Delve into the nuanced legal analysis conducted by the court in a recent property auction case. The focus lies on the interpretation and application of Rule 60, highlighting the importance of procedural compliance and protection of property rights. The court’s examination of technical errors and borrower’s actions provides a comprehensive view of the legal intricacies at play. Stay tuned for a detailed exploration of the court’s legal reasoning and its implications on property auction proceedings.
Facts
- The immovable properties owned by respondent Nos. 3 and 5 were attached in pursuance of a Recovery Order/Certificate.
- Appeals were filed by respondent Nos. 1 and 2 before the DRAT, Mumbai against certain orders.
- The borrowers deposited additional sums of money as per orders and appeals made by them.
- Various legal actions, applications, and objections were filed by the involved parties.
- The auction sale of the properties was set aside based on legal proceedings.
- The Recovery Officer passed orders regarding maintaining status quo over the properties.
- Disputes regarding auction sales, deposits, and calculations were addressed through legal channels.
- An MOU was entered into between the Bank and the borrower regarding the properties.
- Legal orders were passed by authorities like DRT and DRAT in response to appeals and applications.
- Finally, the auction sale was confirmed in favor of the original writ petitioners.
- The High Court allowed the writ petition and quashed the order dated 07.09.2015 of the DRAT, Mumbai
- The High Court confirmed the sale in favor of respondent Nos. 1 and 2 (the auction purchasers)
- Respondent No.5 – M/s. R.S. Infra-Transmission Ltd. filed the present appeal against the High Court’s judgment and order
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Arguments
- The appellant, a subsequent purchaser, argues being a bona fide purchaser who bought the property after full payment.
- The Recovery Officer should have mentioned the exact amount due in the sale proclamation.
- The judgment debtor believed he needed to deposit Rs.1,27,30,527 and did so along with penalty and interest.
- The borrower should be favored in interpreting Rule 60 liberally as a last resort to save their property.
- A mistake in the sale proclamation amount cannot prejudice the application under Rule 60.
- The judgment debtor promptly deposited additional amounts upon shortfall notification by the Bank.
- The borrower’s right to save the property under Rule 60 should not be affected due to technicalities or mistakes by the Recovery Officer.
- The auction purchasers argue that there was a non-compliance of Rule 60 due to a shortfall in the amount deposited by the judgment debtor.
- The amount due and payable was Rs. 63 lakhs, which the judgment debtor did not deposit.
- The auction sale was not confirmed in favor of the auction purchasers as the title and ownership of the property were crystallized in favor of the appellant with registered sale deeds.
- The judgment debtor’s statement before the DRT claiming ignorance of the shortfall was deemed dishonest, as it was suggested that he was aware of the amount owed.
- A notice under Rule 60 was issued timely within 30 days, indicating a shortfall in compliance.
- The borrower only deposited the principal amount due and did not deposit the interest from the date of the recovery certificate, as claimed by the Bank.
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Analysis
- The High Court did not consider the facts in perspective, leading to a technical error in dismissing the application under Rule 60 by the judgment debtor.
- The judgment debtor made efforts to comply with Rule 60 by depositing substantial amounts and interest, indicating good faith.
- The auction purchasers executed sale deeds before the appeal period, potentially impacting the rights of the auction purchaser.
- There was a shortfall in deposit due to the Recovery Officer’s mistake in specifying the interest amount in the sale proclamation.
- The valuable right under Rule 60 should not be disregarded for technical reasons or mistakes beyond the judgment debtor’s control.
- An application to set aside a sale or auction must be made to the Recovery Officer by depositing the amount specified in the proclamation.
- The proclamation must be drafted by the Tax Recovery Officer after providing notice to the defaulter.
- The proclamation should indicate the time and place of the sale and accurately state the amount for which the sale is ordered.
- A person applying under Rule 60 should not suffer due to any fault or shortfall in the computation of the amount to be recovered.
- Reliance is placed upon the decision of the Court in Commissioner of Central Excise, New Delhi Vs. Hari Chand Shri Gopal and Ors., (2011) 1 SCC 236 and Excise Commissioner & Ors. Vs. Ajith Kumar and Anr., (2008) 5 SCC 495.
- The alleged deficit amount in the present case was nominal and arose due to a mistake by the Recovery Officer in specifying the accurate amount for the recovery.
- Citing the decision of the Punjab & Haryana High Court in the case of M/s. National Rice and General Mills, Jagraon and Ors. Vs. Bank of India and Ors., C.W.P. No 19113 of 2005, it was emphasized that compliance with Rule 60 must be evaluated first, followed by an assessment of whether any irregularity caused substantial injury to the objector.
- The legislative intent of Rule 60 was extensively discussed by the Bombay High Court in the case of Hotel Paras Garden, Balapur & Anr.
- High court judgment and order deemed unsustainable under the circumstances.
- The judgment debtor should have deposited the meagre shortfall amount when a substantial amount was already deposited.
- The judgment debtor promptly deposited the shortfall amount upon being made aware of it.
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Decision
- Present appeal allowed
- Impugned judgment and order passed by the High Court quashed and set aside
- No order as to costs in the circumstances of the case
- Amount deposited by respondent Nos. 1 and 2 to be returned to them with accrued interest if not received
- Appeal succeeds
- Appellant to pay further sum of Rs. 10,00,000/- to respondent Nos. 1 and 2 within four weeks by Demand Draft
- Order passed by DRAT dated 07.09.2015 setting aside auction sale dated 08.01.2007 is restored
Case Title: M/S R.S. INFRA TRANSMISSION LTD. Vs. SAURININDUBHAI PATEL . (2022 INSC 672)
Case Number: C.A. No.-003469-003469 / 2022
