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Allahabad High Court · body

2013 DIGILAW 1901 (ALL)

Lal Bai Patel v. Central Bank of India

2013-07-19

R.K.GUPTA

body2013
JUDGMENT : R.K. GUPTA, J. (CHAIRPERSON) 1. No one appears on behalf of the respondent Nos. 3 to 6 in spite of the fact that the notices were published for them in two Newspapers i.e. one in English Newspaper "Hindustan Times" and another in Daily Hindi Newspaper 'Aaj' dated 26th May, 2013 under the circumstances they are deemed to have been served. They are heard. The present case has been remanded by the Hon'ble High Court of Judicature at Allahabad by its judgment dated 18th December, 2012 passed in Writ-C No. 13595/2003, by which the Hon'ble High Court has set aside the order passed appeal preferred by the appellant was dismissed as not maintainable. The Hon'ble High Court by this order as aforesaid has directed that the appeal before this Tribunal is maintainable against the order passed by the Recovery Officer, since the order was passed by the Recovery Officer at the instance of the Presiding Officer; therefore, it will be futile to direct the party to prefer the appeal under Section 30 of the RDDBFI Act, 1993. On the basis of the order of remand passed by the Hon'ble High Court the present Appeal is heard. 2. The present appeal is preferred by the appellant who is the auction purchaser challenging the order passed by the Recovery Officer on 29th January, 2003 and also the order passed by the Presiding Officer on 10th January, 2003. 3. The relevant facts for the adjudication of the present case are that the respondent No. 3 was the borrower and the respondent No. 5 was the guarantor and the mortgagor. The main borrower took the facility of loan from the respondent No. 1 and the respondent No. 5 was the guarantor by creating the mortgage of the property. The loan was not repaid by the respondent No. 3, therefore, the Bank filed the original application before the Tribunal, which was allowed. The Recovery Certificate was issued against the respondent Nos. 3 to 6 which was allowed. The Recovery Certificate was allowed. The Recovery Certificate was for a sum of Rs. 13,70,220/- along with costs of the original application and future and pendente lite interest at the rate of 16.50% per annum with quarterly rests from the date of 17th July, 2011 till realization. 3 to 6 which was allowed. The Recovery Certificate was allowed. The Recovery Certificate was for a sum of Rs. 13,70,220/- along with costs of the original application and future and pendente lite interest at the rate of 16.50% per annum with quarterly rests from the date of 17th July, 2011 till realization. The said recovery certificate was put to the execution and the proceedings for the execution were initiated by the Recovery Officer. 4. The property of the respondent No. 5 who was the guarantor and the mortgagor was attached by the Recovery Officer on 2nd September, 2002. After the attachment, the property was put to auction and the sale proclamation was published on 12th December, 2002 notifying the date of auction sale on 18th December, 2002. 5. The appellant participated in the auction and deposited the earnest money. His bid was for a sum of Rs. 1.15 lacs which was the highest one. The Recovery Officer was having the power to confirm the auction. He issued the provisional sale certificate on 18th December, 2002, which is placed on record as Annexure No. 4 of the paper book. 6. This is to be seen that after when the auction was conducted on 18th December, 2002, admittedly, the respondent No. 2 did not participate in the auction and he never deposited any earnest money. Even without participating in the auction, the respondent No. 2 sent a letter to the Presiding Officer and alleged to have been sent by the post on 19th December, 2002. The said letter was entertained by the Presiding Officer and an endorsement on the said letter was made giving the direction to the Recovery Officer not to confirm the auction on the ground that a sum of Rs. 15.00 lacs had been offered by the respondent No. 2. The Presiding Officer in the proceedings of the recovery also wrote an order sheet on 10th January, 2003, which reads as under: A letter dated 19th December, 2002 has been received from S. Ranjan & Co. in the office on 1st January, 2003 regarding proposal of Rs. 15 lacs for consideration and placed before the Hon'ble P.O. on 10th January, 2003 by the Officer. ORDER R.O. let sale be not confirmed. in the office on 1st January, 2003 regarding proposal of Rs. 15 lacs for consideration and placed before the Hon'ble P.O. on 10th January, 2003 by the Officer. ORDER R.O. let sale be not confirmed. An offer of the amount shown be given to the author of this letter who will deposit the amount proposed as sale consideration up to 27th January, 2003 and the offer be kept open. Record shows that no order has been passed after 30th December, 2002. Sd/- A.S. Choudhary P.O., DRT, Alld. (order passed on the application) 7. On the basis of the order passed by the Presiding Officer as aforesaid, the Recovery Officer did not confirm the sale and also accepted the amount of Rs. 15.00 lacs as offered by the respondent No. 2. It was further directed that in case Rs. 15.00 lacs as offered by the respondent No. 2 is deposited, then the offer be kept open. Thereafter, the Recovery Officer passed another order on 29th January, 2003. The Recovery Officer obeying the command of the Presiding Officer has not confirmed the auction which was conducted on 18th December, 2002, wherein the appellant was the highest bidder. On the basis of the direction of the Presiding Officer, the Recovery Officer directed for re-auction of the property and the auction conducted on 18th December, 2002, was set aside on the basis of the order passed by the Presiding Officer, DRT, Allahabad on 10th January, 2003. 8. It is stated by the respondent No. 2 that in pursuance to the order passed by the Presiding Officer there was a fresh auction conducted by the Recovery Officer on 12th March, 2003, and his highest bid is accepted. 9. In the present case, the question is, whether the Presiding Officer, after when the auction was conducted by the Recovery Officer on 18th December, 2002, highest bid of the appellant was accepted, further when the respondent No. 2 has never participated in the auction and has never shown his intention to participate in the auction as no earnest money was deposited by him, whether was justified and competent to entertain the letter submitted by the respondent No. 2 by which he offered Rs. 15.00 lacs? 10. 15.00 lacs? 10. To the aforesaid question, this is to be seen that admittedly, the auction was conducted by the Recovery Officer to execute the recovery certificate passed by the Presiding Officer in the original application. When the matter in relation to the recovery is with the Recovery Officer, then the Recovery Officer will be competent authority either to confirm the auction or not to confirm the auction. In case, the Recovery Officer wrongly confirms the auction and does not conduct the auction properly, then the remedy to a person aggrieved is provided under Section 30 of the RDDBFI Act, 1993. The said Section provides to prefer an Appeal to the Presiding Officer against the order passed by the Recovery Officer. Admittedly, no appeal under Section 30 of the RDDBFI Act, 1993 was preferred by any person to the Presiding Officer including respondent No. 5. 11. In the present case, the property of the respondent No. 5 was put to auction. If she was aggrieved with regard to the insufficient reserve price or she was aggrieved of any other reason, then it was open for the respondent No. 5 to have preferred the appeal under Section 30 of the RDDBFI Act, 1993, which was a remedy available to a person aggrieved. At no stage any grievance was made by the respondent No. 5, whose property was put to auction, either challenging the auction or challenging the fixation of the reserve price by the Bank. 12. Surprisingly enough, the respondent No. 2 who was unconnected to the auction which was conducted on 18th December, 2002, as he neither deposited any earnest money nor even participated in the auction, submitted a letter to the Presiding Officer on 19th December, 2002, offering higher price. The letter also does not show as to where from he came to know about the auction conducted on 18th December, 2002. He could only awake after when the auction was completed on 18th December, 2002, then on the next day he alleged to have sent a letter to the Presiding Officer higher price. 13. The letter also does not show as to where from he came to know about the auction conducted on 18th December, 2002. He could only awake after when the auction was completed on 18th December, 2002, then on the next day he alleged to have sent a letter to the Presiding Officer higher price. 13. During the course of the argument, the learned Counsel for the respondent No. 2 at the time of arguments submitted that office of the respondent No. 2 was on the rented space and he was willing to purchase the space, therefore, the letter was sent on 19th December, 2002, to the Presiding Officer to purchase the property, but the fact remains, whether his letter/application could have been entertained by the Presiding Officer on the basis that he has offered higher price particularly, when he has not participated in the auction which was scheduled for 18th December, 2002? The conduct of the respondent No. 2 creates a doubt. The auction notice was published in the local newspaper on 12th December, 2002, notifying the date of auction as 18th December, 2002. He slept over by not even depositing the earnest money and never intended to participate in the auction, but he attempted to purchase the premises from backdoor by moving an application to the Presiding Officer through Post on 19th December, 2002, which was entertained by the Presiding Officer by giving the direction to the Recovery Officer for not confirming the auction, as higher price has been offered by the respondent No. 2 and the Recovery Officer acting on the orders passed by the Presiding Officer did not confirm the auction and directed for re-auction of the property. 14. The application dated 19th December, 2002, moved by the respondent No. 2 was entertained by the Presiding Officer on 10th January, 2003, and he also passed the order on 10th January, 2003, which is reproduced herein above. The said order was passed by the Presiding Officer without even giving the opportunity of any nature to the appellant, who was the highest bidder in the auction conducted on 18th December, 2002, and admittedly, the provisional sale certificate was also issued in the name of the appellant, which is placed on record as Annexure No. 4 to the paper book. The appellant at no point of time was heard before passing the order by the Presiding Officer on 10th January, 2003. 15. Learned Counsel for the respondent No. 2 relied upon certain judgments as such 1969 (3) SCC 537 , Navalkha and Sons v. Ramanya Das; I (2006) BC 428 (SC) : 2006 (6) SCC 69, Daya Manufacturing Co. v. Union Bank of India', AIR 2012 SC 2288 : VII (2012) SLT 242 : IV (2012) BC 527 (SC), Ram Kishun v. State of UP and III 2010 (6) SCC 193 : (2010) BC 1 (SC) : IV (2010) SLT 280, Eureka Forbes v. Allahabad Bank. The said judgments have been relied upon to the preposition that it is the duty of the appropriate authority to sell the property for an appropriate price. In case he fails to discharge his duty, then there could be an interference by the Court of Law. 16. In this regard, this is to be seen that the aforesaid preposition of law will be applicable when any person who is aggrieved of not receiving the appropriate price complains to the competent authority that his property has been sold for an unreasonable price, then the said preposition as enunciated by the Apex Court shall be applicable and there is no such dispute in the present case, but in the present case if a party who slept over and to get the property from backdoor, firstly by not participating in the auction and secondly by not showing the intention to participate in the auction as no earnest money was deposited, then such a party cannot claim any equity. Respondent No. 2 from backdoor attempted to frustrate the claim of the appellant by moving the application on 19th December, 2002, that he is prepared to pay higher price and the Presiding Officer of the Tribunal also joined his hands with respondent No. 2 by entertaining the letter/application dated 19th December, 2002, which in fact was an attempt to get the property from the backdoor and passed the order without even hearing to the highest bidder. If the appellant would have been intimated or would have been given some opportunity of hearing by the Presiding Officer, then there was every possibility for the appellant to have objected to the application of the respondent No. 2, but there was no opportunity of hearing given by the Presiding Officer and the order was passed by the Presiding Officer on 10th January, 2003, in the absence of the appellants. The Recovery Officer being a subordinate to the Presiding Officer has also acted by obeying the directions of the Presiding Officer and set aside the earlier auction. Though no defect or irregularity in the earlier was pointed out either before the Presiding Officer or before Recovery Officer, but it appears that only to favour the respondent No. 2 his application was entertained. It is also not the case that the person whose property was put to auction i.e. respondent No. 5, at no point of time made any grievance either to the Presiding Officer or to the Recovery Officer. 17. As submitted above, the recourse under Section 30 of the RDDBFI Act, 1993 was available but that was not chosen by them, which was available to a person aggrieved. 18. It appears that since the respondent No. 5 was not aggrieved to the auction in any manner including the price, therefore, they have not chosen to prefer any Appeal under Section 30 of the RDDBFI Act, 1993. 19. Learned Counsel for the respondent No. 2 submitted that the interference of the Presiding Officer on the application submitted by the respondent No. 2 was an administrative interference and the same was entertained by the Presiding Officer in exercise of its power of superintendence under Sub-section (2) of Section 7 of the RDDBFI Act, 1993, which provides that the Recovery Officers, the other officers and the employees of the Tribunal shall discharge their function under the general superintendence of the Presiding Officer. 20. In this regard, this is to be seen that, this in the general power of superintendence available to the Presiding Officer over the officers and the employees of the Tribunal including the Recovery Officer. 20. In this regard, this is to be seen that, this in the general power of superintendence available to the Presiding Officer over the officers and the employees of the Tribunal including the Recovery Officer. When there is a specific provision, under Section 30 of the RDDBFI Act, 1993 to prefer an appeal by an aggrieved person against the order passed by the Recovery Officer, then it is not understood as to how the general power of superintendence can be exercised by ignoring the special power of the Appeal, which is provided in the RDDBFI Act, 1993. The general power of superintendence can always be exercised by an officer over his subordinates if there are no specific powers available under the Act, but by virtue of Section 30 of the RDDBFI Act, 1993 a specific provision is available to prefer an appeal against the order passed by the Recovery Officer within a period of 30 days from the date the order is passed. An appeal has to be preferred to the Presiding Officer and a person who is not concerned to the auction conducted on 18th December, 2002, as such as respondent No. 2 who has never participated in the auction, how at his instance the Presiding Officer will exercise the control and supervision over his staff by entertaining the application of the respondent No. 2. Under the circumstances, only inference would be drawn that the Presiding Officer supported the backdoor entry made by the respondent No. 2 to grab the property some how or the other hand by ignoring the rights of the other i.e. appellant, whose bid being a highest was accepted, and also ignored the facts that the respondent No. 5 whose properly was sold never submitted any grievance in any manner. 21. Learned Counsel for the appellant relied upon the judgment passed by Division Bench of the Hon'ble High Court of Judicature at Allahabad in Akhilesh Pathak v. State of U.P., 2012 (1) ADJ 1 (DB) to the preposition that after the property is put to auction and highest bid was received, auction as such cannot be declared as bad particularly, when there are no allegations for material irregularity or fraud established in auction by the person aggrieved. 22. 22. The application dated 19th December, 2002, which was entertained by the Presiding Officer placed on record does not show that there was any irregularity or fraud established in the auction other than the fact that higher amount was offered by the respondent No. 2. There was no other reason to set aside the auction by not confirming the bid and thereby directing for a fresh auction. 23. After when the said judgment was completed, the respondent No. 2 made a request to this Court that he should also be heard. He was also heard. 24. During the course of the argument, the respondent No, 2 in person in presence of his Counsel submitted that he is now only interested to get the money back whatever he has deposited i.e. Rs. 16.50 lacs along with the simple interest @ 10% per annum. Accordingly, the DRT is directed to refund the money to the respondent No. 2 along with the simple interest @ 10% per annum, within a period of 30 days on production of the certified copy of this order by the respondent No. 2. 25. For the reasons stated hereinabove, the order passed by the Presiding Officer on 10th January, 2003 and the order passed by the Recovery Officer on 29th January, 2003, are set aside. The sale against the appellant stands confirmed. All consequences of this order shall follow. In view of the aforesaid, the appeal stands allowed with directions as above.