working day.
It is further submitted that the balance 75% of the bid amount was to be deposited by the Appellant on or before 15th day of the date of auction, which would have expired on 27. 04.2019.
It is further submitted that before the expiry of the 15 day period and upon becoming aware about the legal bar on the sale of the properties by non-Uttrakhand residents, the Appellant immediately on 22.04.2019 filed an application vide diary no.5677 before the Recovery Officer.
It is further submitted that as per the application filed by the Appellant before the Recovery Officer, the Appellant brought the legal issue of there being a statutory bar on sale of properties to non-residents of Uttrakhand, to the notice of the Recovery Officer and prayed before the Recovery Officer to take a view on the purchase of the auction, in view of the said legal bar and in case it is held that the sale of the properties in question cannot take place in favour of the Appellant, due to the statutory bar, in that eventuality to return the 25% the bid amount deposited by the Appellant along with interest. The Ld. Recovery Officer despite knowing the fact that the Appellant is required to deposit the balance 75 % of the Amount as per mandate of sale, issued the notice of Application to the Respondent No.1 Bank for date fixed which was beyond the statutory period of 15 days.
It is further submitted that the Respondent No.1 Bank filed its reply to the application of the Appellant, taking a stand that the provisions of the Recovery of Debts and Bankruptcy Act, 1993 shall prevail over the said State Act, and therefore, the auction sale is a valid sale and there was no legal bar for transfer of title in favour of the Appellant, by means of the said auction sale.
It is further submitted that the Appellant as well as the Respondent Bank, thereafter, addressed oral arguments before the Ld. Recovery Officer and also filed their written submissions. While addressing the arguments the Appellant highlighted the facts before the Ld. Recovery Officer that he has filed an application well within 15 days, hence as per the legal maxim “Lis Pendens” is entitled for the exemptions of period which was consumed qua disposal of Application.
It is further submitted that after hearing both the parties, the Ld. Recovery Officer vide order dated 28.11.2019 dismissed the application filed by the Appellant and forfeited the EMD amount of 10%, as deposited by the Appellant.
It is next submitted that the Appellant filed the Appeal No. 21/2019 before the Ld. Presiding Officer, DRT–II, Delhi, inter-alia, challenging the said orders on various grounds. The Respondent No. 1 Bank filed the reply to the said appeal. The matter was listed from time to time and the Appellant as well as Respondent No. 1 filed their respective written submissions and written arguments before the Ld. Presiding Officer and vide order dated 18.03.2020, the Ld. Presiding Officer was dismissed the appeal.
Aggrieved by the order dated 18.03.2020, and action taken by the Respondent Bank, the Appellant has preferred an Appeal on the grounds that the impugned orders dated 18.03.2020 passed by the Learned Presiding Officer, Debt Recovery Tribunal - II, Delhi is against facts and records of the case. The Ld. Presiding Officer, has not considered the facts, material and document placed on record before passing the impugned orders dated 18. 03.2020.
It is further submitted that the Ld. Presiding Officer failed to appreciate that the contention of the Appellant in the Appeal was that the necessary information pertaining to the property, being the bar imposed by the State of Uttrakhand on purchase of properties by non-residents, was mandatorily required to be mentioned by the Respondent No.1 Bank in the Sale Notice and due to said lapse, the sale notice was bad in law and the entire sale proceedings were liable to be quashed / set aside.
It is further submitted that the Ld. Presiding Officer failed to appreciate that same had been specifically mentioned in grounds of appeal in Appeal No. 21/2019, but the Ld. Presiding Officer did not considered the same and passed impugned orders which is liable to be set aside / quashed.
It is further submitted that the Ld. Presiding Officer failed to appreciate that the Appellant had also raised the said issue in his written submissions and in support thereof relied and annexed the judgments / citations being Haryana Financial Corporation and Ors. Vs. Rajesh Gupta, MANU/SC/1829/2009; Chemstar Chemical and Intermediates (P) Ltd. Vs. The Commercial Tax Officer and Ors MANU/TN/2967/2010; B.S. Sheshagiri Setty and Ors. Vs. State of Karnataka and Ors MANU/SC/1176/2015; Rekha Sahu Vs. UCO Bank and Ors MANU/UP/1191/2013; Rajesh Gems and Jewels Pvt. Ltd. & Ors. Vs. India Overseas Bank, W.P(C) 6653/2017 Order dated 20.09.2017; State of Uttar Pradesh and Ors. Vs.United Bank of India and Ors. MANU/SC/1353/2015; Jai Logistics Vs. The Authorized Officer Syndicate Bank, MANU/TN/1161/2010. However, the Hon‟ble Presiding Officer while passing the order dated 18.03.2020, has not considered or discussed the aforestated grounds and citations pressed by the Applicant.
However, this may be pointed out that the above judgments were neither filed, discussed or argued during the course of arguments nor copies of the same have been filed along with written arguments by the Ld. Counsel for the appellant.
It is further submitted that the applicant had contended in the appeal that the period of 15 days for depositing the balance 75% sale amount was to expire on 27.04.2019 and the Applicant on 22. 04.2019 itself, moved an application before the Recovery Officer and sought the adjudication of the issue from the Recovery Officer.
It is further submitted that the applicant had categorically asserted that the Recovery Officer should have granted time to the Applicant, to deposit the balance 75% amount, after deciding the application filed by the Applicant vide diary no.5677 on 22. 04.2019.
It is further submitted that the applicant had made a specific prayer in the appeal that in case this Tribunal holds that the notification of the State of Uttrakhand is not a bar for the Applicant to purchase the property, then in such eventuality, to grant 15 days time to the Applicant to deposit the balance 75% of the bid amount. Prayer 6 (C) of the appeal is reproduced as under :
(c) “In case this Hon‟ble Tribunal holds that the notification dated 16.07.2007 would not be a bar for the Appellant / Auction Purchaser in purchasing the said property, grant 15 days time to the Appellant to deposit the balance 75% of the bid amount and direct the Respondent No.1 Bank to thereafter issue the sale certificates and handed over the physical possession of the properties to the Appellant.”
However, while passing the order dated 18.03.2020 the aforestated grounds and prayer of the Applicant have neither been considered nor adjudicated upon.
It is further submitted that the Ld. Presiding Officer has failed to appreciate that in view of the statutory bar imposed by the State of Uttrakhand on sale of the properties, the entire sale process as well as sale notice was avoid abinitio, being in violation of the law laid down by the Government of Uttrakhand and, thus, being void as per Section 23 of the Indian Contract Act, 1872.
It is further submitted that the Ld. Presiding Officer has failed to appreciate that the Appellant became aware about the statutory bar and the provisions of the law laid down by the Government of Uttrakhand, only after depositing 25% of the bid amount, after making inquiries on the process to have the properties transferred in his favour.
It is further submitted that the Ld. Presiding Officer has failed to appreciate that the Appellant approached the Ld. Recovery Officer by means of an application, before the expiry of the period of 15 days and, therefore, the Appellant was not liable to be penalized nor was at fault, for any delay thereafter. In fact, upon filing the application on 22.04.2019, the Respondent No.1 Bank delayed the matter by 4 months, by filing a reply only on 22. 08.2019.
It is further submitted that the Ld. Presiding Officer has failed to appreciate that the Appellant had never refused to deposit the balance sale 75% bid amount but had only sought a clear order by the Ld. Recovery Officer, on the issue of the validity of the sale in his favour in view of the statutory bar imposed by the Government of Uttrakhand.
It is further submitted that the Ld. Presiding Officer has failed to appreciate that it was the responsibility and duty of the Respondent No.1 Bank to mention all such relevant details about the encumbrances on the properties, statutory / legal bar on purchase of the properties upon a certain Section of the public, in the sale notice. The Respondent No.1 Bank cannot wash its hands off the issue, by simply stating that it was for the Appellant / auction purchaser to inquire about the same.
It is further submitted that the Ld. Presiding Officer has committed a grave error in law in holding that since the permission from the District Magistrate of the State of Uttrakhand could be obtained for purchasing the properties, the same would not act a legal bar. Once there was any permission required for purchase of the properties, the same should have been clearly stated in the sale notice. Moreover, the provisions of the said State Act stipulate, that such permission had to be taken prior to purchase of the properties and not post such purchase.
It is further submitted that the Ld. Presiding Officer has committed a grave error in law in giving contradictory findings to the effect that the provisions of the RDB Act shall prevail over the said State Act and in the same breath holding that the permission can be taken from the Government i.e. District Magistrate, in case one wishes to purchase land beyond the limit imposed by the said Act.
It is further submitted that the Ld. Presiding Officer has failed to grant any time to the Appellant/Auction Purchaser for depositing the balance amount of 75% of the bid amount.
It is further submitted that the Ld. Presiding Officer has committed a grave error in law in dismissing the application of the Appellant and forfeiting the deposit of 10% of the bid amount, paid by the Appellant, being the EMD.
It is further submitted that the Ld. Presiding Officer has ignored the malafide of the Respondent No.1 Bank in view of the fact that the bank was already aware about the statutory bar on purchasing the said land in Uttarakhand and the bank concealed this fact from the Appellant / Auction Purchaser, by not disclosing the same in the sale notice. It is, therefore, prayed that the order passed by the Ld. Presiding Officer dated 18.03.2022 be set aside, in the interest of justice.
Reply on behalf of Respondent no.1-Bank
It is submitted by Ld. Counsel for the respondent no. -1 Bank that the Ld. DRT vide its order dated 01.03.2016 has issued a Recovery Certificate No. 6/16 for a sum of Rs. 1, 37, 45, 742.50 (Rupees One Crore Thirty Seven Lacs Forty Five Thousand Seven Hundred Forty Two and Paisa Fifty Only) together with costs and pendent lite and future interest @ 12.00 % per annum simple from 04.02.2014 till its realization in full against the Certificate Debtors.
It is further submitted that in terms of the directions of Ld. Tribunal below, the Ld. Recovery Officer vide its order dated 27.02.2019 issued the sale proclamation notice qua the properties i.e Khasra No. 833, Plot No. 224, admeasuring 334 Sq Mtrs, at Doon Height, Mauza Kansawali Kothari, Vikas Nagar, Dist Dehradun having reserve price of Rs. 8.00 Lacs, Khasra No. 786, Plot No. 224, admeasuring 845 Sq Mtrs, at Doon Height, Mauza Kansawali Kothari, Vikas Nagar, Dist Dehradun having reserve price of Rs. 19.00 Lacs, Khasra No. 786, Plot No. 224, admeasuring 635 Sq Mtrs, at Doon Height, Mauza Kansawali Kothari, Vikas Nagar, Dist Dehradun having reserve price of Rs. 15.00 Lacsand Khasra No. 556, Plot No. 224, admeasuring 518 Sq Mtrs, at Doon Height, Mauza Kansawali Kothari, Vikas Nagar, Dist Dehradun having reserve price of Rs. 12.00 Lacs.
It is next submitted that in compliance of the directions passed by Ld. Recovery Officer the Respondent No.1 Bank served the sale notice as suggested in the order and filed the service report vide diary No. 4223 dated 25.03.2019.
It is further submitted that the Appellant was declared as successful bidder and deposited 25% of the total sale price, but failed to deposit the rest 75% of the total sale price within the stipulated time of fifteen days. Instead of deposit the rest 75% the successful bidder filed an application for return of 25% of the remaining amount on the ground of one notification of Uttranchal Act No. 29 of 2003 (as amended) knowing that the present sale has been conducted under the provisions of Recovery of Debts and Bankruptcy Act, 1993 which is central Act and it will prevail over the State Act. The respondent Bank has relied upon the judgment of Hon‟ble Supreme Court in UCO Bank and Anr. v. Dipak Debbarma and Ors. (2017) 2 SCC 587
The Ld. Counsel for the respondent bank has also relied upon C.N. Paramasivam & others vs Sunrise Plaza & others, (2013) 9 SCC 460 in which the Hon‟ble court has referred to Judgment Manilal Mohanlal Shah and Ors. V. Sardar Sayed Ahmed Sayed Mahmed and Anr. AIR 1954 SC 349 wherein it was held that the provision regarding the deposit of 25 per cent, by the purchaser other than the decree-holder is mandatory as per the language of the rule. The full amount of the purchase-money must be paid within fifteen days from the date of the sale but the decree-holder is entitled to the advantage of a set-off. The provision for payment is, however, mandatory (Rule 81 of Income Tax Act Second Schedule). If the payment is not made within the period of fifteen days, the Court has the discretion to forfeit the deposit, and there the discretion ends but the obligation of the Court to re-sell the property is imperative. A further consequence of non-payment is that the defaulting purchaser forfeits all claim to the property (Rule 86 of the Income Tax Second Schedule).
It is further submitted that the Appellant himself presumed the law for his own convenience and not deposited the remaining 75 % within the stipulate period of time and now after order of forfeiture of amount under the mandatory provisions filed the present Appeal with a ground that the Respondent No.1 Bank did not disclose the presumed encumbrances (which actually not as per law) and hence submissions of Ld. Counsel for the appellant that sale is bad in the eyes of law is false and frivolous and liable to be rejected on this sole ground.
It is next submitted that the sale was conducted by the Ld. Recovery Officer under the Debts Recovery and Bankruptcy Act and as per the judicial pronouncement the central Act will prevail over the State Act. Although there is no bar qua the sale of the secured immovable property under the State Act.
Written submissions filed by the Appellant
Perusal of record reveals that the appellant has also filed written submissions which are more or less on the same line as pleaded by him in his appeal. In addition to the same, it is submitted that it is an undisputed fact that the Appellant approached the Ld. Recovery Officer before the expiry of 15 days and had further 5 days in his hands when he preferred the said application before the Ld. Recovery Officer. Hence, the Ld. Recovery Officer ought to have granted to the Appellant at least the period of the remaining 5 days to deposit the remaining 75% of the bid amount while finally deciding the Application preferred by the Appellant. However, the Ld. Recovery officer failed miserably to do so.
In addition, it is further submitted that the Appellant was entitled to the said 5 days to deposit the remaining 75% even as per the provisions of Section 14 of the Limitation Act.
It is further submitted that the Hon‟ble Supreme Court of India in the matter of Sesh Nath Singh & Anr. vs Baidyabati Sheoraphuli Co-operative Bank Ltd. 7 Anr. (2021) 7 SCC 313 has specifically held as produced hereunder:-
“100. In any case, Section 5 and Section 14 of the Limitation Act are not mutually exclusive. Even in a case where Section 14 does not strictly apply, the principles of Section 14 can be invoked to grant relief to an applicant under Section 5 of the Limitation Act by purposively construing „sufficient cause‟. It is well settled that omission to refer to the correct section of a statute does not vitiate an order. At the cost of repetition it is reiterated that delay can be condoned irrespective of whether there is any formal application, if there are sufficient materials on record disclosing sufficient cause for the delay.”
It is further submitted that from a bare perusal of the aforesaid, it is apparent that the Appellant was entitled to the remaining period of 5 days to deposit the remaining 75% bid amount when the said Application was dismissed by the Ld. Recovery Officer. Hence, the said order passed by the Ld. Recovery Officer could not be sustained in the eyes of law.
Furthermore, the Appellant had approached the Ld. Recovery Officer with very specific prayer i.e. (i) Decide / take a view on the validity of the auction conducted by this Hon‟ble Court of Recovery Officer on 12.04.2019, in view of the prohibition, applicable by virtue of Uttaranchal Act No. 29 of 2003 (Amendment Act) applicable to the outsiders i.e. who are not residents of Uttarakhand from purchasing the agricultural land in excess of 250 sq. mts. In the state of Uttarakhand.
It is further submitted that from a bare perusal of the above prayer, it is apparent that the Appellant being uncertain about the aforesaid law has prayed before the Ld. Recovery Officer to give a finding about the applicability of the aforesaid laws with respect to the present case meaning thereby that in case the Ld. Recovery Officer opines that aforesaid laws do not have any effect on the present case, the Ld. Recovery Officer could grant certain time to the Appellant to deposit the remaining 75 % of the bid amount.
It is further submitted that aggrieved by the said orders, the Appellant filed the Appeal No. 21/2019 before the Ld. Presiding Officer, DRT –II, Delhi inter-alia challenging the said orders on various grounds as mentioned in the Appeal.
It is further submitted that vide order dated 18.03.2020, the Ld. Presiding Officer dismissed the appeal filed by Appellant.
It is further submitted that being aggrieved by the order dated 18.03.2020, and action taken by the Respondent Bank, the Appellant herein have preferred the instant Appeal bearing No. 91 of 2020 before this Tribunal.
It is further submitted that the Appeal No. 91 / 2020 was first listed for hearing on 26.08.2020 whereby Notice was issued to the Respondents. Thereafter, the matter was taken up on several occasions by the Ld. DRAT, Delhi, however, no ad-interim stay qua the Properties in question was granted.
It is further submitted that the Appellant herein in compliance of the order dated 26.08.2020 had served Notice issued by this Appellate Tribunal upon the Respondent 2-4 i.e. the borrowers through all modes, and had also filed the Affidavit of Service vide diary no. 678 dated 10.09.2022. However, despite the said fact, the Respondent 2 to 4 deliberately evaded from appearing before this Appellate Tribunal in the captioned Appeal.
It is further submitted that the Respondent 2 - 4 herein have been regularly appearing before this Appellate Tribunal in their Appeal i.e. Appeal No. 408 / 2019 which exposes the malafide intentions of the Respondent 2 – 4 to delay the proceedings in the captioned Appeal.
It is further submitted that the Respondent No.1 Bank filed its reply to the Appeal No. 91 / 2020 on 23.10.2021.The Appellant herein also filed his Rejoinder to the Reply filed by the Respondent No. 1 Bank in Appeal No. 91/2020.
It is further submitted that during the pendency of the Appeal No. 91/2020, the Ld. Recovery Officer, DRT-II, Delhi vide his order dated 06.09.2021 in R.C. No. 06/2016 issued fresh Sale Proclamation with respect to the mortgaged properties which were in question in Appeal No. 91/2020.
It is further submitted that owing to the order dated 6. 09.2021, the Respondent No. 1 Bank published the Sale Proclamation in newspaper on 05.10.2021 thereby inviting bids qua the said properties, and slated the e-auction of the said properties to be held on 10.11.2021.
It is further submitted that immediately upon knowledge of the above Publication, the Appellant herein preferred an Interlocutory Application bearing No. 529 / 2021 in Appeal No. 91/2020 seeking intervention of this Appellate Tribunal praying therein to stay the e-auction dated 10.11.2021 and/or prepone the date of hearing of Appeal No. 91/2020 to an earlier date and decide the Appeal No. 91/2020 before 10.11.2021.
It is further submitted that the said Interlocutory Application bearing No. 529 / 2021 was listed for hearing on 20.10.2021 wherein this Appellate Tribunal refused to either stay the e-auction dated 10.11.2021 or to prepone the date of hearing of Appeal No. 91/2020 from 17.11.2021 to any earlier date and kept the Appeal No. 91 / 2020 for hearing on the date already fixed i.e. 17.11.2021 making the said Interlocutory Application virtually infructuous.
It is further submitted that being aggrieved by the said order dated 20.10.2021, the Appellant herein preferred a Writ Petition (Civil) bearing no. 12530 / 2021 before the Hon‟ble High Court of Delhi.
It is further submitted that the Hon‟ble High Court of Delhi vide its order dated 22.11.2021 allowed the Writ Petition (Civil) bearing no. 12530 / 2021 under the condition that the Appellant herein deposits the remaining 75% of the bid amount within a period of two weeks and directed the Ld. Recovery Officer to release the 25% of the amount deposited by the Appellant with him, along with up to date interest, within the next 10 days to the Respondent Bank, and to confirm the sale of the aforesaid properties in question.
It is further submitted that while passing the order dated 22. 11.2021, the Hon‟ble High Court of Delhi has specifically observed that the apprehensions of the Appellant that his title with respect to the properties in question may not be perfected given the bar imposed by the State of Uttrakhand vide notification dated 16.07.2007.
It is further submitted that the Hon‟ble High Court of Delhi while appreciating the contentions raised by the Appellant herein also specifically held as follows:-
“In all fairness, the Recovery Officer himself should have granted an opportunity to the petitioner to make the payment of the balance amount with a reasonable rate of interest.”
It is further submitted that the Appellant herein, in compliance of the order dated 22.11.2021 passed by the Hon‟ble High Court of Delhi deposited the remaining 75% of the Auction amount i.e. Rs. 63,75,000/- (Rupees Sixty Three Lakhs Seventy Five Thousand Only) along with Poundage Fee of 1 % i.e. 85,000/- (Rupees Eighty Five Thousand Only) and the Damages as quantified by this Hon‟ble Court i.e. Rs 5,00,000/- (Rupees Five Lakhs Only) before the Ld. Recovery Officer – II, DRT - II, Delhi which totals to an amount of Rs. 69,60,000/- (Rupees Sixty Nine Lakhs Sixty Thousand Only).
It is further submitted that thereafter, the Respondent Nos. 2 to 4 approached the Hon‟ble Supreme Court of India by way of Civil Appeal Nos. 1302 - 1303 of 2022 wherein the Hon‟ble Supreme Court of India set aside the order dated 22.11.2022 passed by the Hon‟ble High Court of Delhi on technical grounds and held as follows :-
“3.2 The High Court has not properly appreciated the fact that what was challenged before it was regarding nongrant of any interim relief pending the appeal before the DRAT. Main appeal was yet to be considered by the DRAT on merits. From the impugned judgment and order passed by the High Court, it appears that the High Court has decided and disposed of the writ petition as if the High Court was considering the final decision of the DRAT. The order passed by the DRT confirming the order passed by the Recovery Officer forfeiting 10% amount deposited by the auction purchaser was yet to be decided by the DRAT. Therefore, the High Court as such has gone beyond the scope and ambit of the proceedings before it.
3.3 By passing the impugned judgment and order the High Court has as such made the proceedings before the DRAT infructuous, as after the impugned judgment and order nothing further is required to be decided by the DRAT. Therefore, the High Court has exceeded in its jurisdiction by passing the impugned judgment and order.
In view of the above and for the reasons stated above, the present appeals succeed. The impugned judgment and order passed by the High Court is/are hereby quashed and set aside. Now, the DRAT to finally decide and dispose of the Appeal No.91 of 2019 in accordance with law and on its own merits. DRAT is directed to finally decide and dispose of the said appeal at the earliest, preferably within a period of four months from the date of the receipt of the present order.”
It is further submitted that a perusal of the above observation of the Hon‟ble Supreme Court of India, it is apparent that the same has only been made on the premise that the Hon‟ble High Court of Delhi should not have decided the issues on merit as the same was still pending before this Hon‟ble Appellate Tribunal.
It is further submitted that, the Appellant due to no fault of his own has suffered irreparable losses and damages and has approached this Hon‟ble Appellate Tribunal for securing his bonafide rights.
Written submissions on behalf of Respondent nos. 2 to 4.
It is submitted by respondent nos. 2 to 4 that on 01.03.2016, the Ld. Presiding Officer of the DRT-II, Delhi (hereinafter “the Ld. DRT”) passed an ex parte final Judgment and final Order in T.A. No. 160 of 2015 for a sum of Rs. 1,37,45,742.50/- together with cost and pendent lite and future interest @ 12 % p.a. from 04.02.2014 till its realization against the Respondent No. 2 to 4 herein. Pursuant to the said ex parte judgment and final Order dated 01.03.2016, a Recovery Certificate being Recovery Certificate No. 06 of 2016 was issued against the Respondents No. 2 to 4. Pursuant thereto and in terms of the directions contained therein, the Ld. Recovery Officer vide his order dated 27.02.2019 issued a sale proclamation qua the properties located in State of Uttarakhand belonging to the Respondents No. 2 to 4. The Appellant came to know about the auction of the said properties through sale notice dated 27.02.2019 published in the newspapers. The said auction was conducted on 12.04.2019 wherein the Appellant was declared as the highest bidder and accordingly the Appellant deposited 25 % of the bid price i.e., a sum of Rs. 21,25,000/- including the Earnest Money Deposit (EMD). As per the terms of the sale notice, the Appellant being the highest bidder was required to deposit the balance 75 % of the bid amount on or before the 15th day from the date of auction. Thereafter, on the basis a newspaper article, an imaginary and illusory apprehension was raised by the Appellant that his title may not be perfected, in view of the fact that in the State of Uttarakhand, there was a bar against purchase of properties by non-residents of Uttarakhand in excess of 250 Sq. Meters. Thus, instead of depositing the remaining 75 % of the bid amount, the Appellant herein filed an application dated 22.04.2019 before the Ld. Recovery Officer (a) seeking determination of the validity of the auction (b) blanket waiver from payment of 75% and (c) refund of 25 % of the remaining amount if his apprehension is found to be correct. That vide Order dated 28.11.2019, Ld. Recovery Officer dismissed the said Application of the Appellant and held that and in terms of the Rule 58 of the Second Schedule to the Income Tax Act, 1961, forfeited the EMD deposited by the Appellant on the ground that the Appellant had failed to deposit the balance 75% of the bid amount within the stipulated time. Being aggrieved by the said Order of the Ld. Recovery Officer, the Appellant herein filed an Appeal bearing Appeal No. 21 of 2019 before the Ld. DRT on 19.12.2019. The said appeal being Appeal No. 21 of 2019 was dismissed by the Ld. DRT on 18.03.2020 and the Ld. DRT confirmed the order passed by the Ld. Recovery Officer forfeiting the EMD paid by the Appellant.
It is next submitted that the Appellant being aggrieved by the Order dated 18.03.2020 passed by the Ld. DRT preferred the present Appeal bearing No. 91/ 2020 before this Tribunal on 18. 08.2020.
It is further submitted the Appellant also sought interim relief. However, this Tribunal did not grant any interim relief to the Appellant and, consequently, the Respondent bank sought to put the properties to auction on 10.11.2021. The application of the Appellant to seek interim relief from this Tribunal was re-notified on 17.11.2021 i.e., after the date of the proposed auction. In this background, the Appellant herein preferred a Writ Petition being W.P. (C) No. 12530/ 2021 before the Hon‟ble High Court of Delhi.
It is next submitted that the Hon‟ble High Court of Delhi vide its Order dated 22.11.2021 decided the Writ Petition being W.P. (C) No. 12530/ 2021 in favour of the Appellant. The said Order of the Hon‟ble High Court of Delhi was challenged by the Respondents No. 2 to 4 herein before the Hon‟ble Supreme Court of India in Civil Appeal No. 1302- 1303 of 2022 which was decided on 16.02.2022. The Hon‟ble Supreme Court of India vide its Order dated 16.02.2022 set aside the order passed by the Hon‟ble High Court.
It is further submitted that as per the judgment, passed by the Hon‟ble Supreme Court of India, the only issue which is required to be adjudicated by this Tribunal is that whether the Order passed by the Ld. DRT confirming the order passed by the Ld. Recovery Officer forfeiting the Earnest Money Deposit paid by the Appellant auction purchaser, is correct or not. In view of this limited issue, the prayer of the Appellant seeking 15 days‟ time for depositing the balance 75 % of the bid amount and/or for confirmation of the sale in his favour (as pleaded orally during the course of arguments)is not maintainable. The said auction stood cancelled. Anything done by the Appellant pursuant to the order of the Hon‟ble Delhi High Court is non-est in the eyes of law and any monies deposited towards sale confirmation is liable to be returned to the Appellant though the Appellant has not sought such a relief before this Appellate Tribunal and thus the same is also outside the purview of this Appellate Tribunal.
It is further submitted that the Order dated 28.11.2019 passed by the Ld. Recovery Officer is absolutely sound and so is the impugned order passed by the Ld. DRT.
It is next submitted that in the present case, the Appellant herein had raised an imaginary issue (with respect to the auction of the properties located in State of Uttarakhand) on the basis of Section 4 (1) (a) of the Uttarakhand (The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007which imposes a bar on purchase of land beyond 250 sq. meters by non-residents of Uttarakhand.
It is further submitted that since the RDB Act is a Central Act, it would prevail over state law (the Uttarakhand (The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007) and thus the auction pursuant to the Central Act was valid.
It is further submitted that the decision of the Ld. Recovery Officer has been rightly upheld by the Ld. DRT. The Appellant has not argued (during the course of arguments) as to how the impugned order is bad in law. It is next submitted that the thrust of the Appellant‟s arguments were based on the observations of the Hon‟ble Delhi High Court in its order dated 22.11.2021, which according to him are still operative since the Hon‟ble Supreme Court of India in its order dated 16.02.2022 did not set aside the Delhi High Court order dated 22.11.2021 on merits. This argument appears to be completely misconceived since the Hon‟ble Supreme Court of India held that the Division Bench of the Hon‟ble Delhi High Court had exceeded its jurisdiction and has in the manner it approached and dealt with the matter. The Hon‟ble Supreme Court of India expressly held that the Division Bench of the Hon‟ble Delhi High Courts has gone beyond the scope and ambit of the proceedings before it.
It is next submitted that the reliance of the Appellant on the order dated 22.11.2021 passed by the Division Bench of the Hon‟ble Delhi High Court is entirely misconceived since it ceases to exist in the eyes of law.
It is further submitted that pursuant to the order dated 22.11.2021 passed by Division Bench of the Hon‟ble Delhi High Court, the Appellant paid the remaining amount of money which was adjusted by the Respondent No. 1 bank and handing over of original title deeds to the appellant would not create any equities in the Appellant‟s favour since the basis for such further payment and actions of the Respondent Bank, i.e. the order of the Division Bench of the Hon‟ble Delhi High Court, having been completely obliterated by the Hon‟ble Supreme Court of India vide its order dated 16.02.2022.
FINDINGS
I have considered the rival submissions. Ld. RO had passed the following order on 28.11.019.
“Dated: 28.11.2019
Counsel for the CH Bank submitted that he has filed his written arguments in terms of the previous directions and requested to pass appropriate order.
Proxy Counsel for highest bidder has filed his written arguments in terms of the previous directions and requested to pass appropriate order.
Request allowed.
Order pronounced in the open court. The same be seen at Annexure-A of this order.
Directions:
CH Bank is directed to file the details of the expenses of the sale within a period of two weeks time.
Registry is directed to place copy of this order before the Hon‟ble DRAT, Delhi for perusal of his Lordship.
Let a copy of this order be given dasti to the concerned parties.
Let this matter be listed on 10.12.2019.
Annex.A
ORDER
The H1 bidder has filed an application vide diary no. 5677 dated 22.04.2019 stating therein the auction sale was conducted on 12.04.2019 in terms of the sale proclamation notice dated 27.02.2019. He further submitted that the H1 bidder (applicant herein) has already deposited 25% of the bid amount for the 4 properties including EMD in terms of aforesaid sale proclamation notice.
2 That after making his bid for the aforesaid four properties the applicant/H1 bidder has come across an article on internet, according to which there is a prohibition of purchasing the agricultural in excess of 250 sq. meters for the outsider (i.e. the person who are not the resident of Uttarakhand). As per the said article permission form the government of Uttarakhand through District Magistrate is required to purchase the agricultural land in excess of 250 sq. meters. He further submitted that the aforesaid Act downloaded from the website has been filed vide diary no. 6012 dated 29.04.2019
That the applicant/ H1 bidder is having serious apprehension regarding the fate of purchase of aforesaid four properties by him in public auction, conducted by this Forum and hence the applicant is seeking kind intervention of this Forum as now the applicant/H1 bidder is required to deposit the balance 75% of the bid amount within the period of 15 days to be completed on 12.04.2019.
In view of the above facts and circumstances the H1 bidder has requested to decide the validity of the e-auction conducted by this Forum on 12.04.2019, in view of the prohibition, applicable by virtue of Uttaranchal Act no. 29 of 2003 (amendment Act), applicable to the outsider (i.e. the person who are not the resident of Uttarakhand) from purchasing the agricultural land in excess of 250 sq. meters in the state of Uttarakhand and requested to exempt the H1 bidder from depositing the balance 75% of his offered bid for four properties till the disposal of present application filed by him. He requested to pass necessary order of returning back 25% of bid amount to him in case this Forum comes to the conclusion that the auction sale of the aforesaid property is in violation of Uttaranchal Act no. 29 of 2003(amendment Act) or any other law for the time being enforced applicable in the status of Uttarakhand.
Counsel for CD argued this matter at length and also filed written argument on 23.11.2019. The counsel for CD#1 & 2 submitted that the H1 bidder should have been aware of the facts/ rules regarding acquiring land/ property in Uttarakhand and other hill state before going bidding as a participant in auction, it is simply a lame excuse that the applicant was not aware of the facts that there is a prohibition of purchasing agricultural land in excess of 250 sq. meters for the outsider i.e. the person who is not resident of Uttarakhand. The H1 bidder must have done due diligence at their end before participation in the bidding process.
That the H1 bidder did not deposit balance 75% of the bid along with poundage fee and they are trying to find an escape route to save their EMD which otherwise would be forfeited due to non-deposition of balance 75% of the bid amount within the stipulated time. Further plea to refund earnest/ part deposit on the basis of violation of Uttaranchal Act no. 29 of 2003 (amendment Act) does not stands its ground and the same need to be forfeited as per rules and regulation defined in the sale proclamation notice.
In view of the above facts CDs requested to forfeit the 25% amount deposited by the H1 bidder as the rest 75% amount has not been deposited by the H1 bidder within stipulated time of 15 days of the auction.
The CH Bank submitted that in terms of the OA/ present RC the subject four mortgage properties situated at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist. Dehradun has been put on auction by sale proclamation notice dated 27.02.2019 by this Forum and auction is slated for 12.04.2019.
That the H1 bidder has deposited 25% of the total sale price but fail to deposit the rest 75% of the bid amount within the stipulated time of 15 says. Instead of deposition the rest 75% of the bid amount, the H1 bidder filed an application for return of 25% of the bid amount deposited by him on the ground of one notification of Uttaranchal Act no. 29 of 2003 (amendment Act), knowingly that the present sale has been conducted under the provisions of Recovery of Debts and Bankruptcy Act, 1993 which is central Act and it will prevail over the state Act. The Section 31(b) of the RDB Act is stating herein below:-
"Notwithstanding anything contained in any other law for the time being in force, the right of secured creditors to realize secured debts due and payable to them by sale of assets over which security interest is created, Shall have priority and shall be paid in priority over all other debts and government dues including revenue, taxes, cesses and rates due to the Central Government, State Government or local Authority.
The Section 34(1) of the RDB Act save as provided under sub section (2), the provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other Iwa for the time being in force of any instrument having effect by virtue of any law other than this Act.”
In the Act no. 29 of 2003 there is no whisper about the auction sale by the due process at law and moreover it is in the same Act, it is mentioned that “It is extremely pertinent to note that the prohibition is not absolute and only requires permissions from the Government i.e. District Magistrate in case one wishes to purchase land beyond the limits or requirements of the Amended Act. Here before the sale notice this Hon‟ble Tribunal has issued the settling sale proclamation notice dated 23.01.2019 which was duly served to the entire concerned department as well. In compliance of the direction of this Hon'ble Tribunal the Certificate Holder Bank filed the Affidavit of service, but no objection and due claimed by any of the concerned authorities.
That the applicant in the present application could not challenge the validity of sale without depositing the entire amount of the sale price within the stipulated period. It is further hold by the Apex court in the matter of C.N. Paramasivam & Others Vs Sunrise Plaza & others hold as:-
That brings us to the question whether Section 29 of the RDDB Act do not apply the Income Tax Rules in the Second Schedule of the Income Tax Act to the recovery proceedings under RDDB Act with full force and that the expression „as far as possible' appearing in Section 29 vests the Recovery Officer with discretion to apply the said Rules depending upon the fact situation of each case. Section 29 of the RDDB Act 29 is as under:-
Application of certain provisions of income tax Act- The provisions of the Second and Third Schedules of the Income Tax Act 1961 and the Income-Tax (Certificate proceedings) Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modification as if the said provisions and the rules referred to the amount of debts due under this Act instead to the Income Tax:
Provided that any reference under the said provisions and the rules to the "Assessee" shall be constructed as a reference to the defendant under the Act.
The counsel for the CH bank has also submitted that Justice G.P. Singh in his celebrated work on principle of statutory interpretation has explained the concept in detail.
In view of the above facts and circumstances the H1 bidder has filed the present application on false and frivolous ground and the same is raised at belted stage and the present application is devoid of any merit and liable to be dismissed on this sole ground. He requested to not entertain the present application and dismiss the same with exemplary cost.
Arguments of all the parties heard at length. The application filed by the H1 bidder vide diary no. 5677 dared 22.04.2019, and written argument vide diary no. 14172 dated 25.11.2019, reply filed by the CH Bank filed vide diary no. 10346 dated 22.08.2019 written argument vide diary no. 14143 dated 25.11.2019 and written argument of CDs dated
23.11.2019 have also perused. It is pertinent to mention that the mortgage properties (four plots) situated at Doon Height, Mauza Kanswali Kothari, Vikas Nagar, Dist. Dehradun has been put on auction vide sale proclamation notice dated 27.02.2019 and auction was slated for 12.04.2019. As per the said sale proclamation notice the highest bidder is required to deposit 75% of the auction proceed within a period of 15 days from 12.04.2019, but instead of depositing the rest 75% of auction amount along with poundage fee in terms of the said sale proclamation notice, the H1 bidder has filed aforesaid application on 22.04.2019 by special mentioning the matter and notice was issued to the CH Bank.
It is pertinent to mention that the aforesaid sale proclamation notice was issued under RDDB Act and the relevant provisions under Section 31(B) of the RDDB Act will prevail over the state Acts. Moreover, on plain reading of the documents furnished by the H1 bidder vide diary no. 6012 dated 29.04.2019 it has been observed that the prohibition is not absolute and only requires permission from the Government i.e. the District Magistrate in case one wishes to purchase land beyond the limits or requirements of the amendment Acts.
Having, in view of the above facts and rule position, as the highest bidder has not deposited the full auction amount along with poundage fee in the prescribed time limit in terms of the sale proclamation notice, this Forum does not find any merit in the request of the bidder. Hence, the same is dismissed and EMDs deposited by the highest bidder stands forfeited in terms of Rule 58 of 2nd Schedule of Income Tax Act, 1961.
Ordered Accordingly.
Copy of this order be given dasti to all the concerned parties.
The said order was challenged before the DRT and Ld. PO has passed the following order on 18.03.2020.
This appeal is preferred Appeal under Section 30 of Recovery of Debts Due to Banks and financial Institutions Act, 1993 against the order dated 28.11.2019 passed by Ld. Recovery Officer-II, Debts Recovery Tribunal-II, Delhi in R.C. No. 06 of 2016, titled as Corporation Bank Vs. S.R.S. Advertising & Marketing Pvt. Ltd. & Ors. And the factual matrix leading to the filing of the present appeal is as follows:
The factual matrix leading to the filing of the present appeal is as follows:
This Tribunal vide its order dated 01.03.2016 issued a Recovery Certificate No.06 of 2016 for a sum of Rs.1,37,45,742.50 together with cost and pendent elite and future interest @ 12% p.a. from 04.02.2014 till its realization against R-2 to R-4 and in terms of the directions, the Ld. RO vide his order dated 27.02.2019 issued the sale proclamation qua the properties i.e. (1) Khasra No. 833, Plot No. 224, admeasuring 334 sq. meter at Doon Height, Mauza Kansawali Kathari, Vikas Nagar, Dist Dehradun, (2) Khasra No. 786, Plot No. 224, admeasuring 635 sq. meter, at Doon Height, Mauza Knsawali Kothari, Vikas Nagar, Dist Dehradun, (3) Khasra No. 556, Plot No. 224, admeasuring 518 sq. meter, at Doon height, Mauza Kansawli Kothari Kothari, Vikas Nagar, Dist Dehradun, (4) Khasra No. 786, Plot No. 224, admeasuring 845 sq. meter, at Doon Height, Mauza Kansawli Kothari Kothari, Vikas Nagar, Dist Dehradun. Appellant came to know about the auction of the above mentioned properties through sale notice dated 27.2.2019 published in the newspapers and no detail for any encumbrances was given in the said notice. The aforesaid auction was conducted on 12.4.2019 wherein the Appellant was declared as the highest successful Bidder for purchasing the Properties and the Appellant deposited 25% of the bid price for aforesaid four properties. Details of deposited amount are as under:
Sl.
No.
Bid Value of Properties.
10%Amt.
15%Amt.
Total Amt.
1
15,00,000/-
80,000/-
2,95,000/-
3,75,000/-
2
19,00,000/-
1,20,000/-
3,55,000/-
4,75,000/-
3
23,00,000/-
1,50,000/-
4,25,000/-
5,75,000/-
4
28,00,000/-
1,90,000/-
5,10,000/-
7,00,000/-
Total
21,25,000/-
After making his bid for the aforesaid properties, the Appellant came across an article on the internet, according to which there is a prohibition of purchasing agricultural land in the state of Uttrakhand,in excess of 250 Sq. meter for an outsider. That the state of Uttarkand(UK) vide notification dated 16.7.2007 amended the UK (the UK Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007 whereby as per section 1(4)(1)(a) there was a bar on purchasing land exceeding 250 sq. meter by any non resident of UK.
That the above notification passed by the Govt. of UK was challenged before the High Court of UK, Nainital in W.P.(C) No.3 of 2011. Hon‟ble High Court of UK passed their decision vide its order dated 11.04.2014. Hence, In view of the decision of the Hon‟ble High Court as well as Hon‟ble Supreme Court of India, the provisions of the said Act, imposing a bar on purchase of land beyond 250 sq. meters by non residents of UK, stands in force. It is further contended that the RO has failed to consider the legal issue raised by the Appellant, in terms of the auction proceedings being bad in law and also the RO failed to appreciate that in view of the statutory bar imposed by the state of Uttarkand on sale of the properties, the entire sale process as well as sale notice was avoid abinitio, being in violation of the law laid down by the Gov. of UK and thus being void as per section 23 of Indian Contract Act. It is further contended that the Recovery Officer has committed a grave error in law in holding that since the permission from the District Magistrate of the state of UK could be obtained for purchasing the properties, the same would not act alegal bar. Once there was any permission required for purchase of the properties, the same should have been clearly stated in the sale notice. Moreover, the provisions of the said State Act stipulate, that such permission has to be taken prior to purchase of the properties and not post such purchase. It would be pertinent to mention that it was incumbent upon the R-1 Bank to have mentioned this fact in the sale notice and apprised the intended bidders/purchasers of the said legal bar. However, the R-1 with malafide and dishonest intention, deliberately concealed the said fact in the Sale Notice dated 27.2.2019. Appellant further submits that as per the terms of the sale notice Appellant being the highest bidder deposited 25% of the bid amount by the next Bank working day and the balance 75% of the bid amount was to be deposited by the Appellant on or before 15th day of the date of auction, which would have expired on 27.4.2019. Before the expiry of the 15 day period (13.03.2019) and upon becoming aware about the legal bar on the sale of the properties by non UK residents, the Appellant immediately on 22.04.2019 filed an Application vide diary no. 5677 before the Ld. RO. Thereafter, the Appellant brought the legal issue of there being a statutory bar on sale of properties to non residents of UK to the notice of the RO and prayed before the Ld.RO to take a view on the purchase of the auction, in view of the said legal bar and in case it is held that the sale of the properties in question cannot take place in favor of the Appellant due to the statutory bar, in that eventuality to return the 25% the bid amount deposited by Appellant along with interest and prays to set aside the impugned order dated 28.11.2019 passed by the Ld. RO, Delhi in RC No.06 of 2016, adjudicate upon the legality of the sale of the properties in question in favour of the Appellant, keeping in view the notification dated 16.07.2007 of the Govt. of Uttrakhand and in case the said notice would not be a bar for the appellant in purchasing the said properties, grant 15 days time to the Appellant to deposit the balance 75% of the bid amount and direct R- 1 Bank to thereafter issue the sale certificate and hand over the physical possession of the properties to the Appellant.
In response to the notice issued, the Respondent Bank has filed its reply contending that the impugned order is valid being passed in consonance with law and does not call for any interference. It is further contended that the present Application is not maintainable as the same has been filed on frivolous ground just to mislead this Tribunal in order to defeat the present recovery proceedings initiated by the Bank. R-1 Bank further submits that the auction sale is valid sale and there was no legal bar for transfer of title in favor of the Appellant, by means of the said auction sale.
I have heard learned counsel for the parties and have gone through the entire material on record carefully.
Now the point for consideration is whether the Appellant is entitled for refund of the 25% of the amount deposited by him at the time of auction, as prayed for ?
The contention of the Appellant is that by virtue of the provisions of the Act 29 of 2003 of Uttranchal State, a person who is outsider cannot purchase more than 250 sq. meters and the same was upheld by the Hon‟ble High Court of Uttrakhand in W.P.(C ) No.03/2011 dated 11.04.2014 but the auction is conducted under the provisions of the RDDBFI Act wherein it is provided that the provisions of the RDDBFI Act prevails over the other acts which are inconsistent with the provisions of the RDDBFI Act. Further, the Hon‟ble Apex Court in UCO Bank and Anr. V Dipak Debbarma and others (Civil Appeal No.11247 of 2016 and Civil Appeal No. 11250 of 2016), the Act of 2002 is relatable to the entry of banking which is included in List 1 of the 7th Schedule. Sale of mortgaged property by a bank is an inseparable and integral part of the business of banking. The object of the State Act, as already noted is an attempt to consolidate the land revenue law in the State and also to provide measures of agrarian reforms. The field of encroachment made by the State legislature is in the area of banking. So long there did not exist any parallel Central Act dealing with sale of secured assets and referable to entry 45 of List 1, the State Act, including Section 187, operated validly. However, the moment Parliament stepped in by enacting such a law traceable to Entry 45 and dealing exclusively with activities relating to sale of secured assets, the State Law, to the extent that it is inconsistent with the Act of 2002, must give way. The dominant legislation being the Parliamentary legislation, the provisions of the Tripura Act of 1960, pro tanto (Section 187) would be invalid. It is the provisions of the Act of 2002 which do not contain any embargo on the category of persons to whom mortgaged property can be sold by the Bank for realization of its dues that will prevail over the provisions contained in Section 187 of the Tripura Act of 1960. In view of the same, the contention of the appellant that by virtue of the provisions of the Act of UK Zamindari Abolition and Land Reforms Act, as amended in 2007 cannot be made applicable to the sale conducted by the Ld. RO under the RDDBFI Act. I do not see any merits in the appeal and accordingly the same is dismissed.
Copy of this order be sent to the Ld. Recovery Officer-II of this Tribunal for necessary compliance. No order as to costs.”
I have perused the order passed by the Ld. PO against which the present appeal has been filed and do not find any illegality or irregularity in the same. The auction of the disputed land was conducted on 12.04.2019. The appellant was declared highest bidder and he had deposited 25 % of the bid amount. He was to pay the balance 75% amount on or before 27.04.2019 but he failed to pay the said amount and instead moved an application before the Ld. RO on 22.04.2019 to the effect that he should decide on the validity of the auction in view of the prohibition applicable by virtue of The Uttrakhand (The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007, applicable to the outsiders i.e. who are not residents of Uttarakhand from purchasing the agricultural land in excess of 250 Sq.mtrs. in the State of Uttarakhand. The said application was dismissed by the RO on 28.11.2019 and thereafter, an appeal was filed against the order of Ld. RO before the Ld. DRT and vide its order dated 18.03.2020, Ld. PO, DRT-II Delhi has dismissed the appeal.
In the opinion of this Tribunal there was no need for the appellant to approach the Ld. RO for above clarification for the reason that everyone is supposed to know the law of land and ignorance of law is no excuse. It is a settled law that RDB Act being the Central Act prevails over The Uttrakhand (The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007. Reliance in this regard can be placed upon the judgment of Hon‟ble Supreme Court in UCO Bank and Anr. v. Dipak Debbarma and Ors. (2017) 2 SCC 585, where a more or less similar question had arisen for consideration and the Hon‟ble Court has held as under:
“18. The Act of 2002 is relatable to the Entry of banking which is included in List I of the 7th Schedule. Sale of mortgaged property by a bank is an inseparable and integral part of the business of banking. The object of the State Act, as already noted, is an attempt to consolidate the land revenue law in the State and also to provide measures of agrarian reforms. The field of encroachment made by the State legislature is in the area of banking. So long there did not exist any parallel Central Act dealing with sale of secured assets and referable to Entry 45 of List I, the State Act, including Section 187, operated validly. However, the moment Parliament stepped in by enacting such a law traceable to Entry 45 and dealing exclusively with activities relating to sale of secured assets, the State law, to the extent that it is inconsistent with the Act of 2002, must give way. The dominant legislation being the Parliamentary legislation, the provisions of the Tripura Act of 1960, pro tanto, (Section 187) would be invalid. It is the provisions of the Act of 2002, which do not contain any embargo on the category of persons to whom mortgaged property can be sold by the bank for realisation of its dues that will prevail over the provisions contained in Section 187 of the Tripura Act of 1960.”
In view of the above judgment, it is clear that there was no bar to the appellant to purchase land in question since Recovery of Debt Due to Bank and Financial Institution Act, 1993, being the Central Act and dominant legislation prevails over The Uttrakhand (The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007.
As discussed by the Hon‟ble Supreme Court in UCO Bank and Anr. v. Dipak Debbarma and Ors.(Supra), the sale of mortgaged property is an inseparable and integral part of the business of Banking. The object of State Act in the present matter was to abolish Zamindari and to carry out land reforms. Thus, the moment the DRB Act, 1993 was enacted, it being the dominant legislature, it will prevail over the Section 1(4)(1)(a) of The Uttrakhand (The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007. In these circumstances, the contention of Ld. counsel for the appellant that he was not aware about the law whether an outsider i.e. a non-resident can purchase more than 250 Sq. Meters land in Uttarakhand even when it has been purchased vide auction under RDB Act and, therefore, did not deposit the balance amount, cannot be accepted.
Ld. counsel for the appellant has next argued that Ld. RO ought to have granted appellant five days time to deposit the balance 75% amount after dismissal of his application for the reason that he had filed the application before the Ld. RO on 22. 04.2019 and he was supposed to deposit the entire amount by 27. 04.2019. Had the application been decided on 22.04.2019, by the Ld.RO, he would have deposited the amount within 5 days. He has further argued that since he was pursuing his remedy in bonafide manner before a forum, he should have been allowed five days‟ time to deposit remaining amount. In this regard he has relied upon a judgment of Hon‟ble Supreme Court ‘Sesh Nath Singh vs Baidyabati Sheoraphuli Co.(Supra)‟ and relied upon the follow para which runs as under:-
“100. In any case, Section 5 and Section 14 of the Limitation Act are not mutually exclusive. Even in a case where Section 14 does not strictly apply, the principles of Section 14 can be invoked to grant relief to an applicant under Section 5 of the Limitation Act by purposively construing „sufficient cause‟. It is well settled that omission to refer to the correct section of a statute does not vitiate an order. At the cost of repetition it is reiterated that delay can be condoned irrespective of whether there is any formal application, if there are sufficient materials on record disclosing sufficient cause for the delay.”
I have carefully gone through the said judgment. Section 14 of the Limitation Act, 1963 runs as follows:-
Section 14 in The Limitation Act, 1963
14 Exclusion of time of proceeding bona fide in court without jurisdiction. —
(1) In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.
(2) In computing the period of limitation for any application, the time during which the applicant has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the same party for the same relief shall be excluded, where such proceeding is prosecuted in good faith in a court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.
(3) Notwithstanding anything contained in rule 2 of Order XXIII of the Code of Civil Procedure, 1908 (5 of 1908), the provisions of sub-section (1) shall apply in relation to a fresh suit instituted on permission granted by the court under rule 1 of that Order where such permission is granted on the ground that the first suit must fail by reason of a defect in the jurisdiction of the court or other cause of a like nature. Explanation.— For the purposes of this section,—
(a) in excluding the time during which a former civil proceeding was pending, the day on which that proceeding was instituted and the day on which it ended shall both be counted;
(b) a plaintiff or an applicant resisting an appeal shall be deemed to be prosecuting a proceeding;
(c) misjoinder of parties or of causes of action shall be deemed to be a cause of a like nature with defect of jurisdiction.
Perusal of Section 14 of the Limitation Act, 1963 reveals that in case a litigant is prosecuting with due diligence another civil proceeding in Court of first instance or appeal or in revision against the defendant, the said time shall be excluded for the purpose of limitation.
Section 5 of the Limitation Act, 1963 runs as follows:-
Section 5 in The Limitation Act, 1963
5 Extension of prescribed period in certain cases. —Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908 (5 of 1908), may be admitted after the prescribed period, if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period. Explanation.— The fact that the appellant or the applicant was misled by any order, practice or judgment of the High Court in ascertaining or computing the prescribed period may be sufficient cause within the meaning of this section.
In „Sesh Nath Singh vs Baidyabati Sheoraphuli Co.(Supra),it is held that Section 5 and Section 14 of the Limitation Act are mutually exclusive and even in a case where Section 14 does not strictly apply, the principles of Section 14 can be invoked to grant relief to an applicant under Section 5 of the Limitation Act by purposively construing „sufficient cause‟. However, there has to be sufficient material on record showing sufficient cause for delay.
This Tribunal is of the opinion that there is no sufficient cause shown by the appellant. In the present case, the appellant was to deposit the balance amount of 75% by 27.04.2019. He has failed to do so and instead moved an application on imaginary grounds and in total ignorance of law which cannot be an excuse. In law, ignorantia juris non excusant or ignorantia legis neminem excusat is a legal principle holding that a person who is unaware of a law cannot take an excuse to avoid liability. Since the law on this point is well settled, the appellant was supposed to know the law of the land that he can purchase the property in question in Uttrakhand by the virtue of the fact that Central Act prevails over the State legislature i.e. RDB Act will prevail over The Uttrakhand (The Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950) (Amendment) Act, 2007 in view of the judgment of Hon‟ble Supreme Court in UCO Bank and Anr. v. Dipak Debbarma and Ors.(Supra). On the same reasoning, the contention of the appellant that the Bank should have mentioned the fact that an outsider cannot purchase more than 250 Sq. Meters agricultural land in the auction notice also cannot be accepted.
Thus, in the opinion of this Tribunal, no sufficient cause has been shown by the appellant by virtue of which he could have been granted time to deposit the remaining amount.
In view of the above discussion, there is no illegality or irregularity in the order dated. 18.03.2019 passed by the Ld. PO, DRT, Delhi-II, who has discussed in detail all the contentions of the appellant in para no.6 of its order which is quoted once again for ready reference and runs as follows:-
“The contention of the Appellant is that by virtue of the provisions of the Act 29 of 2003 of Uttranchal State, a person who is outsider cannot purchase more than 250 sq. meters and the same was upheld by the Hon'ble High Court of Uttrakhand in W.P.(C ) No.03/2011 dated 11.04.2014 but the auction is conducted under the provisions of the RDDBFI Act wherein it is provided that the provisions of the RDDBFI Act prevails over the other acts which are inconsistent with the provisions of the RDDBFI Act. Further, the Hon'ble Apex Court in UCO Bank and Anr. V Dipak Debbarma and others (Civil Appeal No.11247 of 2016 and Civil Appeal No. 11250 of 2016), the Act of 2002 is relatable to the entry of banking which is included in List 1 of the 7th Schedule. Sale of mortgaged property by a bank is an inseparable and integral part of the business of banking. The object of the State Act, as already noted is an attempt to consolidate the land revenue law in the State and also to provide measures of agrarian reforms. The field of encroachment made by the State legislature is in the area of banking. So long there did not exist any parallel Central Act dealing with sale of secured assets and referable to entry 45 of List 1, the State Act, including Section 187, operated validly. However, the moment Parliament stepped in by enacting such a law traceable to Entry 45 and dealing exclusively with activities relating to sale of secured assets, the State Law, to the extent that it is inconsistent with the Act of 2002, must give way. The dominant legislation being the Parliamentary legislation, the provisions of the Tripura Act of 1960, pro tanto (Section 187) would be invalid. It is the provisions of the Act of 2002 which do not contain any embargo on the category of persons to whom mortgaged property can be sold by the Bank for realization of its dues that will prevail over the provisions contained in Section 187 of the Tripura Act of 1960. In view of the same, the contention of the appellant that by virtue of the provisions of the Act of UK Zamindari Abolition and Land Reforms Act, as amended in 2007 cannot be made applicable to the sale conducted by the Ld. RO under the RDDBFI Act. I do not see any merits in the appeal and accordingly the same is dismissed.”
Perusal of the impugned order reveals that it is a well reasoned order and has dealt with the objections raised by the appellant. The Tribunal is, thus, of the opinion that there is no illegality or irregularity in the order passed by Ld. PO. The appellant, in fact, has not acted prudently and has himself interpreted the law for his own convenience. The RO has, thus, rightly forfeited the amount. The appeal, therefore, stands dismissed.