Banking recovery — appeal from Recovery Officer's auction confirmation · F2J-C-2905
M/s Durga Rice and Dall Mills & Ors. v. Shri Ram Avtar & Anr. with Bank of Baroda v. Shri Ram Avtar & Ors.
VALIDATED · ACTUAL COURT DOCUMENTSource transparency: The local PDF is an actual court document retained from the complete public source. The official court portal is recorded separately. Verify the official record and subsequent history before reliance.
Holding (ratio)
An auction-sale confirmation derives authority from section 25(a) of the Recovery of Debts statute and is directly appealable to the DRT under section 30(1); serious undervaluation and material irregularity remain judicially reviewable.
Operative order (extract)
Both appeals were allowed, the Single Judge's judgment was set aside and the underlying writ petition was dismissed without costs.
Scope limits
The holding is confined to the issues actually decided in the retained judgment; no view is attributed to the court on questions expressly left open or remanded.
Sources and completeness
- PDF status
- Complete searchable public court copy, retained unchanged
- PDF origin
- Downloaded unchanged from the complete public court-copy source
- PDF pages
- 53
- Extracted words
- 19,081
- PDF SHA-256
d84d1fe4b5288ae228f8e0152234fe2c4211c4317306daa04acded2a0658ed8e
Complete searchable judgment text
HIGH COURT OF JUDICATURE AT ALLAHABAD
SPECIAL APPEAL No. - 339 of 2024
AFR
Reserved on 12.05.2026
Delivered on 07.09.2026
M/s Durga Rice and Dall Mills and 4 others
…..Appellant(s)
Versus
Shri Ram Avtar And another
…..Respondent(s)
Counsel for Appellant(s) : Kartikeya Saran, Ujjawal Satsangi,
Veerendra Kumar Shukla
Counsel for Respondent(s) : Ashok Kumar Lal, Maneesh
Mehrotra, Shreya Gupta
With
SPECIAL APPEAL No. - 376 of 2024
Banaras State Bank Limited Now Bank of Baroda
…..Appellant(s)
Versus
Shri Ram Avtar and 5 others
…..Respondent(s)
Counsel for Appellant(s) : Maneesh Mehrotra
Counsel for Respondent(s) : Shreya Gupta, Veerendra Kumar
Shukla
HON'BLE SARAL SRIVASTAVA, J.
HON'BLE GARIMA PRASHAD, J.
(Delivered by Hon’ble Saral Srivastava,J)
2
SPLA No. - 339 of 2024
1. Heard Sri Naveen Sinha, learned Senior Counsel assisted by Sri
Ujjawal Satsangi and Sri Kartikeya Saran, learned counsels for the
appellants and Sri Manish Goyal, learned Senior Counsel assisted by
Ms. Shreya Gupta, learned counsel for the respondents.
2. Since, both the appeals arise out of a common judgement passed
by the learned Single Judge, therefore, both the appeals are being
decided by a common judgement.
3. For convenience, the facts are being delineated from Special
Appeal No.339 of 2024.
4. The appellants by means of the present appeal have assailed the
judgement and order dated 11.03.2024 passed by the learned Single
Judge in Writ-C No.68334 of 2005. By the impugned judgement, the
learned Single Judge has set aside the judgement and order dated
19.10.2005 passed by the Debt Recovery Appellate Tribunal (hereinafter
referred to as ‘DRAT’) in Appeal No.R-525 of 2005 as well as impugned
order dated 29.04.2005 passed by the Presiding Officer of Debt
Recovery Tribunal, Lucknow in Appeal No.01 of 2004.
5. The facts, in brief, are that appellant no.1-M/s Durga Rice and
Dall Mills had taken loan from Banaras State Bank Limited (which was
subsequently merged with Bank of Baroda) (hereinafter referred to as
‘Bank’). The appellant no.1 was proprietorship firm of which appellant
no.2-Ghanshyam Das Mittal was proprietor. The appellant no.2
(Ghanshyam Das Mittal) and appellant no.3 (Sribhagwan Mittal) had
created equitable mortgage in respect of their immovable properties for
securing Cash Credit Limit granted to the appellant no.1-M/s Durga Rice
and Dall Mills and appellant no.2-Ghanshyam Das Mittal (hereinafter
referred to as ‘borrower’).
6. The borrower approached the Bank for enhancement/grant of Cash
Credit Limit of Rs.12 lacs. The Bank on the request of borrower
sanctioned the Cash Credit Limit of Rs.12 lacs on 22.01.1992 subject to
execution of requisite documents of loan, furnishing guarantee and other
3
SPLA No. - 339 of 2024
securities. Subsequently, the borrower executed number of documents on
22.01.1992 to secure the Cash Credit Limit.
7. The borrower defaulted in payment of loan amount which led the
Bank to institute Original Application No.111 of 1999 under Section 19
of the Recovery of Debts Due to Banks and Financial Institutions Act,
1993 (hereinafter referred to as ‘RDDBFI Act, 1993’) for recovery of
loan amount to the tune of Rs.38,36,871/- alongwith interest @ 18.5%
per annum with quarterly rest. The details of property mortgaged with
the Bank as stated in Original Application No.111 of 1999 are as
follows:-
i) Name of the Mortgagee The Benares State Bank Ltd.
ii) Name of the Mortgagor i) Shri G.D. Mittal
ii) Shri Bhagwan
iii) Late Satya Narayan
iv) Late Ram Chandra
iii) Date of Mortgage 10.01.1985
iv) Description of property Building together with land
measuring 694 sq. yards,
situated at Mohalla Haziapur,
Pilibhit Road, Bareilly U.P.
Bounded as East: Haji Munshi Godown.
West: Road M.B.
North: Land of Naketulla
South: Road M.B.
v) Amount due Rs.38,36,871.00 together with
interest, costs, charges and
expenses.
(The aforesaid mortgage was initially created on 10.1.1985 for securing
the credit facilities of the defendant No.1 and its sister concern M/s
Mittal Industries, Bareilly).
8. The Debts Recovery Tribunal, Jabalpur (hereinafter referred to as
‘DRT’) allowed the Original Application No.111 of 1999 by ex parte
judgement and order dated 21.12.1999 for recovery of Rs.38,36,871/-
together with cost along with interest @ 18.5 % per annum with
quarterly rests from 22.03.1999 till the date of realisation of decretal
amount. The DRT allowed the Bank to recover the said outstanding
4
SPLA No. - 339 of 2024
amount by sale of movable hypothecated goods as well as mortgaged
immovable properties.
9. Thereafter, the Presiding Officer, DRT, Jabalpur issued certificate
under sub-Section (7) of Section 19 of RDDBFI Act, 1993. However,
because of change of jurisdiction, the case was transferred to the DRT,
Lucknow and was registered as DRC No.155/2002/Lucknow.
10. The borrower against the judgement of DRT in Original
Application No.111 of 1999 preferred an application dated 08.02.2000
under Section 22(2)(g) of RDDBFI Act, 1993 for setting aside the ex
parte judgement and order dated 21.12.1999, and restoration of the
original case which was transferred to DRT, Lucknow and was
numbered as MA(T)/121/2003.
11. The DRT in the meantime on 06.08.2001 passed an order under
Section 25 of RDDBFI Act, 1993 for attachment of the property. The
detail of the property attached is given below:-
“(i). Building together with land measuring 4950 sq.yds. situated at
6(B) Haziapur, Pilibhit Road, Bareilly bounded by East: Bhim Sen
Ki Mandia; West: Ganesh Industries; North: Shankar Industries
and South; Road; owned by Sri G.D. Mittal, Smt. Saraswati Devi,
Sri Bhagwan and Sri Radhey Shyam, All R/C 145(B), Gangapur,
Bareilly (U.P.) is hereby attached.”
12. After attachment of the property, the proclamation of sale was
drawn under Rules 52 & 54 of Second Schedule of IT Act, 1961 on
10.07.2003. The auction of the property was held on 25.08.2003. The
property was auctioned to the respondent no.1 for Rs.35,20,000/-.
13. It transpires from the record that one Nikesh @ Bunty (hereinafter
referred to as ‘third party) had also filed objection in execution
proceeding. The DRT without deciding the objection of third party
proceeded with the auction which led the third party to institute a Writ
Petition No.4106 (M/S) of 2003 which was disposed off by the Lucknow
Bench of this Court by order dated 10.11.2003 with a direction to the
DRT, Lucknow to decide the application so preferred by the third party
5
SPLA No. - 339 of 2024
to recall the ex parte order dated 03.07.2003. This Court further stayed
the confirmation of sale pursuant to auction held on 25.08.2003.
14. The DRT, thereafter, rejected the objection of third party on
17.12.2003. The DRT also dismissed the application of the borrower to
set aside the ex-parte judgement by order dated 20.10.2003.
15. The borrower, thereafter, preferred an appeal against the order
dated 20.10.2003 under Section 20 of the RDDBFI Act, 1993 before the
DRAT which was numbered as R-366/2003. The DRAT stayed the
recovery proceeding on 23.12.2003 before Recovery Officer in the
appeal preferred by the borrower.
16. As per the borrower’s case, he, thereafter, approached the
Recovery Officer, DRT to serve stay order dated 23.12.2003 passed by
DRAT, but since the Recovery Officer, DRT was not available in his
room, therefore, he approached Section Officer, DRT, Lucknow and
handed over the certified copy of the stay order dated 23.12.2003 who
endorsed the remark on the certified copy of the order ‘keep with
record’. He handed over one certified copy of the order dated 23.12.2003
to the concerned Clerk, DRT.
17. The further case of the borrower is that he had served a copy of
the order dated 23.12.2003 along with statutory appeal on 26.12.2003 to
the Bank at Bareilly, and obtained receiving on the same. However,
Recovery Officer, DRT on 09.01.2004 confirmed the sale in favour of
respondent no.1.
18. It is the further case of the borrower that he came to know about
the confirmation of sale on 14.01.2004 when the respondent no.1 along
with his son Bharat Agarwal as well as two Constables appeared at the
premises of borrower and produced the confirmation of sale certificate
dated 09.01.2004 issued by DRT.
19. The borrower, thereafter, preferred an appeal under Section 30 of
RDDBFI Act, 1993 before the DRT, Allahabad challenging the
confirmation of sale on various grounds. The borrower’s appeal before
the DRT was numbered as Appeal No.1 of 2004.
6
SPLA No. - 339 of 2024
20. The appeal of the borrower was allowed by DRT by judgement
and order dated 29.04.2005. The DRT set aside the confirmation of sale
on various grounds which shall be referred to at the appropriate place.
21. After the DRT allowed the appeal of the borrower, he entered into
a compromise with the Bank and filed compromise application in Appeal
No. R-366/2003.
22. The Bank also issued ‘No Objection Certificate’ to the borrower
on 13.06.2005. The Bank, thereafter, filed an application before the DRT
for depositing Rs.35,20,000/- in favour of respondent no.1 (auction
purchaser).
23. The borrower, thereafter, filed a application on 04.07.2005 in
Appeal No. R-366/2003 praying that the appeal be decided in terms of
letter dated 10.06.2005.
24. The DRAT dismissed the Appeal No.R-366/2003 as withdrawn by
order dated 05.07.2005. The relevant extract of the order dated
05.07.2005 is reproduced below:-
“There is further development in the case to the effect that the
borrower and the Creditor Bank alleged to have entered into a
compromise and on the basis of such compromise, 'No Dues
Certificate’ have been issued by the Creditor Bank and in such
position a petition has been filed by the appellant for not proceeding
with the present appeal as compromise has been arrived at and 'No
Dues Certificate' issued Practically there is no scope of this Appellate
Court in Mise. Appeal arising out of an interlocutory order to record
any compromise arrived at between the Creditor and the appellant,
but the fact remains that the appellant does not want to proceed with
this appeal as compromise have been arrived. It is up to the appellant,
whether he is to proceed with the present appeal or not. When he does
not want to proceed with this appeal, then this court cannot debar him
for withdrawing from this appeal. Learned counsel for the respondent
has also submitted that compromise have been arrived at Be------- it
what it may, such matter of compromise may be recorded or may be
disputed before the Tribunal concerned not before this Appellate
7
SPLA No. - 339 of 2024
Court. Only position remains that the appellant does not want to
proceed with this appeal as compromise have been arrived at. In that
way, there is no other alternative but to dismiss this appeal on
withdrawal.
There is a petition filed by Ram Avtar for his impleadment in the
present appeal under Order 1 Rule 10 of the C.P.C. Practically
auction purchaser is neither a necessary party nor a formal party in
the present appeal. In this context as already mentioned above, this
appeal arises out of the dismissal of the petition filed under Section
22(2)(g) of the DRT Act, wherein the Creditor Bank and the Borrower
are the only parties. Auction purchaser was never a party in such
petition filed under Section 22(2)(g) of the Act or its disposal thereof.
In such position, there is no scope to entertain the petition filed under
Order 1 Rule 10 of the C.P.C. by Ram Avtar and that petition is
dismissed. Again a prayer has been made by the learned counsel for
Ram Avtar that he should be given a chance to file objection regarding
withdrawal of the present appeal and his impleadment is set aside.
The question of giving further chance to him does not arise at all.
When the appeal is not in existence as mentioned above, no further
scope to Ram Avtar can be given either to file objection regarding
withdrawal of the appeal or regarding the rejoinder to be filed on the
reply given by the appellant on the petition filed under Order 1 Rule
10 of the C.P.C. The grievance of the auction purchaser can be looked
into the Appeal No. 525/05 and the present appeal is not the forum to
consider any grievance of Ram Avtar.
In the conclusion thereof, the appeal is dismissed on withdrawal.”
25. The respondent no.1 being aggrieved by the judgement and order
dated 29.04.2005 of DRT in Appeal No.1 of 2004 preferred an appeal
before the DRAT Lucknow registered as Appeal No. R-525/2005 in
which DRAT passed a stay order directing the borrower not to alienate
the auctioned property. The DRAT dismissed the appeal No.R-525/2005
of respondent no.1 by judgement and order dated 19.10.2005.
26. The respondent no.1, thereafter, preferred Writ-C No.68334 of
2005 against the order of DRT dated 29.04.2005 in Appeal No.1 of 2004
8
SPLA No. - 339 of 2024
and the order of DRAT dated 19.10.2005 in Appeal No.R-525 of 2005
which were set aside by the learned Single Judge on following
grounds:-
(A) Once the relief for setting aside the auction proceeding was not
prayed by the borrower, the Tribunal had neither any jurisdiction nor
authorised under the Act to go beyond the same and could set aside the
same.
(B) In the absence of any deposit as contemplated under the Rule 60
or 61 of Second Schedule of IT Act, 1961, the appeal of the borrower
challenging the confirmation of sale was not maintainable, therefore, the
DRT ought not to have entertained the appeal and set aside the
confirmation of sale. The DRAT has not considered this aspect of the
matter while dismissing the appeal of respondent no.1.
(C) With the dismissal of Appeal No.R-366/2003 of the borrower, the
interim order granted in the said appeal had merged with the order of
dismissal. Consequently, learned Single Judge held that once the effect
and operation of the interim order wipes out on final order being passed
thereon, all consequential proceeding goes. This vital aspect of the
matter was not considered by the DRAT while dismissing the appeal of
respondent no.1.
27. Challenging the order, Sri Naveen Sinha, learned Senior Counsel
for the appellant has submitted that the appeal challenging the
confirmation of sale and sale certificate was filed by the borrower under
Section 30 of RDDBFI Act, 1993. It is submitted that Section 30 of the
RDDBFI Act, 1993 does not contemplate any deposit before filing the
appeal, therefore, the learned Single Judge has erred in law in holding
that the appellant’s appeal to the DRT was not maintainable for want of
pre-deposit.
28. He urges that two remedies are available to the borrower under the
RDDBFI Act, 1993 to get the sale set aside. One remedy available to the
borrower is that he can file an application under Rule 60 or 61 of Second
Schedule of the IT Act, 1961 before the Recovery Officer for setting
9
SPLA No. - 339 of 2024
aside the sale. The other remedy to the borrower is to file an appeal
before the DRT under Section 30(1) of RDDBFI Act, 1993 challenging
the order of Recovery Officer confirming the sale.
29. He submits that if the borrower opts the remedy under Rule 60 of
Second Schedule of IT Act, 1961 and files objection within thirty days
from the date of sale for setting aside the sale, the borrower is required to
make deposit under Rule 60(1) (a) & (b) of IT Act, 1961. However, if the
borrower takes recourse to Rule 61 of Second Schedule, the sale under
the said Rule shall not be set aside unless the borrower under the proviso
(b) to Rule 61 deposits the amount recoverable from him in the
execution certificate.
30. He submits that the requirement of deposit is only when the
borrower opts to avail the remedy under Rule 60 or 61 of Second
Schedule of IT Act, 1961, but in the instant case, the borrower has
approached the DRT challenging the confirmation of sale by the
Recovery Officer under Section 30 of RDDBFI Act, 1993 which does
not require any pre-deposit to maintain the appeal.
31. He contends that there is no provision under the RDDBFI Act,
1993 mandating the borrower to first approach the Recovery Officer
under Rules 60 or 61 of Second Schedule of IT Act, 1961, if aggrieved
by the orders of Recovery Officer, then he can approach DRT by filing
appeal under Section 30 of RDDBFI Act, 1993. He submits that it is the
choice of the borrower either to avail the remedy under Rules 60 or 61 of
Second Schedule of IT Act, 1961, or approach DRT directly challenging
the order of Recovery Officer.
32. It is submitted that the language of Section 30 of RDDBFI Act,
1993 is plain and clear which states that any person aggrieved by the
order of Recovery Officer may prefer an appeal. Thus, he submits that
the appeal under Section 30 will lie against any order of Recovery
Officer. In support of his submission, he has placed reliance upon the
judgement of this Court in the case of Kamal Kishore Dheer Vs. Debts
Recovery Appellate Tribunal, 2022 (8) ADJ 704 (DB).
10
SPLA No. - 339 of 2024
33. Accordingly, he submits that the learned Single Judge has failed to
correctly appreciate Section 30 of RDDBFI Act, 1993 while holding that
the Tribunal ought not to have entertained the appeal of the borrower for
want of pre-deposit.
34. He further contends that the learned Single Judge has erroneously
held that DRT has no residuary power to go beyond the relief prayed for
by the borrower in the appeal. He submits that the learned Single Judge
has misinterpreted the law while recording a finding that once the relief
for setting aside the auction proceeding was not made, the DRT had
neither the jurisdiction nor authorised under the Act to go beyond the
same. He submits that Rule 18 of the Debts Recovery Tribunal
(Procedure) Rules, 1993 (hereinafter referred to as ‘Rules, 1993’) gives
residuary power to the Tribunal to pass orders to give effect to its order
or prevent abuse of its process or to secure the ends of justice.
35. He submits that the grounds on which the borrower had sought
relief for setting aside the confirmation of sale and sale certificate has
been extensively spelt out in the memo of appeal, and reading of those
grounds clearly discloses that the borrower had pointed out the
illegalities in conducting the auction proceeding, therefore, the
respondent no.1 was aware of the case set up by borrower in challenging
the order of confirmation of sale. He contends that it was not a case
where the respondent no.1 was caught by surprise during the hearing of
appeal before the DRT. Accordingly, he submits that there was no
necessity to pray for setting aside the auction proceeding as the relief of
setting aside the confirmation of sale and sale certificate imbibes the
relief of annulling the auction proceeding.
36. Finally, he contended that although the interim order dated
23.12.2003 was vacated upon the DRAT’s dismissal of the borrower’s
Appeal No.R-366/2003, this would not affect the DRT’s decision under
Section 30, as the appeal was decided strictly within the parameters of
the said section.
11
SPLA No. - 339 of 2024
37. In rebuttal, Sri Manish Goyal, learned Senior Advocate submits
that under the Scheme of RDDBFI Act, 1993, the borrower has first to
avail the remedy under Rule 60 or 61 of Second Schedule of IT Act,
1961, and if he is still aggrieved by the action of Recovery Officer, he
can prefer an appeal under Section 30 of the RDDBFI Act, 1993. In
other words, he submits that there is no equivalance of remedy rather
there is hierarchy of remedy.
38. He submits that appeal under Section 30 of RDDBFI Act, 1993
was not maintainable as the borrower had failed to avail remedy under
Rule 60 or Rule 61 of Second Schedule of IT Act, 1961. He further
contends that since the borrower had not made pre-deposit as provided
under Rule 60 or 61, therefore, in the absence of any pre-deposit, the
appeal of the borrower under Section 30 of the RDDBFI Act, 1993 was
not maintainable and the DRT had erred in law in entertaining the appeal
of the borrower and deciding the same.
39. He submits that once the auction has been conducted and the sale
of the property had taken place, and if no objection had been filed under
Rule 60 or 61 of Second Schedule of IT Act, 1961, the Recovery Officer
was under obligation to confirm the sale under Rule 63 as the
confirmation of sale is only a ministerial act. Accordingly, he submits
that learned Single Judge has not committed any illegality in holding that
in the absence of any pre-deposit, the appeal under Section 30 of
RDDBFI Act, 1993 was not maintainable.
40. He submits that the provisions of Second and Third Schedule of IT
Act, 1961 and Income Tax (Certificate Proceedings) Rules, 1962
(hereinafter, referred to as ‘Rules, 1962’) has been incorporated in the
RDDBFI Act, 1993 by virtue of Section 29. He contends that as the
provisions of Second and Third Schedule of IT Act, 1961 and Rules,
1962 have been made applicable for recovery of debt under the RDDBFI
Act, 1993, the borrower was under obligation to make pre-deposit at the
time of filing of appeal, and since borrower had failed to make deposit
under Rule 60 or 61 of Second Schedule of IT Act, the appeal was
12
SPLA No. - 339 of 2024
incompetent, therefore, the DRT has erred in law in entertaining the
appeal of borrower.
41. He further submits that when there is specific provision conferring
power upon the DRT to grant relief provided in the relevant Statute, the
Tribunal does not have any residuary power to grant relief not prayed
for. In other words, he submits that there is no provision in the RDDBFI
Act, 1993 which enables the DRT and DRAT to grant relief not prayed
for by the appellant.
42. It is contended that it is settled law that an adjudicatory body is
not entitled to grant those reliefs which have not been prayed for by the
appellant. Consequently, it is contended that in the absence of any prayer
seeking declaration of the auction proceeding and sale to be illegal, the
DRT had erred in law in setting aside the confirmation of sale, and thus,
in turn, granted those reliefs to the borrower that were not prayed for by
the borrower in the appeal.
43. He submits that once the stay order granted by the DRT in appeal
filed by the borrower under Section 20 of the RDDBFI Act, 1993 had
lost its efficacy with the dismissal of the appeal of the borrower, the DRT
ought to have taken into consideration the effect of wiping out the stay
order while deciding the appeal under Section 30 of the RDDBFI Act,
1993.
44. Ms. Shreya Gupta, Advocate in addition to the aforesaid
submission of Sri Manish Goyal has contended that respondent no.1 is a
bona fide purchaser in Court auction, therefore, the Court should strive
to protect the interest of respondent No. 1. She submits that law is settled
that a stranger who purchases at an auction sale has to be considered as a
bona fide purchaser for value, therefore, he should not be allowed to
suffer on account of mistake or irregularities committed in Court of law.
45. She further submits that conduct of borrower was unfair and
unscrupulous as is evident from the chain of events in the present case,
therefore, the borrower is disentitled to any relief from a Court of law.
13
SPLA No. - 339 of 2024
46. In rejoinder, Sri Kartikeya Saran, learned counsel for the appellant
submits that Rule 56 of Second Schedule of IT Act, 1961 deals with the
sale by auction and provides that sale shall be by public auction to the
highest bidder and shall be subject to the confirmation by the Recovery
Officer. He submits that after the auction takes place, the sale is to be
confirmed by the Recovery Officer, and while confirming the sale, the
Recovery Officer has to apply his mind and consider whether the auction
proceeding had been conducted as per procedure provided under the law,
and if he is satisfied that there was no irregularity in auction proceeding,
only then he can proceed to confirm the sale. He submits that Rule 63 of
Second Schedule of IT Act, 1961 mandates the Recovery Officer to pass
an order confirming the sale and only then the sale becomes absolute.
47. He further submits that reading of Section 29 of RDDBFI Act,
1993 suggests that Rules of Second and Third Schedule of the IT Act are
to be applied with necessary modification and not as it is. He submits
that Section 30 of RDDBFI Act, 1993 begins with a non-obstante clause
which excludes the application of Section 29, and argues that Section 30
itself does not envisage any pre-deposit by the borrower at the time of
filing an appeal under that section.
48. He lastly urges that respondent no.1 has not assailed either before
the learned Single Judge or before this Court finding of DRT affirmed by
the DRAT with regard to irregularity committed in the auction
proceeding, thus, the said findings being finding of fact have attained
finality. It is, thus, contended that the learned Single Judge without
reversing the findings of the DRT regarding illegalities and irregularities
committed in the auction sale has erred in law in setting aside the order
of DRT and DRAT while allowing the writ petition.
49. We have heard learned counsel for the parties and perused the
record.
50. In the light of the facts delineated above, we proceed to deal with
the contentions urged by the learned counsel for the parties.
14
SPLA No. - 339 of 2024
51. To test the validity of argument of learned counsel for the
respondents that in the absence of pre-deposit under Rule 60 or 61 of
Second Schedule of IT Act, 1961, appeal under Section 30 of the
appellants was not maintainable before the DRT against the order of
confirmation of sale, it would be apposite to have a glance at Sections
25, 29 & 30 of the RDDBFI Act, 1993 which are being reproduced
below:-
“25. Modes of recovery of debts. The Recovery Officer shall, on receipt of
the copy of the certificate under sub-section (7) of section 19, proceed to
recover the amount of debt specified in the certificate by one or more of
the following modes, namely:-
(a) attachment and sale of the movable or immovable property of the
defendant;
(aa) taking possession of property over which security interest is
created or any other property of the defendant and appointing
receiver for such property and to sell the same;
(b) arrest of the defendant and his detention in prison;
(c) appointing a receiver for the management of the movable or
immovable properties of the defendant.
(d) any other mode of recovery as may be prescribed by the Central
Government.
29. Application of certain provisions of Income-tax Act. The provisions
of the Second and Third Schedules to the Income-Tax Act, 1961 (43 of
1961) and the Income-tax (Certificate Proceedings) Rules, 1962, as in
force from time to time shall, as far as possible, apply with necessary
modifications as if the said provisions and the rules referred to the
amount of debt due under this Act instead of to the Income-tax:
Provided that any reference under the said provisions and the rules to
the "assessee" shall be construed as a reference to the defendant under
this Act.
30. Appeal against the order of Recovery Officer.-(1) Notwithstanding
anything contained in section 29, any person aggrieved by an order of
15
SPLA No. - 339 of 2024
the Recovery Officer made under this Act may, within thirty days from
the date on which a copy of the order is issued to him, prefer an appeal
to the Tribunal.
(2) On receipt of an appeal under sub-section (1), the Tribunal may,
after giving an opportunity to the appellant to be heard, and after
making such inquiry as it deems fit, confirm, modify or set aside the
order made by the Recovery Officer in exercise of his powers under
sections 25 to 28 (both inclusive).”
52. According to the learned counsel for the respondents, the sale is to
be conducted as per the procedure contained in Second Schedule of the
IT Act which has been made applicable by virtue of Section 29 of the
RDDBFI Act, 1993, and once the property has been sold by auction, the
only remedy for the borrower is to approach the Recovery Officer under
Rule 60 or Rule 61 of Second Schedule of the IT Act, 1961 and if the
borrower does not avail the remedy provided under Rule 60 or 61 by
filing necessary application and making pre-deposit as required under
the aforesaid Rules, the confirmation of sale by the Recovery Officer is
only a ministerial act and since the appellant has not availed the remedy
prescribed under Rule 60 or 61 of Second Schedule of the IT Act and did
not make any deposit, the appeal under Section 30 of the RDDBFI Act
was not maintainable nor could assail the order of confirmation of sale.
53. It is explicit from reading of Section 25(a) of the RDDBFI Act,
1993 that it is enabling section authorising the Recovery Officer for
attachment and sale of the movable or immovable property of the
borrower on receipt of copy of certificate under sub-section (7) of
Section 19 of the RDDBFI Act, 1993. However, the provisions of
Second and Third Schedule of the IT Act, 1961 and Rules, 1962 have
been made applicable with necessary modifications by virtue of Section
29 of the RDDBFI Act, 1993.
54. So the Recovery Officer derives the power of attachment and sale
of movable or immovable property under Section 25 of RDDBFI Act,
1993 whereas to execute the sale of immovable property, the procedure
prescribed under the provisions of Second and Third Schedule of IT Act
16
SPLA No. - 339 of 2024
is to be followed by the Recovery Officer which has been made
applicable with necessary modifications by virtue of Section 29 of
RDDBFI Act, 1993.
55. If we take a glance at the attachment order dated 06.08.2001
issued by the Recovery Officer, it is evident that the order of attachment
of property has been made under Section 25 of the Act, 1993. The order
dated 06.08.2001 is reproduced herein below:
“Both the parties present.
Counsel for JD nos.1 and 2 request for some time. Shri Arvind
Sharma, Law Officer for the applicant bank request that attachment
of the mortgaged properties be made and no time may be granted to
the JD's. The JD's have not liquidated the debts till date. In view of
the above following order is made under Section 25 of the RDDBFI
Act, 1993.
(i) 'Building together with land measuring 4950 sq. yas. situated at 5
(B) Haziapur, Pilibhit Road, Bareilly bounder by East Bhim Sen Ki
Mandia; West: Ganesh Industries; North Shankar Industries and
South Road; owned by Sri G.D. Mittal, Smt. Saraswati Devi, Sri
Bhagwan and Sri Radhey Shvam. All R/o 145 (B) Gangapur, Bareilly
(U.P.)' is hereby attached.
(ii) The 'execution of this attachment order shall be made by Shri
Kamleshwar Singh, Advocate, High Court, Allahabad on 28.8.2001
in presence of senior officers of the concerned bank and the JD's and
independent witnesses.
(iii) The copy of the attachment order shall be affixed at conspicuous
part of the above mentioned property as well as in the office of Sub-
Registrar and Tahsildar of the concerned district.
(iv). The execution of this attachment order shall be done by beat of
drum or by any other customary mode.
(v). The applicant bank is directed to help the attaching officer in
identifying the above property and in providing any other necessary
assistance during the course of execution.
17
SPLA No. - 339 of 2024
(vi) The JDs are directed to appear before the undersigned on
27.09.2001 to take notice of date to be fixed for setting terms of
proclamation of sale of the above mentioned property.
Let Form No.16 duly filled and signed to be issued to all concerned.
Fix on 27.09.2001.”
56. After the order dated 06.08.2001 was passed under Section 25 of
the RDDBFI Act, 1993, the order of attachment of immovable property
was passed under Rule 48 of Second Schedule of IT Act, 1961. So it is
only procedural part for carrying out the sale of the property that has
been adopted under Section 29 of RDDBFI Act, 1993 by incorporating
the provisions of Second and Third Schedule of IT Act, 1961 and Rules
1962 with necessary modification.
57. It goes without saying that the sale process starts with the
proclamation. Perusal of proclamation of sale order dated 10.07.2003
reveals that the auction sale proceeding of the attached property had
been undertaken by the Recovery Officer under Sections 25 & 29 of the
RDDBFI Act, 1993. The order dated 10.07.2003 passed by the Recovery
Officer, DRT, Lucknow, is reproduced herein below:-
“10.07.2003
Counsel for applicant bank M/s Usha Chawla present.
None present for the JD's or any other parties.
Applicant bank has already filed valuation of the property.
The JD's have not offered any terms of settling the proclamation of sale
of the attached properties to be put to sale.
Applicant Bank confirms that the JD's have till date not liquidated their
debts as per the certificate amount.
In view of the above, and since dependants have not liquidated dues of
the bank, the auction sale proceeding of the attached immovable
properties shall now be taken up.
In exercise of the power under provision of Section 25 and Section 29 of
Recovery of Debts Due to Banks and Financial Institutions Act, 1993 as
18
SPLA No. - 339 of 2024
amended, the following order is made by the undersigned to meet the
ends of justice.
ORDER
i) The immovable property already attached by order dated 6.08.2001
by DRT Allahabad shall be sold by Advocate commissioner by public
auction on 25.08.03 from 11.00 A.M. onwards at the premises of Bank of
Baroda, Kutub Khana, Branch, Main Road, Bareilly.
ii) The immovable mortgaged property i.e. Building together with land
measuring 4950 sq. yards situated at 6(B), Haziapur, Pilibhit Road,
Bareilly and bounded as under :-
E : Bhim Sen Ki Mandi
W : Ganesh Industries
N : Shankar Industries
S : Road
and owned by Shri G.D. Mittal, Smt. Saraswati Devi, Shri Bhagwan and
Shri Radhey Shyam, JD No.2, 3, 4 and 5
Reserved price : Rs. 35 Lakhs
ii) The proclamation of the sale shall be made in the following manner
by the Recovery Inspector :
a) The proclamation of the sale shall be made at the same place on or
near such property by beat of drum or other customary mode. The copy
of the proclamation shall be affixed at a conspicuous part of the
property and also affixed at a conspicuous part of the office at the
Debts Recovery Tribunal, Lucknow.
b) The proclamation for the sale shall also be published in an abridged
form in a local news paper and the cost of such publication shall be
deemed to be the cost of the sale. A copy of the publication shall be
filed by the applicant bank well before the date of the auction.
c) The proclamation shall be made in the presence of independent
witnesses and also in the presence of senior officers of the applicant
bank, and the defendants.
19
SPLA No. - 339 of 2024
d) The applicant bank shall provide all necessary assistance for
proclamation of sale and all necessary arrangements for holding the
auction at the site as ordered and any other assistance in execution of
this order.
e) Counsel for the applicant bank shall procure a copy of this order
and inform the concerned branch/cell of the applicant bank to contact
the recovery Officer and take necessary steps for the proclamation of
the sale and auction of the property. Let the applicant bank confirm
compliance of the arrangements.
f) Steps to be taken by the Counsel/applicant bank to send a copy of the
proclamation of Sale (form 13) to the concerned defendants by
registered post with acknowledgement due.
g) Let Form 13 be issued duly filled and signed by the undersigned, to
all concerned.
Fix on 18.09.2003 for further orders.”
58. Rule 53 of Second Schedule of IT Act, 1961 provides ‘contents of
proclamation’. Rule 54 of Second Schedule of IT Act, 1961 provides for
‘mode of making proclamation’. Rule 55 of Second Schedule of IT Act,
1961 provides for ‘time of sale’. Rule 57 of Second Schedule of IT Act,
1961 provides for ‘deposit by purchaser and resale in default’.
59. Rule 63 provides for ‘confirmation of sale’ and is the specific
mechanism by which the Recovery Officer makes an order confirming
the sale, rendering it absolute. Thus, the confirmation of sale under Rule
63 of the Second Schedule of IT Act, 1961 by the Recovery Officer is
the final step that concludes the sale, and only thereafter the sale
certificate is issued to the auction purchaser.
60. So, the confirmation of sale by the Recovery Officer under Rule
63 of the Second Schedule of IT Act, 1961 followed by issuance of a
sale certificate under Rule 65 vests the right, title and interest of the
property in the auction purchaser.
61. The order of the Recovery Officer under Rule 63 is referrable to
Section 25 (a) of the RDDBFI Act, 1993, which confers the authority
20
SPLA No. - 339 of 2024
upon the Recovery Officer to sell the property. Consequently, it can be
safely concluded that Rule 63 is merely the procedural machinery used
to finalise the sale authorised by the Parent Statute namely RDDBFI Act,
1993, and any final order confirming that sale draws its ultimate legal
authority from Section 25 (a) of RDDBFI Act, 1993. Therefore, the order
of confirmation of sale is an order passed by the Recovery Officer in
exercise of power under Section 25 (a) of RDDBFI Act, 1993.
62. The Apex Court in the case of Parayankandiyal Eravath
Kanapravan Kalliani Amma (Smt) and Others Vs. K. Devi and Others
(1996) 4 SCC 76 has explained how to interpret the non-obstante clause.
Paragraph no.77 of the said judgement is reproduced below:-
“77. "Non obstante clause is sometimes appended to a section in the
beginning, with a view to give the enacting part of the section, in case
of conflict, an overriding effect over the provision or Act mentioned in
that clause. It is equivalent to saying that in spite of the provision or
Act mentioned in the non obstante clause, the enactment following it
will have its full operation or that the provision indicated in the non
obstante clause will not be an impediment for the operation of the
enactment." (See: Union of India v. G.M. Kokil (1984) (Supp.) SCC
196; Chandavarkar Sita Ratna Rao v. Ashalata S. Guram (1986) 4
SCC 447; R.S Raghunath v. State of Karnataka (1992) 1 SCC 335;
G.P. Singh's Principles of Statutory Interpretation).”
63. The Apex Court in the case of A.G. Varadarajulu & Another Vs.
State of T.N. & Others (1998) 4 SCC 231 has held that while dealing
with non-obstante clause, the Court must try to find out the intention of
the legislature as to the extent to which it intends to give overriding
effect over the other provisions of the Act. Paragraph 16 of the said
judgment is reproduced herein below:-
“16. It is well settled that while dealing with a non obstante clause under
which the legislature wants to give overriding effect to a section, the
court must try to find out the extent to which the legislature had intended
to give one provision overriding effect over another provision. Such
intention of the legislature in this behalf is to be gathered from the
21
SPLA No. - 339 of 2024
enacting part of the section. In Aswini Kumar Ghose v. Arabinda Bose
AIR 1952 SC 369,Patanjali Sastri, J. observed:
"The enacting part of a statute must, where it is clear, be taken to
control the non obstante clause where both cannot be read
harmoniously;"
In Madhav Rao Scindia v. Union of India (1971)1SCC85,
Hidayatullah, C.J. observed that the non obstante clause is no doubt a
very potent clause intended to exclude every consideration arising from
other provisions of the same statute or other statute but "for that reason
alone we must determine the scope" of that provision strictly. When the
section containing the said clause does not refer to any particular
provisions which it intends to override but refers to the provisions of the
statute generally, it is not permissible to hold that it excludes the whole
Act and stands all alone by itself. "A search has, therefore, to be made
with a view to determining which provision answers the description and
which does not."
64. Section 30(1) of the RDDBFI Act, 1993 starts with non obstante
clause which implies that Section 30(1) has overriding effect over
Section 29. The words employed in Section 30 are explicit and clear and
state that any person aggrieved by an order of the Recovery Officer
made under this Act may prefer appeal before the DRT within 30 days.
So, an appeal under Section 30 (1) of RDDBFI Act, 1993 will lie against
an order of Recovery Officer passed under this Act.
65. We have detailed above reasons for concluding that order of
confirmation of sale under Rule 63 falls under Section 25 (a) of
RDDBFI Act, 1993. Therefore, the appeal under Section 30 (1) of
RDDBFI Act, 1993 will directly lie before the DRT against the order of
Recovery Officer confirming the sale.
66. The aforesaid reasoning is also fortified by reading of sub-section
(2) of Section 30 which explicitly dictates that upon receiving the appeal
and giving the appellant an opportunity to be heard, the Tribunal may
confirm, modify or set aside the order made by the Recovery Officer in
exercise of his power under Sections 25 to 28 (both inclusive).
22
SPLA No. - 339 of 2024
67. So, it is explicit by reading of sub-Section (2) of Section 30 that
legislature has provided appeal under Section 30(1) from an order passed
by the Recovery Officer in exercise of power under Sections 25 to 28
(both inclusive).
68. The cardinal principle of interpretation of Statute is where
language in the Statute is clear, the intention of the legislature is to be
gathered from the language used in the Statute. Paragraph no.10 of the
judgement of the Apex Court in the case of Grasim Industries Ltd. Vs.
Collector of Customs, Bombay (2002) 4 SCC 297 is reproduced herein
below:-
“10. No words or expressions used in any statute can be said to be
redundant or superfluous. In matters of interpretation one should
not concentrate too much on one word and pay too little attention to
other words. No provision in the statute and no word in any section
can be construed in isolation. Every provision and every word must
be looked at generally and in the context in which it is used. It is
said that every statute is an edict of the legislature. The elementary
principle of interpreting any word while considering a statute is to
gather the mens or sententia legis of the legislature. Where the
words are clear and there is no obscurity, and there is no ambiguity
and the intention of the legislature is clearly conveyed, there is no
scope for the court to take upon itself the task of amending or
alternating (sick altering) the statutory provisions. Wherever the
language is clear the intention of the legislature is to be gathered
from the language used. While doing so, what has been said in the
statute as also what has not been said has to be noted. The
construction which requires for its support addition or substitution
of words or which results in rejection of words has to be avoided. As
stated by the Privy Council in Crawford v. Spooner (1846) 6 Moore
PC 1) "we cannot aid the legislature's defective phrasing of an Act,
we cannot add or mend and, by construction make up deficiencies
which are left there". In case of an ordinary word there should be
no attempt to substitute or paraphrase of general application.
Attention should be confined to what is necessary for deciding the
23
SPLA No. - 339 of 2024
particular case. This principle is too well settled and reference to a
few decisions of this Court would suffice. (See: Gwalior Rayons Silk
Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests (AIR 1990 SC
1747), Union of India v. Deoki Nandan Aggarwal (AIR 1992 SC
96), Institute of Chartered Accountants of India v. Price Waterhouse
((1997) 6 SCC 312) and Harbhajan Singh v. Press Council of India
(JT (2002) 3 SC 21).”
69. At this juncture, it would be useful to refer to relevant extract of
paragraph no.30 of the judgment of Apex Court in the case of Union of
India and Another Vs. Delhi High Court Bar Association and Others,
2002 (4) SCC 275 wherein Apex Court has held that Section 30, after the
amendment by Amendment Act, 2000, gives a right to any person
aggrieved by an order of Recovery Officer to prefer an appeal to the
Tribunal. Paragraph no.30 of the aforesaid judgment is reproduced
below:-
“30. By virtue of Section 29 of the Act, the provisions of the Second and
Third Schedules to the Income Tax Act, 1961 and the Income Tax
(Certificate Proceedings) Rules, 1962, have become applicable for the
realisation of the dues by the Recovery Officer. Detailed procedure for
recovery is contained in these Schedules to the Income Tax Act,
including provisions relating to arrest and detention of the defaulter. It
cannot, therefore, be said that the Recovery Officer would act in an
arbitrary manner. Furthermore, Section 30, after amendment by the
Amendment Act, 2000, gives a right to any person aggrieved by an
order of the Recovery Officer, to prefer an appeal to the Tribunal. Thus
now an appellate forum has been provided against any orders of the
Recovery Officer which may not be in accordance with law. There is,
therefore, sufficient safeguard which has been provided in the event of
the Recovery Officer acting in an arbitrary or an unreasonable manner.
The provisions of Sections 25 and 28 are, therefore, not bad in law.”
70. The Co-ordinate Bench of this Court in the case of Kamal
Kishore Dheer (supra) has also held that borrower being aggrieved
person can prefer appeal under Section 30 of RDDBFI Act, 1993 against
the order of Recovery Officer without resorting to provisions of Rule 60
24
SPLA No. - 339 of 2024
or 61 by making an application before the Recovery Officer. Paragraph
nos.20 to 23 of the aforesaid judgement are being reproduced below:-
“20 The aforesaid decision of the Bombay High Court follows an
earlier decision in Hill Properties Limited v. Union Bank of India and
others, 2016 SCC OnLine Bom10362.
21. The same issue fell for consideration before the Madras High Court
in Nazims Continental and others v. The Indian Overseas Bank,
Triplicane Branch, Madras and others, 2009 SCC OnLine Mad 862,
where it was held:
"20. In view of the provisions of law and finding of the Court and
discussions made above, we hold that the recovery officer has
also jurisdiction to entertain an application under rules 60, 61
and 62 of Part-III of 2nd Schedule to the Income Tax Act and in
case any person is aggrieved against such order, may prefer
appeal under Section 30 of the Act, 1993. As the defaulter or any
person whose interests are affected by sale is supposed to pay the
pre-deposit amount under Rule 60 and a defaulter required to
pay pre-deposit amount under Rule 61 except the person whose
interests are affected due to non-service of notice on defaulter to
pay the arrears or material irregularity in publishing or
conducting the sale should apply under Rule 61 or the purchaser,
who may file application under Rule 62, who are not liable to
pre-deposit any amount, in such case, for preferring an appeal
under Section 30 of Act, 1993, against an order of recovery
officer under Rules 60, 61 or 62, no pre-deposit amount required
to be deposited.
21. Section 30 starts with non obstante clause, as evident from
the said provision and quoted hereunder:-
"30. Appeal against the order of Recovery Officer.
(1) Notwithstanding anything contained in Section 29, any
person aggrieved by an order of the Recovery Officer made
under this Act may, within thirty days from the date on which a
copy of the order is issued to him, prefer an appeal to the
Tribunal.
25
SPLA No. - 339 of 2024
(2) On receipt of an appeal under sub-section (1), the Tribunal
may, after giving an opportunity to the appellant to be heard, and
after making such enquiry as it deems fit, confirm, modify or set
aside the order made by the Recovery Officer in exercise of his
powers under Sections 25 to 28 (both inclusive)."
In the case of Union of India v. I.C. Lala (AIR 1973 SC 2204),
Supreme Court held that non obstante clause does not mean that
the whole of the said provision of law has to be made applicable
or the whole of the other law has to be made inapplicable. It is
the duty of the Court to avoid the conflict and construe the
provisions to that they are harmonious.
22. Mode of recovery of debt is prescribed under Section 25 of
DRT Act, as quoted hereunder:-
"25. Modes of recovery of debts.- The Recovery Officer shall, on
receipt of the copy of the certificate under sub-section (7) of
Section 19, proceed to recover the amount of debt specified in the
certificate by one or more of the following modes, namely:-
(a) attachment and sale of the movable or immovable property of
the defendant;
(b) arrest of the defendant and his detention in prison;
(c) appointing a receiver for the management of the movable or
immovable properties of the defendant."
From the aforesaid provision it will be evident that apart from
attachment and sale of movable or immovable property of the
defendant, the recovery officer, under the said provision, may
proceed to recover the amount of debt by arresting the defendant
and his detention in prison or by appointing a receiver for the
management of the movable or immovable properties of the
defendant. Those two provisions made under clauses (b) and (c)
of Section 25 cannot be challenged before the Recovery Officer
under II or III Schedule of Income Tax Act. Therefore, except by
preferring an application (appeal) under Section 30 against the
order of recovery officer, any aggrieved person has no other
option. It cannot be said that for sale of movable or immovable
26
SPLA No. - 339 of 2024
property as made under II Schedule to Income Tax Act, including
Rules 60 or 61 or 62 of Part-III of II Schedule, then by way of
appeal only under Section 30 could be preferred and no such
appeal could be preferred directly against the order of
attachment and sale of movable or immovable property of the
defendant, if recovery officer pass such order under Section 25.
Therefore, we hold that against the order of attachment and sale
of movable or immovable property of defendant, who are the
defendants before the Tribunal, an aggrieved person, instead o
moving application under Rule 60 or 61 or 62, may also prefer
an application (appeal) under Section 30 of the Act, 1993.
Therefore, there being a concurrent jurisdiction, DRT under
Section 30 and recovery officer under Rules 60, 61 and 62 of
Part-III of II Schedule of Income Tax Act in regard movable
property and jurisdiction of Tribunal under Part-II of 11
Schedule of Income Tax Act in regard to movable property,
application of any defendant cannot be entertained by Tribunal
under Section 30 without pre-deposit of the amount in terms with
Rules 60 or 61 bypassing the jurisdiction of the recovery officer
under the aforesaid provisions of II Schedule of Income Tax Act.
Further, the auction purchaser being not a defendant in the
original application under Section 19, cannot file an appeal
under Section 30 against the order of recovery officer, if it
intends to prefer an application, if under the provision of Rule 62
of Part-III of II Schedule to Income Tax Act."
(emphasis by Court)
22. The aforesaid position of the law makes it pellucid that it is not
imperative for a defaulter or any person whose interest is affected by
the sale held by the Recovery Officer acting under the RDDBFI Act
to take resort to the provisions of Section 60 or 61 of the Second
Schedule to the 1961 Act. Doing a harmonious constructions of the
provisions of Sections 29 and 30 of the RDDBFI Act, the right of a
person aggrieved by an order of the Recovery Officer under the
aforesaid Act cannot be confined in the manner that he must of
necessity invoke Rule 60 or 61 by making an application before the
27
SPLA No. - 339 of 2024
Recovery Officer in the first instance and against the order of the
Recovery Officer, come up in appeal under Section 30. If that were
done, it would whittle down the scope of the appellate powers of the
Tribunal against all orders of the Recovery Officer, that include an
order of attachment, auction and sale prior to its confirmation. If the
challenge is laid on grounds completely different from those
envisaged under Rule 60 of the Rules framed under the Second
Schedule of the 1961 Act, there may not be any requirement of
deposit at all. The challenge may be on grounds like those envisaged
under Rule 61 of the Rules aforesaid or on any other ground.
23. Mindful of the fact that the petitioner-appellant was claiming
to redeem the mortgagor's interest, akin to an objection under Rule
60, the Tribunal directed the petitioner-appellant to deposit the
amount specified in the proclamation of sale as the one for which
the recovery was ordered. The petitioner-appellant, accordingly,
deposited a sum of 92,200/- on 13.11.2009. The Tribunal,
therefore, permitted the petitioner-appellant, who had stepped into
the shoes of the judgment debtor-mortgagor through a registered
sale-deed of the mortgagor's estate, to exercise the equity of
redemption and set aside the sale, subject to the condition that the
petitioner-appellant would have to bear all expenses of the sale,
pay poundage fees and further pay 10% simple interest to the
auction purchaser till payment was made. In our opinion,
therefore, the learned Single Judge was not right in holding that
since the petitioner-appellant had not followed the procedure
prescribed under Rule 60 of the Second Schedule to the 1961 Act,
he could not ask the auction sale, not yet confirmed, to be set aside
through an appeal under Section 30 of the RDDBFI Act.”
71. Learned counsel for the respondents has placed reliance upon
paragraph nos.13, 14 & 25 of the judgement of Madras High Court in the
case of Nazims Continental (supra).
72. Though, in paragraph no.25 of the judgement in the case of
Nazims Continental (supra), the Madras High Court has held that
“There is nothing on the record that for setting aside the sale the
28
SPLA No. - 339 of 2024
borrower deposited any amount as pre-deposit as required under Rules
60/61 r/w Section 30 as required under the law and held by us in the
preceding paragraph. In absence of such deposition of amount as pre-
deposit to set aside the sale or confirmation of sale, the impugned order
dated 19th Aug. 2008, cannot be upheld. However, if pre-deposit amount
is deposited within 30 days, it will be open to the Tribunal to pass final
order in the appeal u/s 30 made to set aside the sale, if found illegal or
against law or if perverse.”
73. The view taken by the Madras High Court referred above in the
case of Nazims Continental (supra) has also been followed by Kerala
High Court in the case of Dr. Mathew Antony Vs. Oriental Bank of
Commerce and Others 2024 SCC OnLine Ker 6067 as well as by the
Gujarat High Court in the case of Hasubhai Jewellers & Others Vs.
Union Bank of India and Another 2010 SCC OnLine Guj. 4340.
74. However, with respect we do not concur with the reasons recorded
by the Madras High Court in the aforesaid paragraph which has been
followed by Kerala High Court as well as Gujarat High Court for two
reasons; we are bound by the precedent laid down by the Coordinate
Bench of this Court; secondly, the reasons we have deliberated above in
concluding that the order of confirmation of sale by the Recovery
Officer falls under Section 25(a) of RDDBFI Act, 1993, therefore,
appeal will lie under Section 30 have not been considered by the Madras
High Court.
75. As held above, the order of the Recovery Officer falls under
Section 25 (a) of RDDBFI Act, 1993, therefore, the borrower can
directly file appeal under Section 30 (1) of RDDBFI Act, 1993 before
the DRT against an order confirming the sale without first invoking Rule
60 or 61 of Second Schedule of IT Act, 1961. Consequently, we hold that
the legislature has provided the borrower a concurrent remedy; either to
invoke Rule 60 or 61, or to approach the DRT directly by filing an
appeal under Section 30 (1) of the RDDBFI Act, 1993 within thirty days
29
SPLA No. - 339 of 2024
from the date a copy of the order passed by the Recovery Officer
confirming the sale is issued to him.
76. In view of the aforesaid discussion, we do not find substance in
the submission of Sri Manish Goyal, learned Senior Counsel that there is
no equivalence of remedy rather there is hierarchy of remedy which the
borrower has to avail for challenging the order of confirmation of sale.
77. We find that the learned Single Judge did not consider the
aforesaid aspect of the matter while holding that appeal of the borrower
was not maintainable for want of pre-deposit.
78. In the case of Om Sakthi Sekar Vs. V. Sukumar and Others AIR
2026 SC 1460, the Apex Court has vividly explained the purpose of
auction. Paragraph nos.15 & 16 of the said judgement are being
reproduced below:-
“15. While there can be no quarrel with the settled proposition that the
rights of a bona fide auction purchaser deserve due protection and that
confirmed court sales should not ordinarily be interfered with, it is
equally well established that such protection is not absolute. Where
credible issues are raised regarding the adequacy of valuation or the
fairness of the process leading to the fixation of the reserve price, the
supervisory jurisdiction of the Court may be invoked to ensure that the
recovery proceedings have been conducted in a manner that secures the
best possible value of the property. The objective of recovery proceedings
is not merely to complete the sale but to realise the maximum value of the
secured asset so as to balance the interests of the creditor and the
borrower. In this regard, reference may be made to the decision of this
Court in Rajiv Kumar Jindal v. BCI Staff Welfare Association 2023 SCC
Online SC 507, wherein, it was observed that the purpose of an auction is
to obtain the most remunerative price for the property by affording an
opportunity to intending purchasers to participate in a process of
competitive bidding, thereby ensuring transparency and fairness in the
sale. The Court further emphasized that if the process of competitive
bidding is curtailed or compromised, the possibility of underbidding or
securing an inadequate price cannot be ruled out. In such circumstances,
the court is required to exercise its discretion with circumspection so as to
30
SPLA No. - 339 of 2024
safeguard the legitimate interests involved in the sale process. The
following paragraphs are apposite:
“24. The object of the auction is to secure optimum realisable value
of the property by giving opportunity to the potential buyers facing
competitive bids either in open or closed format. The terms
“auction” or “bid” are inter-related as both give the idea of selling
the product to the public. Bidding involves the process where a
person offers a price which is known as a bid. The process of
bidding takes place in a situation where large number of people
show their willingness to buy a particular product or a service and
bidding in a sealed envelope is often used by various companies,
industries and small businesses for assessing the needs of the public
at large. On the other hand, auction is the process that involves
buying and selling goods and services by offering them for bids,
taking bids and selling the item to the highest bidder and that is
possible if there is a competitive bidding between the bidders.
25. The purpose of auction (open or close format) is to get the most
remunerative price and giving opportunity to the intending bidders
to participate and fetch higher realizable value of the property. If
that path is cut down or closed, the possibility of fraud or to secure
inadequate price or underbidding would loom large. In the given
circumstances, it is the duty of the court to exercise its discretion
wisely and with circumspection and keeping in view the facts and
circumstances in each case.
26. The object of auction has been considered by this court in
Lakshmanasami Gounder v. C.I.T. Selvamani, 1992 AIR SCW 551
as under :-
“…The object of the sale is to secure the maximum price and
to avoid arbitrariness in the procedure adopted before sale
and to prevent underhand dealings in effecting sale and
purchase of the debtors property. Public auction is one of the
modes of sale intending to get highest competitive price for the
property. Public auction also ensures fairness in actions of the
public authorities or the sale officers who should act fairly
and objectively. Their action should be legitimate. Their
31
SPLA No. - 339 of 2024
dealing should be free from suspicion. Nothing should be
suggestive of bias, favouritism, nepotism or beset with
suspicious features of underbidding detrimental to the
legitimate interest of the debtor. . .”
16. In the present case, the High Court, upon examining the record, was
of the view that the question relating to valuation of the property and the
fixation of the reserve price warranted closer scrutiny. Significantly, the
High Court has neither set aside the auction sale nor questioned the
participation of the auction purchaser; rather, it has confined its
direction to a reconsideration of the issue of valuation by the DRT.”
79. It is trite law that the Court should be reluctant to interfere with
the sale of property by auction but that protection is not absolute, and in
a given case, if the Court finds that there is element of fraud or material
irregularities have been committed in conducting the sale, the
supervisory jurisdiction of the Court can be invoked to ensure the
fairness in the auction proceeding to secure the best possible value of the
property. Therefore, we are of the view that the Recovery Officer while
passing an order of confirmation of sale must apply his mind to ensure
that the auction of sale had taken place strictly in accordance with the
procedure prescribed in the relevant Statute.
80. Consequently, we reject the submission of Sri Manish Goyal that
in the absence of any objection of borrower under Rule 60 or 61, the
Recovery Officer must confirm the sale under Rule 63 as it is only a
ministerial act.
81. Now coming to the second argument of learned counsel for the
appellants that learned Single Judge has erred in law in allowing the writ
petition on the ground that once the relief for setting aside the auction
proceeding was not prayed for by the appellants, the DRT did not have
jurisdiction to set aside the auction proceeding.
82. However, learned counsel for the respondents has urged that DRT
does not have any residuary power to grant a relief where there is
specific provision conferring power upon the DRT to grant a relief
provided in the relevant Statute.
32
SPLA No. - 339 of 2024
83. Sri Naveen Sinha, learned Senior Counsel for the appellants while
elaborating his submission has placed the memorandum of appeal filed
by the appellants before the DRT to demonstrate that the grounds set out
in the memo of appeal on which the appellants had sought the relief of
setting aside the confirmation of sale had been spelt out in the memo of
appeal, and it is evident from the grounds stated in the memo of appeal
that the appellants have pointed out various irregularities committed by
the Recovery Officer in auction proceeding. Therefore, the respondent
no.1 was aware of the fact that the appellants have also challenged the
action of Recovery Officer in illegally carrying out the auction
proceeding and sale of immovable property. Consequently, it is urged
that it was not a case where the respondent no.1 was caught by surprise
during the course of hearing that appellants also have challenged the
action of the Recovery Officer in carrying out the sale illegally.
84. He has placed reliance upon ground nos.xv to xviii of paragraph
no.5 of the appeal which are reproduced below:-
“xv. That the aforesaid statutory appeal, under section 20 of the Act,
1993 came up for hearing on the application for interim relief on
dated 23rd December, 2003 and after hearing the
appellants/applicants, the Debts Recovery Appellate Tribunal,
Allahabad passed an interim direction and stayed the confirmation
of sale vide order dated 23rd December, 2003.
xvi. That on 24th December, 2003, the appellants/applicants
immediately approached with the Recovery Officer, Debts Recovery
Tribunal, (Concerned Recovery Officer), Lucknow in connection
with the submission of the interim direction dated 23rd December,
2003 passed by the Debts Recovery Appellate Tribunal, Allahabad.
However, the concerned Recovery Officer, Debts Recovery Tribunal,
Lucknow was not available in his sitting room, hence having no
other alternative remedy, the appellants/applicants (Judgement
Debtor No.5) i.e. Shri Radhey Shyam Mittal approached with the
Section Officer, Debts Recovery Tribunal, Lucknow and also handed
over the certified copy of Judgement and order dated 23-12-2003 to
him considering the same the Section Officer, Debts Recovery
33
SPLA No. - 339 of 2024
Tribunal, Lucknow endorsed the remarks on the certified copy of
order dated 23rd December, 2003 "keep with record" and also
handed over the same to the concerned clerk, Debts Recovery
Tribunal, Lucknow.
xvii. That thereafter the appellants/applicants also handed over the
same copy of interim direction dated 23rd December, 2003
alongwith a copy of statutory appeal on dated 26th December, 2003
to the respondent-Bank at Bareilly and also obtained duly receiving
on the same dated 26th December, 2003.
xviii. That on 14th January, 2004, the respondent-auction purchaser
Shri Ram Avtar alongwith his son Shri Bharat Agarwal as well as
two other constables appeared at the premises of M/s Durga Rice &
Dal Mills, Haziapur, Pilibhit Road, Bareilly and also produced the
confirmation of sale of immovable property certificate dated 9th
January, 2004, issued by the Recovery Officer, Debts Recovery
Tribunal, Lucknow.”
85. He has further placed paragraph nos.xx to xxiv of paragraph no.5
of the appeal wherein the appellants have pointed out the illegality in
publication of proclamation. The appellants in the aforesaid paragraph
have questioned the fixation of reserved price of Rs. 35 lacs by the
Recovery Officer. He has also questioned the legality of auction
proceeding on the ground that single bidder had participated in the
auction proceeding. Paragraph nos.xx to xxiv of paragraph no.5 of the
appeal are reproduced herein below:-
“xx. That it is desirable to state here, that the Recovery Officer. Debts
Recovery Tribunal, Lucknow calculated the reserve price of immovable
property in the tune of Rs.35 lacs only on the basis of incorrect
measurement of land measuring 4950 sq. yards situated at 6-B,
Haziapur, Pilibhit Road, Bareilly, bounded as under:-
East - Bhimsen Ki Mandi
West - Ganesh Industries
North - Shanker Industries
South - Road
34
SPLA No. - 339 of 2024
However, in fact the immovable property dispute in question having its
total land measuring 6100 sq. yards approximately. It may be further
submitted that the Recovery Officer, Debts Recovery Tribunal,
Lucknow also shown/ indicated the situation of boundaries in
incorrect manner, since the western and northern portion having
commercial properties, as like to the Dal Mills, Commercial Godowns
etc. which resulted the immovable property land in question in the
commercial place of the immovable property dispute in question.
xxi. That it is desirable to state here that the Recovery Officer, Debts
Recovery Tribunal, Lucknow put all the immovable property dispute in
question on the basis of valuation report dated 22nd March, 2003 in
which total area of land measuring shown/ indicated in the shape of
3762 sq. meter, which would be to come into the tune of 4499.46 sq.
yards. However in fact the Recovery Officer, Debts Recovery Tribunal,
Allahabad vide attachment order dated 6th August, 2001 shown the
land measuring the carpet area 4950 sq. yards which later on also
shown/indicated by the learned Recovery Officer, Debts Recovery
Tribunal, Lucknow in his another order of proclamation of sale dated
10th July, 2003. It may be further submitted, if the measurement of
4950 sq. yards is converted into shape of square meter, then it would
be to come in the shape of 4138.69 sq. meter, as such the Recovery
Officer, Debts Recovery Tribunal, Lucknow calculated the reserve
price of immovable property in the tune of 35 lacs only on the basis of
incorrect measurement of land treating the land measuring area 3762
sq. meter, hence the basis structure of valuation report dated 22nd
March, 2003 is based on the basis of incorrect measurement of land
area of the immovable property, which resulted the cost of immovable
property disputed in question in lower market value of the land.
xxii That it is desirable to state here that the Recovery Officer, Debts
Recovery Tribunal, Lucknow calculated the reserve price of the
immovable property in the tune of Rs.35 lacs on the basis of incorrect
measurement of construction area/structure in the shape of 1255 Sq.
Meter constructed in 1968 as well 278.81 sq. meter constructed in
1982. However infact at the place of immovable property dispute in
question, the construction area/structure is at present available in the
35
SPLA No. - 339 of 2024
tune of 2508.3 sq. meter approximately, which resulted in the tune of
extra constructed area of 975 sq. meter approximately, as such the
constructed area shown in the valuation report dated 22.03.2003 is
incorrect measurement, as such the calculation of reserve price of the
immovable property in the tune of Rs.35 Lacs is incorrect
figure/valuation adjudicated by the Recovery Officer, Debts Recovery
Tribunal, Lucknow.
xxiii That it is desirable to state here, that the property auction
publication shown/published in the New paper, Danik Jagran, Bareilly
on dated 21st August, 2003 which is before 4 days from the date of its
auction dated 25th August, 2003.
xxiv That on 25th August, 2003 the public auction as the same was
scheduled on 25th August, 2003, the public auction as the same was
scheduled on 25th Augusut, 2003 has taken place and only one single
bid participated in the auction proceedings namely Shri Ram Avtar
through his authorized representative Shri Bharat Agarwal, Bareilly.”
86. Besides the above grounds, the appellants have taken various other
grounds challenging the auction proceeding in paragraph no.5 of the
appeal stating ‘brief facts of the case’. Based upon these facts and
grounds stated in the appeal, the appellants have prayed for the
following relief in the appeal:-
“a. That the confirmation of sale of immovable property order dated
9th January, 2004 as well as certificate of sale of immovable property,
form No. 20 passed by the Recovery Officer, Debts Recovery Tribunal
Lucknow in DRC NO.155/2002/LKO be set aside.
b. That any other order or direction which is just, fit and proper in the
present facts and circumstances of the case may also kindly be passed
in favour of the appellants/applicants.
c. That cost be also awarded, against the respondents.”
87. According to Sri Naveen Sinha, learned Senior Counsel for the
appellants, the DRT under Rule 18 of Rules, 1993 has ample power to
make such orders or give such direction as may be necessary or
expedient to give effect to its orders or to prevent abuse of its process or
36
SPLA No. - 339 of 2024
to secure the ends of justice. Therefore, there was no need to make a
specific prayer for setting aside the auction proceeding.
88. Alternatively, he submits that even if, without admitting, the
argument of respondents is accepted that DRT does not have any
residuary power to grant a relief not prayed for in the instant case, the
DRT has not exercised any residuary power because the relief of setting
aside the auction proceeding is implicit in the relief of confirmation of
sale and as such, the DRT has not committed any illegality in allowing
the appeal of appellants which order has been affirmed by the DRAT by
dismissing the appeal of respondent against the order of DRT.
89. The Apex Court in the case of Bachhaj Nahar Vs. Nilima
Mandal and Others AIR 2009 SC 1103 has explained the purpose and
object of pleading. Paragraph nos.9 & 10 of the said judgment are being
reproduced herein below:-
“9. The object and purpose of pleadings and issues is to ensure that
the litigants come to trial with all issues clearly defined and to prevent
cases being expanded or grounds being shifted during trial. Its object
is also to ensure that each side is fully alive to the questions that are
likely to be raised or considered so that they may have an opportunity
of placing the relevant evidence appropriate to the issues before the
court for its consideration. This Court has repeatedly held that the
pleadings are meant to give to each side intimation of the case of the
other so that it may be met, to enable courts to determine what is
really at issue between the parties, and to prevent any deviation from
the course which litigation on particular causes must take.
10. The object of issues is to identify from the pleadings the questions
or points required to be decided by the courts so as to enable parties
to let in evidence thereon. When the facts necessary to make out a
particular claim, or to seek a particular relief, are not found in the
plaint, the court cannot focus the attention of the parties, or its own
attention on that claim or relief, by framing an appropriate issue. As
a result the defendant does not get an opportunity to place the facts
and contentions necessary to repudiate or challenge such a claim or
relief. Therefore, the court cannot, on finding that the plaintiff has not
37
SPLA No. - 339 of 2024
made out the case put forth by him, grant some other relief. The
question before a court is not whether there is some material on the
basis of which some relief can be granted. The question is whether
any relief can be granted, when the defendant had no opportunity to
show that the relief proposed by the court could not be granted. When
there is no prayer for a particular relief and no pleadings to support
such a relief, and when defendant has no opportunity to resist or
oppose such a relief, if the court considers and grants such a relief, it
will lead to miscarriage of justice. Thus it is said that no amount of
evidence, on a plea that is not put forward in the pleadings, can be
looked into to grant any relief.”
90. In the case of Hindalco Industries Ltd. Vs. Union of India and
Others (1994) 2 SCC 594, the Apex Court has explained the power of
Court or Tribunal to grant relief. Paragraph nos.7 & 8 of the said
judgment are being reproduced herein below:-
“7. It is settled law that it is no longer necessary to specifically ask
for general or other relief apart from the specific relief asked for.
Such a relief may always be given to the same extent as if it has been
asked for provided that it is not inconsistent with that specific claim
which the case raised by the pleadings. The court must have regard
for all the relief and look at the substance of the matter and not its
forms. It is equally settled law that grant of declaring relief is always
one of discretion and the court is not bound to grant the relief merely
because it is lawful to do so. Based on the facts and circumstances
the court may on sound and reasonable judicial principles grant
such declaration as the facts and circumstances may so warrant.
Exercise of discretion is not arbitrary. If the relief asked for is as of
right something is included in his cause of action and if he
establishes his cause of action, the court perhaps has been left with
no discretion to refuse the same. But when it is not as of right, then it
is one of the exercise of discretion by the court. In that event the
court may in given circumstances grant which includes 'may refuse'
the relief. It is one of exercising judicious discretion by the court.
Same consideration would apply to the causes under the Act and the
Tribunal has such discretion. The Tribunal, while keeping justice,
38
SPLA No. - 339 of 2024
equity and good conscience at the back of its mind, may when
compelling equities of the case oblige them, shape the relief
consistent with the facts and circumstances established in the given
cause of action. Any uniform rigid rule, if be laid, it itself turns out
to be arbitrary. If the Tribunal thinks just, relevant and germane,
after taking all the facts and circumstances into consideration,
would mould the relief, in exercising its discretionary power and
equally would avoid injustice. Likewise when the right to remedy
under the Act itself arises on the presence or absence of certain
basic facts, at the time of granting relief, may either grant the relief
or refuse to grant the same. It would be one of just and equitable
exercise of the discretion in moulding the ancillary relief. It is not as
of right. In Associated Provincial Picture Houses Ltd. case, under
Sunday Entertainments Act, 1932, the licensing authority while
granting permission to exhibit cinematographs, imposed certain
conditions, prohibiting the children under age of 15 years to be
admitted in the theatre. It was challenged as being arbitrary.
Dealing with the discretionary power of the licensing authority, the
Court of Appeal held that the law recognised certain principles on
which discretion must be exercised but within the four comers of
those principles. The discretion is not absolute one. The exercise of
such a discretion must be a real exercise of the discretion. If in any
statute conferring the jurisdiction, there are to be found, expressly or
by implication, matters to which the authorities exercising the
discretion ought to have regard, then, in exercising the discretion,
they must have regard to those matters. Conversely, if the nature of
the subject- matter and the general interpretation of the Act make it
clear that certain matters would not be germane to the matter in
question, they must disregard those matters. Expressions have been
used in cases where the powers of local authorities came to be
considered relating to the sort of thing that may give rise to
interference by the court. Bad faith, dishonesty-those, of course,
stand by themselves, unreasonableness, attention given to
extraneous circumstances, disregard of public policy, and things like
that have all been referred to as being matters which are relevant for
consideration. The discretion must be exercised reasonably. A
39
SPLA No. - 339 of 2024
person entrusted with a discretion must direct himself properly in
law. He must call his own attention to the matters which he is bound
to consider. He must exclude from his consideration matters which
are irrelevant to the matter that he has to consider. If he does not
obey those rules, he may truly be said to be acting unreasonably.
8. There lies a distinction between the administrative authorities
exercising discretionary jurisdiction and the court or the quasi-
judicial Tribunal deciding the lis. In the latter case discretion has
been given to the court or the Tribunal to mould the ancillary relief.
The discretion is to be exercised with circumspection consistent with
justice, equity and good conscience, keeping always the given facts
and circumstances of the case.”
91. Now, in the light of the law postulated by the Apex Court in the
aforesaid case with respect to power of Tribunal to grant relief, the Court
proceeds to test the argument of learned counsel for the respondents
whether in the absence of any prayer for setting aside the auction
proceedings, the DRT had erroneously set aside the auction proceeding.
92. From the grounds of appeal, reproduced above, it is manifest that
while challenging the confirmation of sale by the Recovery Officer, the
appellants have challenged the fixation of reserved price Rs.35 lacs of
the property. The appellants have also challenged the publication of
notice, which according to appellants, was not as per Rule 52(2) of
Second Schedule of IT Act, 1961. The appellants have also pointed out
that the auction was not fair because only one bidder had participated in
the auction proceeding.
93. In the light of grounds raised by the appellants, the DRT has
framed issue no.2 which is being reproduced below:-
“2. Whether the impugned order dated 09.01.2004 passed by the
Recovery Officer, DRT, Lucknow in DRC 155/2002 LKO as well as
the related earlier order is respect of attachment, proclamation of
sale and auction of the immovable property suffer from illegality,
material irregularity and exercising power beyond jurisdiction.”
40
SPLA No. - 339 of 2024
94. It is obvious that the issue no.2 had been framed on the basis of
the pleadings on record. The issue no.2 clearly encompasses the
adjudication of legality of orders passed by the Recovery Officer in
respect of attachment, proclamation of sale and auction of immovable
property by the DRT.
95. So, from issue no.2, it is evident that DRT was asked to adjudicate
the legality of orders passed by the Recovery Officer regarding
attachment, proclamation of sale and auction of immovable property.
96. The respondent no.1 was well aware of the issue no. 2. However,
the record does not reflect that respondent no.1 had ever objected to the
framing of issue no.2 on the ground that since appellants had only
prayed for setting aside the order dated 09.01.2004 passed by the
Recovery Officer, DRT Lucknow in DRC 155/2002 LKO, and had not
asked for setting aside the orders passed by the Recovery Officer relating
to attachment, proclamation of sale and auction of immovable property,
therefore, the DRT could not adjudicate the aforesaid issue in its entirety
and should confine the issue no.2 only with regard to legality of the
order dated 09.01.2004 passed by the Recovery Officer, DRT Lucknow
in DRC 155/2002 LKO. In the absence of any objection by the
respondent no.1 against framing of issue no.2, the respondent no.1 has
acquiesced to adjudication of legality of other orders regarding auction
proceeding besides the legality of order of confirmation of sale dated
09.01.2004.
97. Respondent no.1 was also aware of the consequence of
adjudication of issue no.2: if the DRT found the orders relating to
attachment, proclamation of sale, and auction of immovable property
patently illegal, it might set them aside. Consequently, the respondent
no.1 is estopped in law by his conduct from challenging the order of the
DRT that it had acted beyond its jurisdiction in granting reliefs which
had not been prayed for by the appellants before the DRT in appeal.
98. It is pertinent to state that under Rule 18 of the Rules, 1993, the
DRT is empowered to make such orders and give necessary directions to
41
SPLA No. - 339 of 2024
give effect to its decision, prevent the abuse of its process, and secure the
ends of justice.
99. The Apex Court in the case of Hindalco Industries Ltd. (supra)
has enunciated that the Tribunal could shape the relief consistent with
the facts and circumstances established in the given cause of action.
Even Rule 18 of Rules, 1993 authorises the Recovery Officer to pass any
order to secure the ends of justice.
100. In the instant case, the DRT while deciding issue no.2 was
supposed to determine the legality of the orders passed by the DRT
relating to attachment, proclamation of sale and auction of immovable
property. Adjudication of those issues have not been objected by the
respondent no.1. Therefore, once the DRT came to the conclusion that
orders of attachment, proclamation of sale and auction of immovable
property were illegal, the DRT was well within its right and had the
jurisdiction under Rule 18 of Rules 1993 to set aside the order of
attachment, proclamation of sale and auction of immovable property to
secure the ends of justice.
101. The argument of respondents can be tested from another angle. It
is urged by the respondent no.1 that his rights accrued in the auction
property on acceptance and payment of bid amount, therefore, it was
incumbent upon the appellants to have prayed for setting aside of auction
proceeding. Now, the question arises whether the rights of respondent
no.1 in auctioned property accrued on acceptance and payment of bid
amount. We have held that process of sale of property starts from the
proclamation of sale and culminates with the confirmation of sale and
issuance of sale certificate.
102. To appreciate this issue, it would be useful to have a glance at
judgement of Apex Court in the case of Valji Khimji and Company Vs.
Official Liquidator of Hindustan Nitro Product (Gujarat) Limited and
Others (2008) 9 SCC 299 wherein the Apex Court has held that in cases
where auction is subject to confirmation by some authority, the right of
auction purchaser would accrue only after the sale is confirmed by the
42
SPLA No. - 339 of 2024
said authority. Paragraph nos.29 & 30 of the said judgement are being
reproduced below:-
“29. In the present case we are satisfied that there is no fraud in the
auction-sale. It may be mentioned that auctions are of two types - (1)
where the auction is not subject to subsequent confirmation, and (2)
where the auction is subject to subsequent confirmation by some
authority after the auction is held.
30. In the first case mentioned above, i.e. where the auction is not
subject to confirmation by any authority, the auction is complete on
the fall of the hammer, and certain rights accrue in favour of the
auction-purchaser. However, where the auction is subject to
subsequent confirmation by some authority (under a statute or terms
of the auction) the auction is not complete and no rights accrue until
the sale is confirmed by the said authority. Once, however, the sale is
confirmed by that authority, certain rights accrue in favour of the
auction-purchaser, and these rights cannot be extinguished except in
exceptional cases such as fraud.”
103. It means that no right accrues to the respondent no.1 till the sale is
confirmed by the Recovery Officer by passing appropriate order under
Rule 63 of Second Schedule of IT Act, 1961.
104. So, non-challenge the order of proclamation of sale and order of
auction sale of immovable property does not prejudice any right of the
respondent no.1, since the right, title and interest of the property vests in
the auction purchaser i.e. respondent no.1 only after the Recovery
Officer passes an order confirming the sale. Thus, non-challenge to the
earlier orders passed by the Recovery Officer before confirmation of sale
did not prejudice any rights of the respondent no.1.
105. In view of the aforesaid fact, the order of confirmation of sale is
the main relief. Accordingly, even if the appellants have not prayed
specifically for setting aside the orders passed by the Recovery Officer
relating to proclamation of sale and auction of immovable property, that
would not come in aid of the respondent no.1 as the natural consequence
of setting aside the order of confirmation of sale was that all earlier
43
SPLA No. - 339 of 2024
orders, namely the proclamation of sale, auction of immovable property
passed by the Recovery Officer during the process would have to go.
106. So far as the judgement in the case of Bharat Amratlal Kothari
Vs. Dosukhan Samadkhan Sindhi and Others AIR 2010 SC 475 is
concerned, the Apex Court has held that the Court cannot grant a relief
which has not been prayed for and would result in serious prejudice to
the interested party and deprive him of valuable right under the statute,
but the said judgement is not applicable in the facts of the present case
inasmuch as we have already held that interest of respondent no.1 in the
auction property accrued only after the Recovery Officer has passed
order of confirmation of sale and not by earlier orders, namely
attachment, proclamation of sale and auction of immovable property. We
have already held that Rule 18 of the Rules, 1993 confers ample power
upon the Tribunal to pass any order to secure the ends of justice. The
DRT in the instant case has acted within its jurisdiction to set aside the
orders of proclamation of sale and auction of immovable property under
Rule 18 of the Rules, 1993 to secure the ends of justice.
107. The respondent no.1 has also relied upon the judgement of the
Apex Court in the case of Trojan & Company Ltd. Vs. RM. N.N.
Nagappa Chettiar AIR 1953 SC 235. The principle of law laid down by
the Apex Court in the case of Trojan & Company Ltd. (supra) that the
decision of a case cannot be based on grounds outside the pleadings of
the parties is well settled. However, we are of the view that the said
judgement does not come to the aid of the respondent no.1 for the
reasons delineated below.
108. We have detailed above that the appellant in appeal under Section
30 of the RDDBFI Act 1993 raised specific grounds pointing out the
illegalities committed by the Recovery Officer in proclamation of sale
and sale of immovable property, and based upon the pleadings, the DRT
framed the issue no.2. The DRT decided issue no.2 in favour of the
appellants. Consequently, it set aside the order of confirmation of sale.
44
SPLA No. - 339 of 2024
109. The respondents could not demonstrate that relief granted by the
DRT is not based on the grounds set out by the appellants in appeal,
therefore, the judgement of the Apex Court in the case of Trojan &
Company Ltd. (supra) is not applicable in the facts of the present case.
110. Now coming to the finding of the learned Single Judge that DRT
as well as DRAT ought to have considered the fact that by dismissal of
Appeal No.R-366/2003 of borrower by the DRT, the effect and operation
of the interim order wiped out. The said finding has been recorded by the
learned Single Judge in paragraph no.25 of the judgment, which reads as
under:-
“25. Once the effect and operation of the interim order wipes out on
final order being passed thereon, all consequential proceeding goes.
This vital aspect of the matter was brought to the notice of the
Tribunal, but in stead of taking note of the said fact, the appeal of the
petitioner was dismissed on that ground, which cannot be permissible
in law.”
111. From the reading of the aforesaid paragraph, we do not find that
the aforesaid finding is supported by any reason. The appellants have
preferred appeal under Section 30 of the RDDBFI Act, 1993 challenging
the confirmation of sale and issuance of certificate of sale. The DRT was
supposed to decide the appeal strictly within the parameters of Section
30 on the basis of pleadings, arguments and issues framed in the appeal.
112. Though the DRT has observed that propriety demanded that when
the DRT had passed an order staying the confirmation of sale, the
Recovery Officer ought not to have passed the order of confirmation of
sale to show proper respect to the stay order dated 23.12.2003 passed by
the Appellate Authority. However, the order passed by DRT does not
reflect that the grant of interim order by DRAT staying the confirmation
of sale was the consideration which weighed with the DRT in allowing
the appeal of the borrower and setting aside the confirmation of sale and
sale certificate.
45
SPLA No. - 339 of 2024
113. Neither the decision of DRT in Appeal No.R-366/2003 was
relevant nor the interim order passed in the said appeal was relevant in
deciding the appeal under Section 30 as the appeal was to be decided
within the parameters and scope of Section 30. Since the scope of appeal
under Section 30 of the of RDDBFI Act, 1993 of the appellant was only
confined to the issues framed in the said appeal, therefore, the aforesaid
finding is erroneous and perverse.
114. We have reproduced the order dated 05.07.2005 of DRAT
dismissing the appeal of appellant after compromise. If we take a glance
at the said order, we find that respondent no.1 had filed an application
under Order 1 Rule 10 of CPC before the DRAT for being impleaded as
a party in the appeal so that he could file objection against the
application of appellant for withdrawal of appeal which was rejected by
the DRT. The record does not reflect that the appellant has ever
challenged the said order or has challenged the compromise between the
bank and the borrower in any appropriate proceeding.
115. Since there was no challenge to the compromise between the
borrower and the bank in an appropriate proceeding by the respondent
no.1, therefore, we are of the view that learned Single Judge has acted
beyond jurisdiction in declaring the compromise invalid.
116. Now coming to the last submission of learned counsel for the
respondents whether the respondent no.1 by virtue of being a stranger is
entitled to be considered a bona fide purchaser for value is concerned, it
is trite law that a stranger who purchases a property at an auction sale
has to be considered as a bona fide purchaser for value and he should not
be allowed to suffer on account of mistakes or irregularities committed
in Court of law. However, while enunciating the said proposition, the
Courts have consistently held that if there was element of fraud in
conducting auction sale or material irregularities had been committed in
conducting the sale, the Courts are not devoid of power to set aside the
confirmation of sale.
46
SPLA No. - 339 of 2024
117. In the case of Om Sakthi Sekar (supra), the Apex Court while
repelling the contention of appellant that the confirmation of sale renders
the matter entirely immune from further scrutiny has observed “The
requirement that the recovery process be fair, transparent and based on
a proper assessment of value must co-exist with the principle of finality
governing confirmed sales”.
118. The DRT while deciding the issue no.2 has recorded as follows:-
(i) The auctioned property was different than the mortgaged property.
(ii). The publication of auction notice in one daily Dainik Jagran is in
English language, whereas the district Bareilly is a Hindi speaking area,
and therefore, for giving wide publicity of auction sale and in order to
fetch best possible highest price, the publication of notice should have
been in Hindi language.
119. The record reflects that finding on merits recorded by DRT
affirmed by DRAT setting aside the confirmation of sale have not been
assailed before the learned Single Judge inasmuch as the order of learned
Single Judge does not reflect that it has set aside the findings of DRT
affirmed by DRAT with regard to irregularity conducted in auction
proceeding.
120. The learned counsel for respondents has not assailed the finding of
irregularity committed in the sale returned by DRT and affirmed by
DRAT even before us. Therefore, in the absence of any challenge by the
respondent no.1 before the learned Single Judge and even before this
Court, the findings of DRT in respect of irregularities committed in sale
of property have attained finality.
121. The record also reflects that glaring irregularities have been
committed in sale of property inasmuch as it is evident from the original
application that description of mortgaged property was ‘Building
together with land measuring 694 square yards situated in Mohalla
Hazipur, Pilibhit Road, Bareilly U.P.’ whereas the description of
property put for auction was ‘Building together with land measuring
47
SPLA No. - 339 of 2024
4950 square yards’. The area of land put for auction was about more
than seven times the area of land that was mortgaged.
122. The record reveals that the proclamation of sale was published in
English in daily newspaper i.e. Dainik Jagran. The proclamation of sale
is to be made as per the procedure provided under Rule 52(2) of Second
Schedule of IT Act, 1961 which categorically mandates that the
Recovery Officer shall cause a proclamation of the intended sale to be
made in language of district. Therefore, as per the mandate of Rule 52(2)
of Second Schedule of IT Act, 1961, the publication of intended sale
must be made in the language of district.
123. Undisputedly, the mortgaged property is situated in District
Bareilly which is a Hindi speaking area, and therefore, the proclamation
of intended sale should also have been published in Hindi language.
124. The Apex Court in the case of State of Orissa Vs. Sridhar Kumar
Malik AIR 1985 SC 1411 while upholding the judgement of Orissa High
Court whereby the Orissa High Court has quashed a notification issued
by the State Government for the purpose of constituting a notified area
under the Municipal Act, 1950 on the ground that the proclamation
convey the intention of the State Government to constitute a notified
area was made in English language and not in a language with which the
local people are familiar with. Paragraph no.8 of the said judgement is
being reproduced below:-
“8. The next point concerns the validity of the proclamation made
under sub-Section (1-a) of Section 417-A of the Orissa Municipal Act.
The sub-section requires that the proclamation should be published in
the official Gazette and also at least in one newspaper circulating in
the area. Admittedly, the proclamation was framed in the English
language, in the Gazette as well as in the local newspaper, the "Daily
Samaj". The Oriya Gazette is published in English, and that being so
the intention of the legislature in sub-Section (1-a) must be construed
to be that the proclamation in the Gazette should be in the English
language. But the proclamation in the newspaper was also in the
English language. The contention of the residents, which has found
48
SPLA No. - 339 of 2024
favour with the High Court, is that the notification should have been in
Oriya, the local language of the people residing in the area and invited
to submit their objections. Our attention has been drawn to Rule 602 of
the Orissa Municipal Rules, 1953 which provides:
“(1) Every notification required to be published by a municipal
council under the Act shall be published in Oriya by affixture in
the notice board of the municipal office concerned and also
proclaimed by beat of drum.
(2) Every notification required to be published by the State
Government in the prescribed manner shall be published in
English in the Gazette”.
There is nothing, however, in Rule 602 which prescribes the language
in which the proclamation under sub-Section (1-a) of Section 417-A of
the Orissa Municipal Act has to be made. Sub-rule (1) of Rule 602
deals with the notification published by a municipal council while sub-
rule (2) deals with a notification published in the Gazette by the State
Government. We have no doubt in our mind that having regard to the
object with which a proclamation is required to be published under
sub-Section (1-a) of Section 417-A of the Orissa Municipal Act, it must
be published in the local language of the area in which the newspaper
circulates. It is apparent that the legislature attaches serious
importance to eliciting the opinion of the residents of the area who
will be affected by its constitution as a notified area, and that is why
express provision in that behalf was made in sub-Section (1) of Section
417-A. The legislature did not consider it sufficient that the
proclamation was published in the official Gazette. It is a notorious
fact that few people beyond those who belong to the official
community actually read the official Gazette. Therefore, the legislature
imposed the fürther requirement that the proclamation should be
published in a newspaper circulating in the area. A newspaper today
has become a basic medium for communication with the people. Its
effectiveness in that regard cannot be disputed, even as its influence in
the dissemination of information cannot be underestimated. To reach
out to the people, it must be published in a language with which they
are familiar. In so fundamental a matter as local self-government the
49
SPLA No. - 339 of 2024
legislature intended that an opportunity should be available to all
persons residing within the area to submit their objections. The local
language of the area is Oriya, and therefore the State Government
should have published the proclamation in that language in the
newspaper. On this point also we find ourselves in agreement with the
High Court.”
125. The Orissa High Court in the case of Govinda Chandra Pattnaik
Vs. Presiding Officer, Debt Recovery Tribunal, Cuttack and Others
2009 SCC OnLine Ori 37 had set aside a confirmation of sale on the
ground of non-compliance of statutory requirement of Rule 52 as in the
said case, the proclamation notice was published in English language
and not in Oriya language which was the local language. Paragraph
no.22 of the said judgement is being reproduced below:-
“22. The statutory notice under Rules-52 and 53 was published in
English language, and not in "the language of the district", which
clearly indicate non-compliance of the statutory requirements. The
object behind such requirement is that if the notice is published in
English though in a newspaper printed in vernacular language, it
would definitely not sub-serve the purpose for which the Rule has been
grafted. Therefore, notice has to be published in vernacular language
in the newspaper published in vernacular language. The property
mortgaged and the secured creditor may be situated in "rural area"
and the persons residing in rural areas may be interested in purchasing
it. Therefore, the need was considered to have the publication of the
notice in vernacular language and non-compliance of such a
mandatory requirement vitiated the proceedings.”
126. In the instant case also the mandate of Rule 52(2) had not been
followed by the Recovery Officer as the notice of proclamation of sale
was published in English language and not in Hindi which is the local
language of District Bareilly.
127. One more fact needs to be noticed is that as per valuer report, the
Market Value of the property was Rs.80,55,468/- and after depreciation,
the Residual Value of the property was Rs.70,15,380/-, and the Forced
50
SPLA No. - 339 of 2024
Sale Value of the property was Rs.56,12,000/-. Part-II of valuation report
is reproduced herein below:-
“Part-II Valuation
As per the request of Manager, Bank Of Baroda, I visited and inspected
the property which is under question with bank Employ to evaluate the
relisiable force sale value of said property. But on site there was not any
responsible person who could give us required informations and we had
not permitted to visit and measure the entire property, we could measure
only a part portion (measuring 278.81 sqm) of said property. We are
giving valuation as per revised rates considering all the measurements
of previous valuation.
As per previous valuation of said property given us by bank, the said
property is a single storey industrial type property and stands in the
name of Sri Ram Chandra and Sri Satya Narain both sons of Sri Fateh
Chand. The said property is situated in Haziapur and measures 3762
sqm land as per given documents.
The said construction is ordinary type, brick work is done in cement
mortar and covered by R.B. slab and G.I. sheet roofing plain flooring is
done. The said building was done in two phase 1968 and 1982.
The circle rates are Rs 1200/Sqm and the prevailing market rates are
Rs.1500 to 1800/Sqm. As the said property consists of a very big piece
of land so (land rates diminishes. After considering all factors I adopt
the land rates Rs.1400/Sqm.
COST ANALYSIS:
Market Value:
Value of Land: 3762*1400/Sqm= Rs.52,66,800.00
Value of structure (constructed in 1968)=1255.00 Sqm x
1600=20,08,000.00
Value of structure (constructed in 1982)=278.81 Sqm x 2800=7,80,668.00
Total value of said property=Rs.80,55,468.00
51
SPLA No. - 339 of 2024
DEPRECIATION:
DEPRECIATION=(20,08,000.00” 0.9*35/75) + (7,80,668.00*
9*21775)=10,40,088.00
RESIDUAL VALUE Rs.80,55,468.00-Rs.10,40,088.00=Rs.70,15,380.00
FORCED SALE VALUE
After work out fair market value we can find out the Forced Sale Value
multiplying by a suitable factor. This multiplying factor may be 0.95 to 0.75
depending upon on the legal, economic, utility, marketability,
transferability etc. In my opinion the forced sale value of the property is
Rs.70,15,780.00 *0.80 i.e. Rs.56,12,304.00. (Rs.56,12,000.00).”
128. From the aforesaid valuation report, it is evident that the market
value of the property on 22.03.2003 was more than Rs.80 lacs, and after
depreciation, the value of the property was Rs.70,15,380/- and the forced
sale value of the property was Rs. 56,12,000/-.
129. As per ‘Advanced Law Lexicon’ dictionary, the meaning of Forced
Sale Value is ‘Amount that may be realized at a forced sale. The price
that could be obtained at immediate disposal, generally, substantially
below fair market value’.
130. So, the minimum price which the property would have fetched if
sold on Forced Sale Value was Rs.56,12,000/- whereas in the instant
case, only one bidder i.e respondent no.1 participated and the property
was sold out at Rs.35,20,000/-much below not only the market value, but
also the forced sale value.
131. For the aforesaid reason also, we find that there had been material
irregularities committed in conducting the auction sale.
132. In a recent judgment, the Apex Court in paragraph nos.36 to 39 of
the judgement in the case of M.R. Vasumathi Vs. The Authorized
Officer & Others in Civil Appeal No.1606 of 2026 has held as follows:-
“36. While it is trite that the rights of an auction purchaser and the
sanctity of a confirmed sale ordinarily merit due protection, such
protection is by no means absolute. It must yield where the very process
52
SPLA No. - 339 of 2024
engendering the sale is demonstrated to be legally infirm or to be
incongruous with the statutory framework. The object of proceedings
under the SARFAESI Act is not the mere culmination of a sale in a
mechanical manner, but the lawful realisation of the secured asset
through a process that is fair, transparent and strictly compliant with
the prescribed rules. In the present case, the non-adherence to the
timeline that the SARFAESI Rules contemplate constitutes a material
irregularity going to the root of the matter. The mere factum that the
sale stood confirmed cannot, therefore, foreclose judicial scrutiny.
37. It is true that there is no express or formal articulation, in so
many words, by the appellant evincing her readiness and willingness to
tender the stipulated amount for redemption of the secured asset.
However, the matter cannot be posited in such a narrow compass. The
record unmistakably discloses that the appellant, along with the other
legal heirs, had instituted multiple miscellaneous applications before
the DRT, inter alia, seeking permission to redeem the property upon the
deposit of the required amount and to set aside the consequences of the
sale. Such steps, taken in the teeth of adverse proceedings, cannot be
disregarded as inconsequential or merely procedural. On the contrary,
they evince a clear manifestation of intent, although implicit, that the
appellant was desirous of redeeming the property upon being accorded
with an opportunity to do so. Viewed in this prism, the filing of the said
application must be construed as sufficient indication of the appellant’s
willingness to redeem.
38. Even otherwise, as a logical sequitur, the contention that the
guarantor or his legal heirs did not evince adequate interest in
repayment does not advance the case of the secured creditor, for a
process vitiated by statutory non-compliance cannot otherwise be
sanctified on such considerations.
39. The property in question belonged to G. Ramanujam, the deceased
guarantor, and upon his demise, vested in his legal heirs. Such heirs
cannot be divested of their lawful interest except in accordance with a
procedure that is fair, just and in strict conformity with the governing
statute, i.e., the SARFAESI Act and the SARFAESI Rules.”
53
SPLA No. - 339 of 2024
133. The Apex Court in the case of Surinder Pal Singh Vs. Vijaya
Bank & Others in Civil Appeal No. 6843 of 2023 has refused to set
aside the judgement of Punjab and Haryana High Court whereby the
High Court has dismissed the writ petition filed by the appellant for
quashing of an order passed by the Debt Recovery Appellate Tribunal by
which the Tribunal has allowed the appeal of the borrower and permitted
the redumption of mortgaged property.
134. The Apex Court refused to interfere with the judgment of High
Court merely on the ground that sale certificate issued was not registered
and possession of auction property was not handed over to the appellant
and same remained with the borrower. Further, the bank had issued ‘No
Objection Certificate’ to the borrower against the loan account.
135. In the instant case also, only sale certificate had been issued. The
record of the case does not show that the sale certificate has been
registered. The possession of mortgaged property is also with the
borrower. The borrower has paid dues of the bank and the bank has
issued ‘No Objection Certificate’.
136. For the reasons given above, we are of the view that judgement of
learned Single Judge does not stand to merit. Consequently, the
judgement of learned Single Judge is set aside. The Writ-C No.68334 of
2005 is dismissed. Both the appeals are allowed with no orders to cost.
(Garima Prashad,J.) (Saral Srivastava,J.)
September 7, 2026
Sattyarth/NS
Digitally signed by :-
NITIN KUMAR
High Court of Judicature at Allahabad
Disclaimer: Educational and research material only; not legal, tax, investment or professional advice. Verify the controlling court record, statutory version, jurisdiction and subsequent history.