The present appeal is directed against the judgment and order dated 10 March, 2016 passed by the Division Bench of the High Court of Uttarakhand Nainital whereby the High Court while reversing the finding returned by the learned Single Judge under its order dated 21 July, 2015 upheld the re-auction proceedings initiated by the first respondent(Punjab National Bank-secured creditor) held on 1 May, 2014 and granted liberty to the appellant to initiate independent proceedings before the competent forum for recovery of the amount which stood forfeited by the first respondent.
On 25 July, 2013, the borrower(third respondent) preferred an appeal before the Debt Recovery Tribunal, Lucknow(hereinafter being referred to as “DRT”) assailing the auction notice dated 18 June, 2013.
Since the appellant was completely unaware of the pending proceedings before the DRT initiated at the instance of the third respondent(borrower) and it was nowhere indicated in the auction notice which ordinarily in the instant fact situation would not have been possible but the date when auction was held on 26 July, 2013 and the appellant was called upon to deposit the earnest money and 25% of the bid amount, no such information was extended to the appellant about the pending proceedings in reference to the auction notice published on 18 June, 2013 before the DRT.
However, the first respondent later informed the appellant by communication dated 28 October, 2013 that if he fails to deposit the balance amount of the auction bid, the first respondent may forfeit the earnest money. It reveals from the record that in the pending proceedings before the High Court, to test bona fides of the appellant, the High Court directed the appellant to deposit Rs.1.77 crores, after adjustment of the sum already deposited with 10% interest, which indisputedly the appellant deposited on 10 March, 2015. Taking note of the bona fides of the appellant, as a final bid amount was deposited in compliance of order of the High Court, the learned Single Judge keeping in view the paramount principle that the mortgaged property must fetch the maximum realizable value on which the security interest was created, set aside the re-auction proceedings and directed the first respondent to execute the sale deed in favour of the appellant and directed that the amount deposited by the appellant, i.e., of Rs.1.77 crore be adjusted by the first respondent and money deposited by the subsequent auction purchaser be returned with 10% interest under its order dated 21 July 2015. Re-auction held pursuant to the re-auction notice dated 05.03.2014 in favour of respondents nos.07 and 8 sale dated executed in favour of respondent no.7 and 8 on 27.05.2014 is hereby held invalid.
The High Court, after hearing the parties, was of the view that no error was committed in the re-auction proceedings initiated pursuant to notice dated 5 March, 2014 and at least the subsequent auction purchaser was not at fault and if there is no error been committed in the decision making process adopted by the first respondent, there appears no reason to set aside the re- auction proceedings initiated in reference to notice dated 5 March, 2014 and accordingly while upholding the re-auction proceedings directed the first respondent to return the sum of Rs.1.77 crores which was deposited by the appellant pending proceedings with accrued interest before the learned Single Judge of the High Court and so far as the amount which stands forfeited, liberty was granted to the appellant to avail appropriate remedy for recovery as admissible under the law. The amount, however, deposited by the writ petitioner in a sum of Rs.1,77,00,000/-, which has been directed to be put in Fixed Deposit under orders of this Court, shall be returned to the writ petitioner along with the accrued interest.” The order of the Division Bench of the High Court became a subject matter of challenge in appeal before us.
Learned counsel further submits that there is no requirement of adopting any other remedial mechanism when there is no dispute either on facts or on law that the sum which was forfeited by the first respondent pursuant to the auction proceedings initiated in reference to notice dated 18 June, 2013, the appellant is qualified to seek refund of the amount forfeited and it is an apparent manifest error committed by the High Court under the impugned judgment and at the appellant is entitled to refund of the amount deposited and if the appellant is being thrust upon to adopt any other remedial mechanism, it will cause great injustice to him and needs interference of this Court.
Per contra, learned counsel for the first respondent Bank submits that as per terms and conditions of the auction notice dated 18 June, 2013, since the appellant has failed to deposit the balance amount of the auction bid within the time stipulated, despite reasonable opportunity being afforded, the first respondent is justified in taking a decision of forfeiture of the earnest money. The earnest money of Rs.11.19 lakhs was deposited on 22 July, 2013 and the bid was finalized on 26 July, 2013 and 25% of the bid in terms of the auction notice of Rs.38.35 lakhs was deposited by the appellant on 27 July, 2013.
This fact can be further corroborated which has come on record that even when the correspondence was made by the first respondent, the only request made by the appellant throughout was that he had no difficulty to pay the balance amount provided the matter is finally decided by DRT.
Also Read: https://newslaw.in/case-type/civil/judgment-on-execution-of-lease-deed-for-remaining-land/
The Division Bench of the High Court although has reversed the finding so far as the subsequent auction proceedings held pursuant to notice dated 5 March, 2014 is concerned, the appellant has no quarrel with the same. We are of the considered view that once there is no dispute on the facts came on record, there appears no reason for the appellant to be relegated to avail other remedial mechanisms for recovery of the indisputed amount and the Division Bench has committed a manifest error in the facts and circumstances in not exercising its power under Article 226 of the Constitution and instead of resolving the dispute, the Division Bench under the impugned judgment has kept the issue alive, permitting the parties to have a second innings in reference to the dispute which stands crystalized/settled.
Case Title: MOHD. SHARIQ Vs. PUNJAB NATIONAL BANK (2023 INSC 355)
Case Number: C.A. No.-002724-002724 / 2023
