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Judgment
JUSTICE R. D. KHARE, CHAIRPERSON
The present appeal has been filed under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (in short "the RDDBFI Act, 1993") against the order dated 22.04.2016, whereby the Appeal No. 08/2012 filed by the appellants-borrowers has been dismissed.
Brief facts of the case are that the respondent-Bank had filed Original Application No. 19/2003 against 08 defendants including the appellants, who were defendants no. 4 & 5, for recovery of Rs.18,09,342.52 along with interest, which was decreed vide ex-parte judgment and order dated 01.08.2005 and the recovery certificate was issued, which was instituted as DRC No. 117/2005 before the Recovery Officer.
It appears that the appellants filed an Application u/s 22(2)(g) of the RDDBFI Act, 1993 before the Tribunal below for recalling the ex-parte judgment/order dated 01.08.2005 passed in OA No. 19/2003, which was dismissed vide order dated 07.03.2011. Thereafter, the appellant no. 1 challenged the ex-parte judgment/order dated 01.08.2005 passed in the said O.A. before this Tribunal by filing Appeal Sr. No. 305/2013, which was dismissed vide order dated 06.08.2013 on the ground of limitation. The said order was challenged by the appellant no. 1 before the Hon'ble High Court by filing Writ Petition No. 6339/2014, which was also dismissed vide order dated 03.02.2014. The said order was challenged by the appellant no. 1 before the Hon'ble Division Bench of High Court, Allahabad, by filing Special Appeal No. 584/2014, which is stated to be still pending.
It transpires that in the execution proceedings, the Recovery Officer issued a sale proclamation scheduling the auction of the property in question on 12.04.2010. Against the said auction, the appellants filed an objection dated 03.05.2010 before the Recovery Officer praying that the auction dated 20.04.2010 may not be confirmed till setting aside the same on the ground that the property has been undervalued and the reserve price of Rs.3.00 lacs has been fixed on a very lower side. It is averred that the appellants filed another objection dated 13.09.2010 with the same prayer on the ground that the existing partner of the firm M/s Progressive Computer Shri A. K. Pandey is having personal property at Ballia City, which is valued at Rs.25.00 lacs and the Bank should have proceeded against the same before proceeding against the property of the appellants, as it is not mortgaged in the present case. The Recovery Officer vide order dated 02.07.2012 rejected the objections of the appellants and ordered for confirmation of sale in favour of the auction purchaser. Against the said order, the appellants filed an appeal u/s 30 of the RDDBFI Act before the Tribunal below, which has been dismissed vide order impugned. Being aggrieved by the said order, the present appeal has been filed by the appellants.
Learned counsel for the appellant submitted that in the present case the appellants had not mortgaged their property, but the property of the appellants was mortgaged in other account of M/s G P Industry, but the Recovery Officer published auction sale notice in the newspapers on 01.04.2010 scheduling the auction of the property in question on 12.04.2010. In support of his contention, learned counsel has referred to Annexure No. 1 to the memo of appeal, which is copy of the mortgage deed dated 26.10.1993. It was further contended that the property mortgaged is having total area of 1.49 Acres, but the Bank obtained the valuation of an area of 1.20 Acres and the reserve price was fixed for Rs.3.00 lacs, whereas the entire area of 1.49 Acres were sold by the Recovery Officer. It was also contended that as per the sale notice dated 01.04.2010, the property in question was to be auctioned on 12.04.2010, but without assigning any reason, the said property was sold on 20.04.2010 without issuing or publication of sale notice, which is clear from the report of the Advocate Commission dated 13.04.2010 and 20.04.2010, copies of which are placed at page no. 48 to 54.
Learned counsel further submitted that the entire proceedings for auction were collusive, fraudulent and predetermined for the reason that the demand drafts were got prepared from the same account by the bidders and numbers of the DDs were also one after the other, which is clearly mentioned by the Advocate Commissioner in its report as mentioned above. It was further contended that the appellants sought an information under the RTI Act from the respondent-Bank seeking exact outstanding amount against the firm M/s Progressive Computers System, which was replied by the Bank vide letter dated 07.04.2012 along with statement of account having zero balance as on 10.12.2007. It was lastly contended that without considering these facts, the Tribunal below has dismissed the appeal of the appellants, thus the order impugned is not sustainable. It was, therefore, prayed that the order impugned may be set aside and the appeal may be allowed.
Learned counsel for the respondent-bank submitted that the appellant no. 1 being the sole and absolute owner of the property in question has mortgaged the same in favour of the respondent-Bank on 26.10.1993, which was further extended on 17.11.1997 for the loan of M/s G P Industries. It was further contended that the valuation report was obtained by the Bank from the approved valuer, who had assessed the value of the property in question on the basis of the actual area available. It was thus contended that the contention of the appellant that the property was valued by taking its less area is incorrect. As in the said valuation report, area as per mortgage deed as well as the actual area has been mentioned and as such the reserve price was fixed on the basis of actual area of the property in question.
Learned counsel also submitted that the report of the Advocate Commissioner dated 13.04.2010 clearly shows that the auction scheduled on 12.04.2010 at the premises of Branch of the Bank could not be started due to hindrances created by the appellants. It was thus contended that the Recovery Officer has rightly postponed the auction scheduled on 12.04.2010 to 20.04.2010. It was further contended that the Recovery Officer vide its order dated 24.02.2010 had passed an order for auction of the property in question on 12.04.2010 and thus had issued an order of proclamation of sale to be conducted over the property on 10.03.2010, as such it is clear that a clear 30 days notice was given from the date of auction on 12.04.2010. It was thus contended that the Tribunal below has rightly passed the order impugned in accordance with law and the judgment does not need any interference by this Tribunal. It was, therefore, prayed that the appeal filed by the appellant may be dismissed with heavy costs.
Learned counsel for the respondents-auction purchasers has adopted the arguments as advanced by the learned counsel for the respondent-Bank adding further that they are bonafide purchasers of the property in question and have deposited the entire sale consideration with the respondent-Bank. It was, therefore, prayed that the sale may not be disturbed as at this stage and the appeal filed by the appellants may be dismissed with heavy costs.
I have considered the rival contentions of the learned counsels for the parties and perused the material available on record.
The grievance of the appellants is that the property has been sold at undervalued price and without issuing any fresh proclamation of sale.
So far as the sale of the property in question at undervalued price is concerned, the valuation report dated 07.12.2009 is relevant, copy of which is placed at page no. 42 to 47 of the paper book. As per the said report, the total area of the property in question is 1.49 Acre as per the deed, but for the purpose of valuation, the area of the property in question was taken as 1.20 acre, as the sale notice was published on 01.04.2010 for auction of 1.49 Acre. If the actual area of the property was 1.20 Acre, then the sale notice ought to have not been issued for the area, which was not existing, meaning thereby the quantity proposed for sale and the quantity taken for valuation for the purpose of fixing a reserve price is different from each other. Thus it is clear that the property was got valued taking less area of the property in question and reserved price was fixed at lower side, but the sale notice was published for sale total area of 1.49 Acre. As such the Recovery Officer has sold the property in question on its own whims. Hence, it is held that the property has been sold at undervalued price. Thus, on this count alone, the auction sale dated 20.04.2010 is liable to be set-aside.
So far as the contention of the appellants that the property was sold on 20.04.2010 without issuing/publishing sale notice is concerned, it is to be seen that the sale notice was published in the newspapers scheduling the auction of the property in question to be held on 12.04.2010 at the premises of the respondent-Bank at Balia Branch, but the same could not take place and the same was deferred by the Advocate Commissioner to 20.04.2010 and the property was sold on the said date. Now the question arises, as to whether, the Advocate Commissioner, who was conducting the said sale, had power to defer the sale to another date without issuing fresh sale proclamation or not?
In this regard, the Tribunal below vide order impugned has held that there was no need to issue fresh proclamation in view of the Appendix III to 2nd Schedule of the Income Tax Act. While going through the said provisions, the sub clause 1 of the said Rule clearly says that the Tax Recovery Officer may, in his discretion, adjourn any sale hereunder to a specified day and hour; and the officer conducting any such sale may, in his discretion, adjourn the sale, recording his reasons for such adjournment; provided that, where the sale is made in, or within the precincts of, the office of the Tax Recovery Officer, no such adjournment shall be made without leave of the Tax Recovery Officer. Thus, it is clear that the sale can be deferred by the officer, who is conducting the sale, after obtaining the permission/direction in writing from the Recovery Officer by recording reasons for such adjournment. In the present case, the sale was fixed on 20.04.2010, but the Advocate Commissioner had given his report on 13.04.2010, thus it is clear that on the said date, there was no written instruction/permission of the Recovery Officer. However, there is nothing on record, which may show that the Recovery Officer had ever given any permission/direction in writing to the Advocate Commissioner for deferring the scheduled date of auction from 12.04.2010 to 20.04.2010. In this regard, the respondent-Bank in para 26 of its reply has only stated that the Recovery Officer has rightly postponed the auction sale scheduled date from 12.04.2010 to 20.04.2010, but in support of it, he has not filed any document, which may show that on which date and time, the Recovery Officer had given any permission/approval for the deferment of the said sale in writing. As such it can be said that the Advocate Commissioner in its own capacity has adjourned the date of auction from 12.04.2010 to 20.04.2010, which is not permissible in the eye of law, but without considering these facts, Recovery Officer has rejected the objection of the appellants and confirmed the auction sale dated 20.04.2010 vide order dated 02.07.2012, which has been affirmed by the Tribunal below vide order impugned. Thus both the orders are not sustainable in the eye of law.
In view of the discussions as held above, the auction dated 20.04.2010 conducted by the Recovery Officer is set-aside. Consequently, the order impugned as well as the order dated 02.07.2012 passed by the Recovery Officer in pursuance of the auction sale dated 20.04.2010 is also set-aside.
The appeal filed by the appellant is accordingly disposed of with no order as to costs.
A copy of this judgment be forwarded to the parties as well as to the DRT concerned and also be uploaded on the e-DRT portal.