Vijay Kumar vs State Bank Of India And Ors.

Ranjit Singh, J

The present appeal was being heard with another appeal (No. 449/2013) titled Shivam Aggarwal vs. State Bank of India & Ors. The said appeal, however, was dismissed on 19.11.2015. On request made by the Counsel for the appellant, the present appeal was kept for hearing. The present appellant is a borrower and has impugned the order passed by the Tribunal below dismissing his appeal filed under Section 30 of the RDDBFI Act where the appellant had prayed for setting aside the auction sale held on 5.2.2007.

During the course of hearing, the Counsel for the respondent raised an objection about the maintainability of the appeal as the appellant had neither made any pre-deposit nor made any prayer for seeking waiver of the requirement of pre-deposit. The Counsel for the appellant had accordingly prayed for time to move appropriate application seeking wavier of the requirement of pre-deposit. This objection was raised on 10.4.2015. Thereafter, on three dates, the Counsel for the appellant did not appear and was represented by a proxy Counsel. Thus, the issue of seeking waiver of the requirement of pre-deposit remained pending when, after seven months, request for further time was made to move such an application. On 2.11.2015, this prayer was allowed subject to payment of Rs. 2,000/- as cost. This Tribunal had then also observed that if the appellant failed to move the application within one week, the appeal would be heard on the subsequent date as it was.

Cost was paid on 26.11.2015 and at the request of the proxy Counsel appearing for the Counsel for the appellant the case was adjourned to 18.12.2015. No application seeking wavier of the requirement of pre-deposit is found on record. The Counsel for the appellant, however, has made an attempt to pass written submissions, but is asked to address the Tribunal orally.

The main plea of the Counsel for the appellant to seek waiver of pre-deposit is that this property stands sold by way of auction sale from which an amount of Rs. 12.10 lac has been realized and as such appellant is not required to make any further deposit. Once the appellant is challenging the sale as such, he cannot seek benefit of the amount realized from the sale of his property. If the sale is set aside, the amount may have to be returned. In any event, no such application seeking waiver of the requirement of pre-deposit is found on record. The application moved by the appellant perhaps is lying under objection. No action was taken to remove the objection, if any. The appeal is liable to be dismissed as not maintainable.

Ignoring the legal hurdle, I have considered the plea of the appellant to see if any case is made out to interfere in the appeal filed on his behalf.

The facts have already been noticed while disposing of the Appeal No. 449/2013. To recapitulate the same, it may be noticed that a land measuring 2K (907.50 sq.yds) belonging to the appellant and located within the premises of Gurdeep Cycles (Single & Co.), Single Cycle road, Dhandari Kalan, Ludhiana was put to public auction on 5.2.2007. The said property was purchased by M/s. Ashoka Industrial Fastners for a sum of Rs. 12.10 lac. This property had been put to sale in execution of R.C. 525/2006 which was issued on 9.6.1998 for a sum of Rs. 36,91,374.53 in a case titled as SBI v. Madan Lal Lakpat Rai.

Appellant statedly filed objections on 6.3.2007 pleading that he was excluded from the firm in 1995 and that there were six firms working in the total area of 26K out of which 2K was under his name. As per him, all the six firms had availed various financial facilities from the Banks and financial institutions. Out of this land measuring 26K, 23K 91/2M was sold by PFC. As per the appellant, he had approached the Bank with an OTS proposal which had not been decided. He accordingly challenged the auction held on 5.2.2007 stating that it was not a public auction in the eyes of law. As per him, the property was at a throw-away.

The R.O. considered the objections filed by the appellant. The case was taken up on 10.3.2008 and on the basis of the replies filed by the Bank, auction purchaser and the report of the Court Auctioneer, the R.O. had held that the auction was conducted as per rules, which was considered satisfactory. R.O. accordingly dismissed the objection relating to violation of procedure while conducting the sale. In order to provide fair opportunity to the borrower, the R.O. considered the offer made for purchase of the property for Rs. 21 lac and kept it open. He accordingly issued notice to the appellant for giving him a chance and to bring a better buyer for Rs. 21 lac and directed him to deposit the amount within seven days to show his bona fides. In the notice given to the borrower appellant, the R.O. had clearly mentioned that if he failed to deposit the amount within the period, all his objections would stand dismissed and the sale shall stand confirmed in favour of the auction purchaser. The auction purchaser was also directed to deposit the poundage fee.

Instead, the appellant thereafter came with similar objection on 18.3.2008 i.e. after lapse of one year, seeking setting aside of the auction held on 5.2.2007. He also sought permission to bring an intending buyer for Rs. 18 lac. This application was accompanied by another application containing an affidavit of one Mr. Shivam Aggarwal with an offer to purchase the property for Rs. 18 lac. A demand draft of Rs. 4.50 lac, i.e., 25% of the amount offered was annexed therewith.

The case was thereafter listed before the R.O. on 24th, 25th and 27th March, 2008. The auction purchaser filed response to this application and objected to the very maintainability of the application. The auction purchaser also pleaded that these objections were filed with mala fide intention without any basis.

The R.O. dismissed the objection filed by the borrower appellant by holding that the objection which he filed on 6.3.2007 was without any deposit of the amount along with interest and penalty and thus would not fall within the purview of Rule 60 of the Second Schedule to the Income Tax Act. Initially, the prayer was made that the appellant had an intending buyer for the property for a sum of Rs. 21 lac and the offer to purchase the property for a sum of Rs. 18 lac had come after more than a year and, that too, without offering full purchase money. The R.O. found the intention of the appellant being not bona fide wherein he was raising frivolous objections to delay the proceedings. The R.O. accordingly dismissed the said objections.

Aggrieved by this order, the appellant and Shivam Aggarwal, intending buyer, filed two separate appeals. The Tribunal below, vide its order dated 23.10.2013, has dismissed both the appeals against which two separate appeals have been filed by the appellant and said Mr. Shivam Aggarwal before this Tribunal. The appeal filed by Mr. Shivam Aggarwal has already been dismissed on 19.11.2015.

The attempt by the appellant to introduce Mr. Shivam Aggarwal with offer of Rs. 18 lac against the plea that he had buyer of Rs. 21 lac was required to be curbed in the bud but was entertained. In fact, the R.O. had ordered that if the borrower failed to deposit the amount within seven days, his objections shall stand dismissed. This preventive order was enough to bring an end to this litigation. The approach by the appellant to introduce Mr. Shivam Aggarwal after one year was unfairly entertained. Result is that the appellant misled this Tribunal also to urge that he has a better buyer which led to inter se bidding.

During the course of hearing of these appeals, it was put to the Counsel for the appellant if he had any better buyer even today who is ready to offer the rate prevalent at the moment. The Counsel had prayed for one week's time, which was allowed. On the next date, the appellant and the father of Mr. Shivam Aggarwal came present. The appellant stated before this Tribunal that he had not been able to arrange any better buyer. The father of Mr. Shivam Aggarwal stated that he was ready to offer 10% more. This Tribunal noticed that this was not the reason for which the appellant had taken time on the previous date. Accordingly, it was observed that appellants were only intended to buy time and were not serious.

On the next date, i.e., 3.11.2014, the Counsel for the appellant appeared and stated that he had a better buyer who was ready to pay Rs. 6 lac upfront and offered to deposit a total amount of Rs. 24 lac within a period of one month. This request was not accepted. To ascertain bona fides of the intending buyer, he was directed to deposit Rs. 24 lac within 10 days. Yet another person named Mr. Anand Goyal was introduced as intending buyer this time. Mr. Goyal tendered a total amount of Rs. 24 lac which have been deposited with the Registrar of this Tribunal. An option was given to the auction purchaser to match the bid. The auction purchaser matched the bid given by the intending buyer. The appellant came up with the plea to pay a sum of Rs. 25 lac. After some reluctance, the auction purchaser also expressed his readiness to pay a sum of Rs. 25 lac.

The present intending purchaser is newly introduced person who has no right to bid for the property. The appellant had earlier stated before this Tribunal that he had not been able to arrange better buyer. The appellant cannot be permitted to act in this manner and introduce one person after another as intending buyer. If any such person had any interest to buy the property, then he should have participated in an auction. The objections filed by the appellant were dismissed on 6.3.2007 as these were held not maintainable under Rule 60 of the Second Schedule to the Income-Tax Act as application under this rule for setting aside the sale could be maintained on deposit of the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered with interest thereon. Since no deposit had been made by the appellant, the objections filed by him was dismissed. The appellant being aggrieved person was fully entitled to file and maintain appeal against this order before the Tribunal below. The objection against the sale can be filed by a defaulter or any person whose interests are affected by the sale. As already held in Appeal No. 449/2013, a person who is introduced as intending buyer cannot claim interest in the property which was sold in execution of an R.C. and thus the intending buyer could not have filed any objection before the R.O. Even an appeal filed by such an intending buyer under Section 30 and subsequent appeal filed before this Tribunal was held not maintainable.

So far as the case of the appellant is concerned, he was given enough opportunity to bring a better buyer. He did bring a buyer but for a sum which was much less than what he had stated before the Tribunal. The Tribunal was justified in dismissing the appeal of the present appellant as he failed to comply with the provisions of Rule 60 of the Second Schedule to the Income Tax Act. The appellant has been able to sustain the appeal primarily by misleading the Tribunal by introducing yet another person who was not before any fora below. This action of the appellant has now been disapproved by this Tribunal while deciding Appeal No. 449/2013. The appellant thus cannot have any justification to introduce a stranger as buyer at this stage and in this regard reference can be made to Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Products (Gujarat) Ltd. & Ors., IV (2008) BC 536(SC) : VII (2008) SLT 621 : JT 2008 (8) SC 610. It may call for a notice that at one stage the auction purchaser had readily agreed to participate in the inter se bidding. He had also expressed his readiness to pay a sum of Rs. 25 lac when such an offer was made by the intending buyer introduced by the appellant. It will not be now fair to permit the auction purchaser to go back from his commitment and offer which he had made for Rs. 25 lac. Accordingly, directions are issued to the auction purchaser to deposit the balance amount with the Bank. If the auction purchaser fails to do so, the Bank would be entitled to recover this amount from the auction purchaser in accordance with law.

Accordingly, I find no merit in the present appeal and, therefore, would dismiss the same.