M/s. R.S. Infra-Transmission Ltd Versus Saurinindubhai Patel and Ors
M/s. R.S. Infra-Transmission Ltd Versus Saurinindubhai Patel and Ors
Landmark Cases of India / सुप्रीम कोर्ट के ऐतिहासिक फैसले
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3469 OF 2022
M/s. R.S. Infra-Transmission Ltd. …Appellant
Versus
Saurinindubhai Patel and Ors. …Respondents
J U D G M E N T
M.R. SHAH, J.
1. Feeling aggrieved and dissatisfied with the impugned judgment
and order dated 22.12.2015 passed by the High Court of Gujarat at
Ahmedabad in Special Civil Application No. 17981 of 2015 by which the
High Court has allowed the said petition preferred by the respondent
Nos. 1 and 2 herein – original writ petitioners before the High Court and
has set aside the order passed by the Debts Recovery Appellate
Tribunal, Mumbai (hereinafter referred to as “DRAT”) dated 07.09.2015
in Appeal No. 223 of 2007 and has consequently confirmed the sale in
1
favour of the original writ petitioners, respondent No.5 – subsequent
purchaser – M/s. R.S. Infra-Transmission Ltd. has preferred the present
appeal.
2. The facts leading to the present appeal in nutshell are as under:-
2.1 A Bank namely, IndusInd Bank Ltd. (hereinafter referred to as the
“Bank”) filed an O.A. bearing No. 424 of 1999 before the Debt Recovery
Tribunal, Ahmedabad (hereinafter referred to as “DRT”) on 25.05.2006
for recovery of debt and enforcement of security against the original
respondent Nos. 3 to 5 (original borrowers). Recovery Certificate
bearing RP No.153/2006 was issued in favour of the Bank for recovery
of an amount of Rs.71,88,819.87/- recoverable from the original
borrowers - respondent Nos. 3 to 5 with further interest payable at the
rate of 12% p.a. from 27.12.1999 till realization and the costs, charges
and expenses of the proceedings for recovery thereof.
2.2 The immovable properties, being Survey No.188/P admeasuring
36,735 square meters owned by respondent No.3 (borrower) and Survey
No.187/P admeasuring 8280.51 square meters owned by respondent
No.5 (borrower) situated at Mauje Karan Nagar, Tehsil Kadi, District
Mehsana got attached in pursuance of the above Recovery
Order/Certificate.
2.3 A proclamation of sale of the properties came to be issued by the
Recovery Officer, DRT on 28.11.2006 fixing the public auction on
2
08.01.2007. As per the proclamation of the sale, the amount due and
payable was Rs.1,27,30,527/- including interests as on 30.06.2006. In
the auction held on 08.01.2007, the bid of respondent Nos. 1 and 2
herein (original writ petitioners) being the highest offer being Rs.1.35
crores came to be accepted by the Recovery Officer. The successful
bidders – respondent Nos. 1 and 2 herein deposited the bid amount on
22.01.2007.
2.4 That the original borrowers thereafter filed an application under
Rule 60 of the Second Schedule of the Income Tax Act, 1961 read with
Sections 25 to 29 of the Recovery of Debts due to Banks and Financial
Institutions Act, 1993 for setting aside the above auction vide application
dated 25.01.2007 and submitted a Demand Draft for an amount of
Rs.1,27,30,527/- as specified in the sale proclamation. Respondent
No.3 herein (borrower) also submitted a Demand Draft for Rs.6,75,000/-
for payment to the purchaser as penalty, a sum equal to 5% of the
purchase money and a Demand Draft for Rs.3,01,290/- towards interest
@ 15% from the date of the sale proclamation to the date of deposit, i.e.,
25.01.2007. The Recovery Officer adjourned the matter to 06.02.2007
directing the respondents to serve a copy of the order and the
application on the Bank and the auction purchaser. In the meantime,
the appellant herein expressed its interest in purchasing the properties
3
which were the subject matter of the auction sale and entered into a
Memorandum of Understanding with respondent No.3 (borrower).
2.5 The Bank filed its reply on 06.02.2007 before the Recovery Officer
in response to the application of the respondent No.5 (on the 29th day
from the date of auction). In its reply, the Bank claimed that there was
some shortfall in the amount deposited by the borrower but no
calculation sheet was attached to the reply. The matter was adjourned
for filing of reply by the auction purchaser and the Bank was also
directed to file compliance affidavit. The auction purchasers -
respondent Nos. 1 and 2 herein filed its objection/reply to the
application. The borrower also filed its rejoinder to the reply filed by the
Bank. The matter got adjourned to 15.02.2007 with the following order
passed by the Recovery Officer:-
“………..the bank had still not served the copy of the
calculation sheet.
"Further, he submits a DD for an amount of Rs.2.80
lacs towards difference in calculations, if any. He
farther submits that the CH Bank be directed to serve a
copy of the calculation sheet on the CDs, so that, any
further difference in interest, etc. in calculation may be
paid. Request is allowed. CH Bank is again directed to
serve a· copy of the calculation sheet on the CDs, so
that, the CDs may be able to pay the difference in
payment, if any. "
2.6 Thereafter, the Bank submitted a calculation sheet before the
Recovery Officer on 12.02.2007. According to the calculation sheet, the
4
borrower - respondent No.3 deposited a further sum of Rs.77,647/- with
the Recovery Officer, which was over and above Rs. 2.80 lakhs
deposited as per the order dated 15.02.2007. The Recovery Officer
thereafter passed an order dated 15.02.2007 allowing the application
submitted by the respondent No.3 – borrower by holding that the
borrower had deposited the requisite amount for setting aside the sale
under Rule 60 of the Second Schedule of the Income Tax Act.
Accordingly, the sale of the properties in question came to be set aside.
The Recovery Officer also directed the Bank to hand over all the original
documents pertaining to the immovable properties in question to the
borrower immediately. In compliance of the order passed by the
Recovery Officer, the Bank handed back to the original borrowers the
documents pertaining to the properties in question on 19.02.2007 and on
release of the documents, the request of the Bank to release the amount
deposited was allowed by the Recovery Officer. Immediately on
19.02.2007 itself, the borrowers – respondent Nos.3 to 5 herein
executed two sale deeds in favour of the appellant herein for a sale
consideration of Rs.1,40,89,855/-. That after the sale deeds were
executed in favour of the appellant dated 19.02.2007, the auction
purchasers – respondent Nos. 1 and 2 preferred an appeal bearing
No.11 of 2007 before the DRT, Ahmedabad on 20.02.2007.
5
2.7 The DRT Ahmedabad by order dated 18.05.2007 allowed the said
Appeal No.11 of 2007 and set aside the order passed by the Recovery
Officer passed in Recovery Proceedings No.153 of 2006. The borrowers
then preferred the appeal bearing No.233 of 2007 before the DRAT,
Mumbai against the order dated 18.05.2007 passed by the DRT in
Appeal No.11 of 2007. The appellant herein moved an application
bearing M.A. No.704 of 2007 seeking impleadment in Appeal No.223 of
2007.
2.8 Prior to the borrower preferring Appeal No.223 of 2007,
respondent Nos.1 and 2 herein moved an application before the
Recovery Officer on 31.05.2007 for seeking a direction to the appellant
to maintain status quo over the properties in question and to appoint the
receiver to take possession of the same from the appellant. The said
application came to be rejected by the Recovery Officer vide order dated
31.05.2007. Against the order passed by the Recovery Officer dated
31.05.2007, rejecting the application seeking status quo order in regard
to the properties in question, respondent Nos. 1 and 2 herein preferred
appeal before the DRT being Appeal No. 34 of 2007, which came to be
dismissed by the order dated 08.02.2008. Thereafter respondent Nos. 1
and 2 herein filed an Appeal No.43 of 2008 before the DRAT, Mumbai
against the order dated 08.02.2008.
6
2.9 Further, respondent Nos. 1 and 2 moved cross objections in
Appeal No.223 of 2007 aggrieved by certain observations in the order
dated 18.05.2007 pertaining to the right of redemption of the mortgagers
till the time conveyance is not executed in favour of the successful
auction purchaser.
2.10 By order dated 07.09.2015, the DRAT, Mumbai allowed Appeal
No.223 of 2007 preferred by the borrowers and set aside the auction
sale dated 08.01.2007, which was in favour of the respondent Nos. 1
and 2 herein.
2.11 Feeling aggrieved and dissatisfied with the order passed by the
DRAT, Mumbai dated 07.09.2015, allowing the Appeal No.223 of 2007
and setting aside the auction sale, respondent Nos. 1 and 2 herein (the
auction purchasers) preferred the writ petition before the High Court
being Special Civil Application No.17981 of 2015. By the impugned
judgment and order, the High Court has allowed the said writ petition and
has quashed and set aside order dated 07.09.2015 passed by the DRAT,
Mumbai in Appeal No.223 of 2007 and consequently confirmed the sale
in favour of respondent Nos. 1 and 2 herein (the auction purchasers).
2.12 Feeling aggrieved and dissatisfied with the impugned judgment
and order passed by the High Court, the subsequent purchaser -
respondent No.5 – M/s. R.S. Infra-Transmission Ltd. has preferred the
present appeal.
7
3. Shri Guru Krishnakumar, learned Senior Advocate appearing on
behalf of the appellant – subsequent purchaser has vehemently
submitted that in the present case, as such, the appellant can be said to
be a bona fide purchaser, who purchased the property in question on
payment of full sale consideration. It is submitted that at the time when
the appellant purchased the properties in question, the judgment debtor
had already exercised the rights under Rule 60 of the Second Schedule
of the Income Tax Act, 1961 and after the Recovery Officer passed the
order in favour of the Judgement Debtor and directed the Bank to hand
over the original documents pertaining to the properties in question and
at the time when the appellant purchased the properties in question, the
documents pertaining to the properties in question were handed back to
the judgment debtor. It is submitted that therefore as such any
subsequent order cannot defeat the rights of the appellant, who is a
bona fide purchaser, who purchased the properties in question pursuant
to the order passed by the Recovery Officer dated 15.02.2007.
3.1 On merits, the learned Senior Advocate appearing on behalf of the
appellant has vehemently submitted that if at all there was any mistake
in the proclamation, in not mentioning the correct amount due and
payable by the judgment debtor, it was that of the Recovery Officer. It is
submitted that therefore, any lacuna in the proclamation would not
8
defeat the rights of the judgment debtor when the judgment debtor acted
in a bonafide manner and deposited the entire amount mentioned in the
proclamation of sale.
3.2 It is submitted that in the present case, the judgment debtor
deposited the amount specified in the sale proclamation, i.e.,
Rs.1,27,30,527/- alongwith 5% of the purchase money as penalty for
payment to the auction purchaser and 15% interest from the date of sale
proclamation till the date of deposit as per Rule 60. In fact, an additional
sum of Rs.2.80 lakhs was also paid on 09.02.2007 (anticipated shortfall)
and further a sum of Rs.77,647/- on 13.02.2007 towards the purported
shortfall (after being supplied with the calculation sheet by the Bank).
3.3 It is further submitted that the judgment debtor had on 25.01.2007
(about 17 days after auction) preferred an application under Rule 60 of
the Second Schedule of the Income Tax Act, 1961 seeking to set aside
the auction sale and he, in compliance thereof, had deposited the
amount as above. It is submitted that the Bank filed its reply before the
Recovery Officer on 06.02.2007 and in its reply, the Bank claimed that
there was some shortfall in the amount deposited by the judgment
debtor but no calculation sheet was supplied. It is submitted that the
same was on the 29th day from the date of auction. That if, on
06.02.2007, the Bank would have submitted the calculation sheet and
would have pointed out the shortfall in the amount deposited by the
9
judgment debtor, the latter would have deposited the balance shortfall
amount on the 29th day itself, i.e., within 30 days. That however, the
bank submitted the calculation sheet before the Recovery Officer on
12.02.2007 and immediately on the very next day, i.e., 13.02.2007, the
judgment debtor deposited Rs.77,647/-, which was the shortfall as per
the calculation sheet. Therefore, it can be said that the judgment debtor
had substantially complied with the Rule 60.
3.4 It is submitted that the provisions of the statute and the legislative
intent embodied in Rule 60 of the Second Schedule of the Income Tax
Act, 1961 provides a course of last resort to the judgment debtor to save
his property. That once Rule 60 is exercised in letter and spirt, then the
rights of the judgment debtor are crystallized and correspondingly, the
rights of the auction purchaser reach a vanishing point. That the salient
objective of Rule 60 is to provide a judgment debtor a last and final
opportunity to save/retain his asset. It is urged that such right should not
be defeated on a highly pedantic and hyper technical construction.
Therefore, in the facts and circumstances of the case, the High Court
ought to have appreciated that in the present case, the judgment debtor
had complied with Rule 60 in letter and spirit.
3.5 It is contended that in the present case, the Recovery Officer ought
to have specifically mentioned the exact amount due and payable in the
sale proclamation. That it was the Recovery Officer, who was required
10
to determine the entire amount alongwith the interest, which was due till
the date of issuance of the proclamation. It is submitted that the
Recovery Officer would be in a better position to know the actual value
of the property and to indicate the correct upset price.
3.6 It is urged that it is the duty of the Recovery officer to apply his
mind for determining all the necessary particulars that should be inserted
in the proclamation of sale. Reliance is placed on the decision of this
Court in the case of Gajadhar Prasad Vs. Babu Bhakta Ratan, (1973)
2 SCC 629.
3.7 It is submitted by learned senior counsel that in the present case,
at the most, it can be said that there was an ambiguity in the sale
proclamation to extent that in the sale proclamation, it was mentioned
that the amount due and payable is Rs.1,27,30,527/- including interests
as on 30.06.2006. That however, it was the duty cast upon the
Recovery Officer to mention the exact amount alongwith interest as
interest is paid upto the date of sale proclamation. Therefore, the
judgment debtor has virtually believed that he is required to deposit a
sum of Rs.1,27,30,527/- and therefore, he deposited the same alongwith
5% of the purchase money as penalty for payment to the auction
purchaser and 15% interest from the date of sale proclamation till the
date of deposit. However, there was a shortfall of Rs.77,647/- towards
11
the interest for the period between 30.06.2006 to 08.01.2007, which the
judgment debtor deposited as soon as he was informed by the Bank.
3.8 It is further submitted that a mistake/inaccuracy in the amount
specified in the proclamation, as recovery through sale was ordered,
cannot prejudice the application filed under Rule 60. That a person, who
makes an application under Rule 60 cannot be made to suffer due to the
fault/shortfall, if any, in the computation of the amount sought to be
recovered. It is submitted that the applicant is bound to go by the
amount specified in the proclamation. That the borrower/judgment
debtor cannot be caused to suffer on account of a mistake on the part of
the Court/Executing Officer/Recovery Officer.
3.9 It is further submitted that Rule 60 is to be read with Rule 53. That
as per Rule 60, an application to set aside a sale/auction must be made
to the Recovery Officer by depositing, inter alia, the amount specified in
the proclamation, as that with the recovery of which the sale was
ordered. That as per Rule 53, the proclamation shall be drawn by the
Tax Recovery Officer, after notice to the defaulter. The proclamation
shall state the time and place of sale and shall specify as fairly and
accurately as possible the amount for the recovery of which the sale is
ordered. It is submitted that therefore the legislative intent is that the
amount to be specified in the proclamation of sale must be a fair
estimate of the amount due from the borrowers. That once the provision
12
provides that a specific amount prescribed in the proclamation is to be
deposited and the same is deposited, it would be unjust to hold that the
provisions have not been complied with. It is submitted that an
applicant/judgment debtor cannot be compelled to deposit any
unspecified demands.
3.10 It is further submitted by the learned senior counsel appearing on
behalf of the appellant that even the bona fides of the judgment debtor
are also required to be considered. That in the present case, the auction
of the subject properties took place on 08.01.2007. On the 17th day of
the auction sale, the borrower filed the requisite application under Rule
60 and deposited the amount specified in the proclamation alongwith
other amounts to be deposited under Rule 60, i.e., interest @ 15% p.a.
from the proclamation of date of sale to the date when the deposit is
made and a sum equal to 5% of the purchase money as penalty. That
on 28th/29th day of the auction, the Bank filed its reply to the application
under Rule 60. However, in its reply, the bank did not specifically state
the exact amount of shortfall. That upon the request of the borrowers,
vide order dated 09.02.2007, the Recovery Officer directed the Bank to
serve a copy of the calculation sheet so that the judgment debtor may be
able to pay the amount of difference, if any. In fact, even without waiting
for the supply of the calculation sheet, the borrower deposited Rs.2.80
lakhs in anticipation of the shortfall. Subsequently, the Bank submitted
13
the calculation sheet on 12.02.2007 and it was found that an amount of
Rs.77,647/- was the shortfall. Therefore, immediately on the very next
day, i.e., 13.02.2007, the judgment debtor deposited the shortfall
amount, i.e., Rs.77,647/- with the Recovery Officer. It is submitted that
therefore, all throughout the judgment debtor acted promptly and in a
bonafide manner. Therefore, it cannot be said that there was any
deliberate and/or wilful non-compliance of the provisions of Rule 60,
which defeats the valuable right of the judgment debtor provided under
Rule 60.
3.11 It is further submitted by the learned counsel appearing on behalf
of the appellant that the provisions of Rule 60 ought to be interpreted in
favour of the borrower liberally, as it is the last chance to save his
property without assigning any cause. Reliance is placed upon the
decision of Bombay High Court in the case of Hotel Paras Garden,
Balapur & Anr. Vs. Central Bank of India, Balapur & Ors., 2015 SCC
Online Bom 3398.
3.12 Relying upon the decision of the Punjab & Haryana High Court in
the case of M/s. National Rice and General Mills, Jagraon and Ors.
Vs. Bank of India and Ors., C.W.P. No. 19113 of 2005, it is submitted
that as observed and held by the High Court while considering
compliance of Rule 60, the Court has to consider, firstly, that the deposit
has been made in compliance of Rule 60 with regard to the deposit of
14
the money and then, to see, whether, such irregularity, which has
surfaced has caused any substantial injury to the objector.
3.13 It is submitted that in any case, there has been substantial
compliance of Rule 60. From the aforesaid facts, it can be seen that the
borrower has substantially complied with the provisions of Rule 60 so as
to accomplish the reasonable objectives for which the provision was
passed. Reliance is placed upon the decision of this Court in the case of
Commissioner of Central Excise, New Delhi Vs. Hari Chand Shri
Gopal and Ors., (2011) 1 SCC 236 and Excise Commissioner & Ors.
Vs. Ajith Kumar and Anr., (2008) 5 SCC 495.
3.14 It is submitted that in the present case, the alleged deficit amount
was nominal and in fact was due to the mistake on the part of the
Recovery Officer in specifying the accurate amount for the recovery of
which the sale was ordered. Therefore, the right of the borrower to save
his property conferred under Rule 60 can be said to be a valuable right
and the same shall not be affected on the technical ground and/or
should not be made to suffer due to the mistake on the part of the
Recovery Officer.
3.15 It is further submitted on behalf of the learned counsel appearing
on behalf of the appellant that the right of redemption of mortgage under
Section 13(8) of the Securitization and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002 is to enable the
15
borrower to protect his constitutional right guaranteed under Article 300A
of the Constitution of India. That in fact the borrower’s right to redeem
his property survives till there has been completion of the sale by the
mortgagee, i.e., the bank by registered deed. That in the present case,
the auction sale was not confirmed in favour of the auction purchasers
as the title and ownership of the subject property has been crystallised in
favour of the appellant and sale deeds have been executed and
registered in favour of the appellant.
3.16 Making the above submissions, it is prayed to allow the present
appeal and quash and set aside the impugned judgment and order
passed by the High Court.
4. Present appeal is vehemently opposed by learned counsel
appearing on behalf of the respondent Nos. 1 and 2. It is submitted by
the learned counsel appearing on behalf of respondent Nos. 1 and 2 –
auction purchasers that in the present case, the Hon’ble High Court has
rightly observed and held that there was a non-compliance of Rule 60, in
as much as, the entire amount mentioned in the sale proclamation was
not deposited and there was a shortfall.
4.1 That in the present case, in the said proclamation itself, it was
mentioned that as on 30.06.2006, the amount due and payable would be
Rs.1,27,30,527/- including interest. Therefore, it was for the borrower to
calculate and deposit the amount alongwith the interest on
16
Rs.1,27,30,527/- from the date of recovery certificate till the date of
deposit. It is contended that it is an admitted position that the borrower
deposited a sum of Rs.1,27,30,527/- only and did not deposit the interest
from the date of recovery certificate till the actual deposit. Therefore,
there was a shortfall and hence, it can be said that there was noncompliance of Rule 60.
4.2 It is further submitted that in the present case, the notice on the
application under Rule 60 was issued on 06.02.2007 itself, which was
within 30 days as contemplated by Rule 60. That on the returnable date,
the Bank filed a reply pointing out that the amount paid by the judgment
debtor was less than what was required to be paid and annexed a
calculation sheet. It is submitted that despite the fact that the judgment
debtor was having knowledge about what was the shortfall, he made a
statement before the DRT that he was not aware of the
amount/difference claimed by the Bank and offered to pay Rs. 2.8 lakhs
and no basis of the said amount was shown. It is submitted that this
attempt was clearly dishonest. That according to the Bank, Rs. 4.63
lakhs was outstanding, which the borrower refused to pay. Therefore,
the amount, which was due and payable was Rs. 4.63 lakhs, which was
not deposited by the judgment debtor. That as there was a breach of
Rule 60, the High Court has not committed any error.
17
4.3 It is further submitted by the learned counsel appearing on behalf
of respondent Nos. 1 and 2 – auction purchasers that even the
acquisition is also in favour of the respondents. It is submitted that
respondent Nos. 1 and 2 have deposited a sum of Rs. 1.35 crores in
2007. It is urged that the land in question is a very valuable land so far
as the respondent Nos. 1 and 2 are concerned, as they purchased the
land through Court auction for their business purpose as it already has a
factory adjacent to this plot of land. That on the other hand, the
appellant is a buyer by an internal agreement between the borrower and
the appellant whereas the auction purchaser bought it by auction in court
and by following due process of law. It is submitted that even the
borrower and the appellant did not wait for the appeal period against the
order passed by the Recovery Officer and the appellant and the
borrower executed the sale deeds without waiting for appeal period to
defeat the rights of auction purchaser.
4.4 Making the above submissions, it is prayed to dismiss the present
appeal.
5. We have heard the learned counsel appearing for the respective
parties at length.
6. At the outset, it is required to be noted that by the impugned
judgment and order, the High Court has set aside the order passed by
the DRAT and has confirmed the sale in favour of respondent Nos. 1 and
18
2 – auction purchasers by dismissing the application submitted by the
judgment debtor under Rule 60 of the Second Schedule of the Income
Tax Act, 1961 by observing that as there was a shortfall in the deposit of
the amount while exercising the right under Rule 60 and hence, there
was non-compliance of the provisions of Rule 60.
6.1 However, it is required to be noted that in the sale certificate, the
amount mentioned was Rs.1,27,30,527/- including interest as on
30.06.2006. The judgment debtor while exercising the right under Rule
60 deposited Rs.1,27,30,527/- alongwith Rs. 6,75,000/- for payment to
the purchaser as penalty, a sum equal to 5% of the purchase money and
also further deposited Rs. 3,01,290/- towards interest @ 15% from the
date of sale proclamation to the date of deposit i.e., 25.01.2007.
However, it was the case on behalf of the auction purchasers that there
was a shortfall in not making the payment of interest from 30.06.2006 to
25.01.2007. However, at this stage, it is required to be noted that as
such it was the duty cast upon the Recovery Officer to mention the exact
amount in the sale certificate. The Recovery Officer mentioned the
amount in the Sale Certificate of Rs.1,27,30,527/- including the interest
as on 30.06.2006, however, did not specify any further amount towards
the interest for the period between 30.06.2006 till the date of the sale
proclamation, i.e., 08.01.2007, which the Recovery Officer ought to have
mentioned specifically. The aforesaid mistake and/or inaccuracy on the
19
part of the Recovery Officer led to the shortfall in the deposit of the
amount, which was towards the interest for the period between
30.06.2006 to 08.01.2007, otherwise, the judgment debtor had
substantially complied with Rule 60. The shortfall was Rs.3,57,647/-.
When the judgment debtor deposited the substantial amount of Rs.
1,27,30,527/- and other amounts due and payable under Rule 60
including the penalty and the interest, there was no reason for the
judgment debtor not to deposit Rs. 3,57,647/- which is a very small
amount as against the amount deposited. At this stage, it is required to
be noted that though the Bank filed its reply before the Recovery Officer
in response to the application made by the judgment debtor - borrower
made under Rule 60 and in which it was stated that there was some
shortfall in the amount deposited, but according to the judgment debtor,
no calculation sheet was attached to the reply and/or supplied to the
judgment debtor.
6.2 At the time of hearing of the application under Rule 60 on
09.02.2007, a grievance was made before the Recovery Officer as to
why the Bank had not served a copy of the calculation sheet and in the
meantime, the judgment debtor had himself deposited a further sum of
Rs.2.80 lakhs towards the difference in calculation, if any. The Recovery
Officer directed the Bank to supply the calculation sheet and the Bank
submitted the calculation sheet before the Recovery Officer on
20
12.02.2007 and on that day, a sum of Rs.77,647/- was the shortfall,
which the judgment debtor deposited on the very next day, i.e., on
13.02.2007. If the Bank would have submitted the calculation sheet
earlier alongwith the reply on 06.02.2007, which was 29th day from the
date of auction, the judgment debtor would have deposited the balance
shortfall amount. Therefore, in the facts and circumstances of the case,
it can be said that there was a substantial compliance/ compliance of
Rule 60. If the Recovery Officer would have been accurate in submitting
the exact amount in the sale proclamation due and payable on the date
of sale proclamation then the eventuality which has arisen in the present
case would not have arisen. There was an absurd misconduct on the
part of the Recovery Officer for which the judgment debtor should not be
made to suffer.
6.3 At this stage, it is required to be noted that the right available to the
judgment debtor under Rule 60 is a valuable right and the last
resort/opportunity to the judgment debtor to save his property. It is a
right available to the judgment debtor after his property is sold in a court
auction. Therefore, such a valuable right available to the judgment
debtor to save his property should not be affected on the technical
ground and/or for the mistake and/or the bona fide mistake for which he
was not at all responsible.
21
6.4 The legislative intent of Rule 60 has been dealt with and
considered in detail by the Bombay High Court in the case of Hotel
Paras Garden, Balapur & Anr. (supra). In the aforesaid case, it is
observed that the legislative intent of Rule 60 is to give the defaulter as
much latitude as possible till the end and he can, under Rule 60, without
assigning any cause but after depositing the sum therein mentioned as
mentioned in the sale proclamation within the stipulated time, avoid the
auction and protect his property. Thus, the right which is available to the
judgment debtor under Rule 60 is a most valuable right available and the
same shall not be permitted to be affected on the technical ground
and/or bona fide mistake for which he cannot be said to be at fault.
6.5 Now, so far as the submission on behalf of respondent Nos. 1 and
2 that according to the Bank, a sum of Rs.4.63 lakhs was the balance
amount due and payable against which even subsequently the borrower
has deposited Rs. 3,57,647/- and therefore, still there is a shortfall is
concerned, the aforesaid has no substance. At this stage, it is required
to be noted that on deposit of the aforesaid amount of Rs. 3,5,7647/-,
(i.e., Rs.2,80,000/- + Rs.77,647/-) as on 13.02.2007, the Recovery
Officer directed the Bank to hand over the original documents pertaining
to the impugned properties and file compliance affidavit and thereafter
the Bank was allowed to appropriate the decretal amount deposited by
the judgment debtor and that on 19.02.2007 itself, the Bank complied
22
with the order passed by the Recovery Officer dated 15.02.2007 and
handed back to the judgment debtor the documents pertaining to the
properties in question and requested to release the amount deposited,
which came to be allowed by the Recovery Officer. At that time, no
dispute was raised by the Bank that any further amount was due and
payable. The Bank was satisfied with the deposit of the amount by the
judgment debtor.
7. In view of the above discussion and for the reasons stated above,
the High Court has committed a grave/serious error in quashing and
setting aside the order passed by the DRAT and the Recovery Officer by
which the Recovery Officer and the DRAT set aside the sale in favour of
the auction purchasers. The view taken by the High Court is too
technical. The High Court has not at all considered the facts narrated
hereinabove in its true perspective. The High Court has not at all
appreciated and considered the fact that for the inaccuracy and/or
mistake on the part of the Recovery Officer, the judgment debtor cannot
be made to suffer for no fault of his. The High Court has also not
properly appreciated and considered the valuable right available to the
judgment debtor under Rule 60. As observed and held hereinabove,
when the substantial amount was deposited, there was no reason for the
judgment debtor not to deposit the shortfall, which as such can be said
to be very meagre amount. As and when the judgment debtor was made
23
aware about the shortfall, immediately, the shortfall amount has been
deposited by the judgment debtor.
Under the circumstances, the impugned judgment and order
passed by the High court is unsustainable and the same deserves to be
quashed and set aside.
8. In view of the above and for the reasons stated above, present
appeal succeeds. The impugned judgment and order passed by the
High Court is hereby quashed and set aside. The order passed by the
DRAT dated 07.09.2015 setting aside the auction sale dated 08.01.2007
is hereby restored. The amount deposited by respondent Nos. 1 and 2
shall be returned to them alongwith the interest accrued thereon, if not
received by them so far. To do the substantial justice, we also direct that
the appellant shall pay a further sum of Rs. 10,00,000/- (Rupees Ten
Lakhs) to respondent Nos. 1 and 2 by Demand Draft within a period of
four weeks from today.
Present appeal is allowed accordingly. However, in the facts and
circumstances of the case, there shall be no order as to costs.
…………………………………..J.
[M.R. SHAH]
NEW DELHI; …………………………………..J.
JULY 11, 2022. [B.V. NAGARATHNA]
24
Comments
Post a Comment