Telangana High Court
M/S. Radical Bio Organics Ltd vs The Southern Power Distribution ... on 24 April, 2026
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
IN THE HIGH COURT OF JUDICATURE FOR THE STATE OF
TELANGANA
HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No. 11626 OF 2021
24.04.2026
Between:
M/s Radical Bio Organics Ltd.,
Rep. by its Director Mr. Buyyani Srinivas Reddy
..... Petitioner
And
The Southern Power Distribution Company of
Telangana Ltd.,
Rep. by its Chairman and Managing Director,
& others.
..... Respondents
O R D E R:
Petitioner is a company incorporated in 2011 under TIN No. U74999AP2010PLCD66652 and is engaged in the business of distilleries manufacturing and operates a co-generation power plant with a capacity of 6 MW at Jakkepally Village, Yalal Mandal, Vikarabad District. The construction of the co-generation power plant commenced in the year 2011 and the plant was synchronized on 30.12.2012. The said co-generation plant supplied power to the Indian Electricity Exchange (IEX) from January 2013 to February 2014. Petitioner's LT connection was upgraded to HT connection in 2 January 2013, and a High-Tension Agreement was executed on 01.04.2013 with Respondent authorities.
1.1. The specific case of Petitioner is that the 4th Respondent-Superintending Engineer, Operation Circle, Ranga Reddy South had issued proceedings vide Lr.
No.SE/OP/RRS/SAO/JAO/HT/D.No. 164/14 dated 31.05.2014, clearly stating that the HT supply to Petitioner's company was disconnected on 10.02.2013 in accordance with the orders of the Chief General Manager (Commercial) issued for auxiliary consumption vide Memo No. CGM(C)/SE/DE/ADE- III/D.No.2691/2013 dated 08.10.2013. In the said letter, it is clearly mentioned that HT Agreement dated 01.04.2013 stood terminated with effect from 07.03.2014, as per Clause 5.9.4.2 of the General Terms and Conditions of Supply, and that the dues as on that date amounted to (-) Rs. 56,079/- i.e. no amount was due from Petitioner, and rather, Petitioner was entitled to a refundable balance after adjustment of the consumption deposit by Respondents. The said communication also directed that no fresh service, either LT or HT, should be released in Petitioner's premises until a no-dues certificate was issued, thereby conclusively closing the account.
1.2. It is contended by Petitioner that the aforesaid proceedings dated 31.05.2014 had attained finality and that 3 there were no pending dues or allegations of unauthorized use of power. However, to the utter shock of Petitioner, an inspection report dated 02.07.2014 was prepared by the 7th Respondent-Assistant Divisional Engineer, DPE/HT, Corporate Office, Mint Compound, Hyderabad-alleging "indicative unauthorized drawal of power" for the period between 30.12.2012 and 12.06.2014, and levelling a wholly baseless demand of Rs.1,17,31,158/-, and that the said report was issued without any notice, without conducting any inspection in the presence of Petitioner's authorized representatives, and without any reference to the earlier proceedings dated 31.05.2014, which declared no dues. Petitioner asserts that the said inspection was not authorized under law and was carried out in contravention of Section 126 of the Electricity Act, 2003, which mandates that an assessment for unauthorized use of electricity can be made only by an authorized assessing officer after due notice and hearing.
1.3. It is further stated that the HT supply having been disconnected in February, 2013 and the HT Agreement having been terminated in March 2014, the question of unauthorized drawl of power thereafter does not arise. Hence, the inspection report dated 02.07.2014 and the demand raised pursuant thereto is wholly without jurisdiction, fabricated, and contrary 4 to the factual position acknowledged by Respondents themselves in the earlier official records. That apart, notices dated 15.12.2015 and 21.03.2016 issued by Respondents under Form 'A' and Form 'B' respectively were issued under Section 24 of the Indian Electricity Act, 1910, which had long been repealed by Section 185 of the Electricity Act, 2003. Therefore, the said notices are illegal and unsustainable in the eyes of law. 1.4. It is the further case of Petitioner that during the period between February 2014 and November 2016, the plant remained non-operational owing to severe financial distress and internal disputes among directors. No power was drawn during this period and yet Respondents continued to raise fictitious demands. The impugned notices in Form 'A' and Form 'B', though dated 2015 and 2016, were served only in February 2019, almost five years later and were followed by Form 'C' dated 02.08.2019. Petitioner immediately made a representation dated 02.03.2019 to the 1st Respondent seeking withdrawal of Unscheduled Interchange (UI) charges and penalty amounts, explaining the entire factual background. However, without considering the representation or affording an opportunity of hearing, Respondents rejected the same vide Memo dated 19.03.2020, confirming the illegal demands.
51.5. Petitioner submits that the impugned notices are barred by limitation under Section 56(2) of the 2003 Act, which provides that "no sum due from any consumer shall be recoverable after the period of two years from the date when such sum first became due unless such sum has been shown continuously as recoverable as arrears of charges." The alleged dues pertain to the period 2013-2014, while the demands were raised and served only in 2019, without being shown continuously as arrears in the subsequent bills. Therefore, the demands are ex facie barred by limitation, illegal, and unenforceable.
1.6. To substantiate this legal contention, Petitioner relied upon the authoritative pronouncement of the Hon'ble Supreme Court in Ajmer Vidyut Vitran Nigam Ltd. v.
Rahamatullah Khan (Civil Appeal No. 1672 of 2020), wherein, interpreting Section 56(2) of the Act, it was held as follows:
" Sub-section (1) of Section 56 confers a statutory right to the licensee company to disconnect the supply of electricity, if the consumer neglects to pay the electricity dues. This statutory right is subject to the period of limitation of two years provided by sub-section (2) of Section 56 of the Act. The period of limitation of two years would commence from the date on which the electricity charges became first due' under sub- section (2) of Section 56. This provision restricts the right of the licensee company to disconnect electricity supply due to non-payment of dues by the consumer, unless such sum has been shown continuously to be recoverable as arrears of electricity supplied, in the bills raised for the past period. If the licensee company were to be allowed to disconnect 6 electricity supply after the expiry of the limitation period of two years after the sum became "first due", it would defeat the object of Section 56(2)."
1.7. Petitioner further relied on the judgment of the Hon'ble Bombay High Court in Maharashtra State Electricity Distribution Company Limited v. Electricity Ombudsman (W.P. No. 10764 of 2011), wherein it was held that:
" Unless and until the preconditions set out in sub-section (2) of Section 56 are satisfied, there is no question of the electricity supply being cut-off. The recovery proceedings may be initiated seeking to recover amounts beyond a period of two years, but the section itself imposes a condition that the amount sought to be recovered as arrears must, in fact, be reflected and shown in the bill continuously as recoverable as arrears, otherwise, the claim cannot succeed The Distribution Licensee cannot demand charges for consumption of electricity for a period of more than two years preceding the date of the first demand of such charges."
1.8. Respondents acted in complete violation of Section 126 of the 2003 Act which governs cases of alleged unauthorized use of electricity. Under Section 126(3), an assessing officer must issue a provisional assessment, afford an opportunity of hearing, and pass a final order within thirty days. In the present case, no such procedure was followed; no provisional or final assessment order was served, and no hearing was afforded. Hence, the purported demand of Rs.1,17,31,158/- is in direct contravention of statutory provisions and cannot be sustained.
71.9. The letter dated 18.03.2021 issued by the 5th Respondent to the Sub-Registrar, directing not to allow registration of Petitioner's properties in Survey Nos. 36, 38, 41, and 43 of Jakkepally Village, is without any legal authority or jurisdiction under the 2003 Act. The said letter is a coercive step designed to pressurize the Petitioner into paying unlawful and time-barred demands. It is brought to the notice of this Hon'ble Court that despite the pendency of the Writ Petition and subsistence of the interim order dated 29.04.2021 granted by this Court staying the impugned proceedings, Respondents, in utter disregard of judicial orders, continued to initiate fresh coercive steps by writing to the District Collector and Tahsildar, Yalal Mandal, to proceed under the A.P. State Electricity Board (Recovery of Dues) Act, 1984, thereby committing contempt of the interim orders of this Court.
1.10. Petitioners therefore, state that the entire action of Respondents in issuing Forms 'A', 'B', and 'C' notices, rejecting the representation dated 02.03.2019 by Memo dated 19.03.2020, and issuing the consequential letter dated 18.03.2021 to the Sub-Registrar is illegal, arbitrary, without jurisdiction, violative of statutory provisions, and contrary to principles of natural justice. The demands are barred by 8 limitation, raised without lawful authority, and based on repealed statutory provisions.
2. Respondents 1 to 4, 6, and 7 filed a detailed Counter Affidavit through the Superintending Engineer, Operation Circle, Vikarabad, opposing the Writ Petition. The 5th Respondent has also filed an Additional Counter Affidavit, bringing on record subsequent events that transpired during the pendency of the Writ Petition. The combined stand of the Respondents is set out hereunder:
The answering Respondents in the Counter Affidavit submit that the present Writ Petition is devoid of merit and is liable to be dismissed, as the impugned demand notices were issued strictly in accordance with the provisions of the2003 Act, the A.P. State Electricity Board (Recovery of Dues) Act, 1984, and the A.P. State Electricity Board (Recovery of Dues) Rules, 1985. It is asserted, Petitioner has deliberately suppressed the material facts regarding unauthorized withdrawal of electricity and failure to pay Unscheduled Interchange (UI) charges and other statutory dues. Petitioner originally obtained a Low Tension (LT) Category-III (B) connection, Service Connection No. 2418000206, with a contracted load of 149 HP, which was released on 02.02.2011 for its distillery unit. Subsequently, they proposed a 6 MW Biomass-based Co-generation Power Project 9 for captive use and export under open access. The said proposal was sanctioned by NREDCAP vide Proceedings No. NREDCAP/RBOL/Biomass Co-gen/2012/2937, dated 21.01.2012. Thereafter, Petitioner vide letter dated 23.06.2012 requested permission to utilize 51% of the installed capacity for captive consumption and export the remaining capacity to the grid through open access on a temporary basis. It was also requested that the plant be synchronized with the grid. On 06.12.2012, the Petitioner once again addressed the authorities stating that all synchronization works were completed.
2.1. Subsequently, on 07.12.2012, Petitioner furnished a categorical undertaking stating that it would not draw any power for start-up or auxiliary consumption from APCPDCL (now TSSPDCL), and that it would shortly apply for an HT connection and that on 24.12.2012, while requesting installation of internal consumption meters, Petitioner reiterated that it would not draw any power from the grid during or after synchronization and would not claim any compensation for inadvertent power injected into the grid. Contrary to these representations, the Petitioner allegedly indulged in unauthorized drawal of electricity from the grid.10
2.2. Respondents had stated that Petitioner's LT service was disconnected on 10.02.2013 for non-payment of current consumption charges. As per APERC's Tariff Order for 2013-14, all services above 100 HP were required to be shifted to High Tension (HT). Accordingly, Petitioner's LT service was converted to HT Category-1, Service Connection No. VKB1630 (Old No. RRS1630), with a Contracted Maximum Demand (CMD) of 130 KVA, effective 01.04.2013. Petitioner's co-generation plant was synchronized on 30.12.2012. It is admitted, as per Memo No. CGM(C)/SE(C)/ADE-II/D.No.2691/2013 dated 08.10.2013, the HT supply to Petitioner's industry was disconnected on 10.02.2013 and the HT Agreement dated 01.04.2013 was terminated with effect from 07.03.2014, under Clause 5.9.4.2 of the General Terms and Conditions of Supply (GTCS). The dues as on the date of termination were recorded as (-) Rs. 56,079/-
after adjusting the consumption deposit of Rs. 1,47,742/- 2.3. Respondents, however, state that the said termination and no-dues statement pertained to the original LT/HT Cat-I connection and not to the co-generation plant operating at 33 KV under HT Category-II. Petitioner's 33 KV line for evacuation of power was sanctioned vide Letter No. SE/OP/RRS/Comml/C.O.O.Ms.No.284/2012-13 D.No.3105/12 dated 15.09.2012, for an estimated cost of Rs. 8,98,203/- on a 11 turnkey basis. Petitioner's co-generation plant was thus synchronized on 30.12.2012 at 33 KV voltage level without any sanction for start-up or auxiliary power supply. While so, on 12.06.2014, upon receiving a complaint from the Divisional Engineer (Operations), Vikarabad, Petitioner was drawing power unauthorisedly from the grid, the Assistant Divisional Engineer (DPE/HT) inspected the premises. The inspection revealed that Petitioner had been drawing electricity for start-up and auxiliary consumption without permission, contrary to its own undertaking. Accordingly, a case under Section 126 of the 2003 Act was booked for unauthorized use of electricity from 30.12.2012 to 12.06.2014, and a provisional assessment notice dated 19.07.2014 was issued demanding Rs. 1,17,21,158/-. Petitioner was called upon to file objections within 15 days or pay the assessed amount. They neither paid the demanded amount nor filed any objections. Consequently, the service connection was disconnected on 30.07.2014 and HT agreement was terminated on 30.11.2014 under Clause 5.9.4.3 of the GTCS.
2.4. Respondents further contend that Petitioner scheduled and sold power through the Indian Electricity Exchange (IEX) from January 2013 to June 2014 without actual generation of electricity, thereby deriving wrongful gain and 12 violating the grid code. It is stated, Unscheduled Interchange (UI) charges were levied from 28.01.2013 to 01.06.2014 amounting to Rs. 2,42,34,007/-, out of which Petitioner paid up to 22.12.2013 but defaulted thereafter. Several notices were issued between October 2013 and August 2014 demanding payment, but Petitioner failed to comply.
2.5. In view of the continued non-payment, Respondents issued statutory Form 'A', Form 'B', and Form 'C' notices under the A.P. SEB (Recovery of Dues) Rules, 1985 demanding cumulative dues of Rs. 8,00,67,563/- as on 31.07.2019, including surcharge for delayed payment. The detailed calculation of arrears, surcharge, and back billing was furnished, showing the accumulation of total dues of Rs. 9,53,97,998/- as on 31.07.2021. It is therefore, contended that the plea of limitation under Section 56(2) of the Act is misconceived, as the demands were continuously raised from 2013 onwards and reflected as recoverable arrears. Petitioner's letter dated 02.03.2019 requesting waiver of UI charges and offering to pay the back-billing amount in installments constitutes a clear acknowledgment of debt.
2.6. Respondents also assert that due to non-payment, letter dated 18.03.2021 was issued to the Sub-Registrar, Seetharampet, Tandur Village, requesting not to register or 13 transfer any of Petitioner's properties in Survey Nos. 36, 38, 41, and 43 of Jakkepally Village, until the outstanding dues were cleared. The interim order of this Court dated 29.04.2021 causes serious prejudice to the distribution company and should be vacated. Respondents accordingly, pray that this Court dismiss the Writ Petition and vacate the interim order dated 29.04.2021.
3. The 5th Respondent, Superintending Engineer, Operation Circle, Vikarabad, filed an Additional Counter Affidavit narrating the subsequent developments that occurred after the interim orders dated 29.04.2021. It is stated that during the pendency of Writ Petition, Petitioner approached the 1st Respondent seeking waiver of penal and Ul charges.
Pursuant to this, vide Letter No. SE/OP/VKB/SAO/JAO/HT/D.No.1960/21 dated 23.09.2021, a request was made to the District Collector, Vikarabad, to initiate action under Section 5 of the A.P. State Electricity Board (Recovery of Dues) Act, 1984. The District Collector accordingly directed the Tahsildar, Yalal Mandal, to initiate recovery proceedings vide Letter No. D2/13134/2021 dated 23.11.2021, resulting in a Demand Notice under Section 7 of the Revenue Recovery Act, 1864 issued on 28.02.2023 (No. B/7/170/2023). 14 3.1. Subsequently, Petitioner again approached the 1st Respondent on 09.10.2023, expressing willingness to pay the total back-billing, penal, and UI charges in easy installments. On such request, the Chief General Manager (Commercial), vide Lr.No.CGM(C)/SE(C)/DE(C)-1/ADE-IV/D.No.2602/2023-24 dated 25.10.2023, permitted Petitioner to pay a total outstanding of Rs. 10,95,64,096/- in twelve (12) monthly installments, subject to surcharge and adherence to tariff and GTCS conditions. It is further stated, Petitioner made payment of the first two installments but defaulted in the third installment due on 25.12.2023. Consequently, the Assistant Divisional Engineer (Operations), Tandur, was instructed to disconnect Petitioner's linked LT service for non-payment, vide Lr.No.CGM(C)/SE(C)/DE(C)-1/ADE-IV/D.No.9602/2023-24 dated 27.12.2023.
3.2. The 5th Respondent thus contends that in view of Petitioner's unconditional acceptance of the payment schedule and part-payment thereof, the cause of action in Writ Petition no longer survives. It is argued that Petitioner cannot now challenge the validity of demands it has already accepted. Consequently, Respondents initiated lawful recovery proceedings through the Revenue Department, and therefore, submit that Writ Petition is devoid of merit, Petitioner 15 suppressed material facts, and the interim orders have been misused to delay recovery of legitimate dues. Respondents therefore pray that this Court dismiss the Writ Petition, uphold the legality of all demand and recovery proceedings, and vacate the interim orders dated 29.04.2021.
4. Heard Sri Raja Sripathi Rao, learned Senior Counsel assisted by Sri Rahul Kandharkar, learned counsel for petitioner as well as Sri N. Sreedhar Reddy, learned Standing Counsel for respondents.
5. At the time of filing of Writ Petition, I.A.No. 1 of 2021 was filed seeking stay of all further proceedings in pursuance of the notices dated 15.12.2015 in Form 'A' with demand of Rs.3,88,11,228/-, another notice dated 21.03.2016 in From-B, with demand of Rs.4,70,78,020 and the subsequent notice dated 02.08.2019 in Form 'C' demanding Rs.8,00,67,563/- issued by the 5th Respondent against the Petitioner Company and consequential letter dated 18.03.2021 addressed by the 5th Respondent to the 8th Respondent pending disposal of the writ petition.. This Court had passed Interim order on 29.04.2021 in I.A.No.1 of 2021, In view of the same, there shall be an interim stay, as prayed for.
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6. The aforementioned interim order is in subsistence till date, though Respondents have filed Counter together with Vacate Petition. Be that as it may, as against the subsistence of the interim order, have approached the District Collector vide letter No. 6E/OP/VKB/SAO/JAO/HT/D.No.1960/21 dated 23.09.2021 who, in turn, directed the Thasildar, Kodangal Tandur, Parigi and Vikarabad, Vikarabad District to initiate action against the Petitioner Company under Section (5) if the Andhra Pradesh State Electricity Board (Recovery of Dues) Act, 1984. That apart, it is also apparent that during the subsistence of the interim order mentioned supra, Respondent No.5 had issued Memo dated 01.12.2021 to the Divisional Engineer (Operations), Respondent No.7 to follow-up with the concerned MRO/Thasildar for recovery of the amounts from Petitioner and the same was followed by another letter from Respondents vide letter dated 16.02.2022 to the effect the disconnection of the service connection, if the above payments are not made cleared, immediately. This action of Respondents is continued by the issuance of another letter dated 12.10.2023 requesting the Tahsildar, Yalal Mandal, Vikarabad District to issue auction notice to Petitioner Company for recovery of electricity dues at early date. The afore-mentioned acts of Respondents were taken in the back drop of the undisputed fact that the 4th 17 Respondent, through its official communication Lr.No.SE/OP/RR/S/SAO/JAO/HT/D.No.164/14, dated 31.05.2014, had categorically recorded that the High Tension Agreement dated 01.04.2013 stood terminated with effect from 07.03.2014 under Clause 5.9.4.2 of the General Terms and Conditions of Supply (GTCS), and further declared that Petitioner was not due to pay any arrears and that Rs. 56,079/- stood refundable after adjustment of consumption deposit. Once such a finding was recorded by the competent authority, the same is conclusive and binding upon the department. The subsequent issuance of Form 'A' notice dated 15.12.2015, Form 'B' notice dated 21.03.2016, and Form 'C' notice dated 02.08.2019, demanding Rs.3,88,11,228/-, Rs. 4,70,78,020/-, and Rs.8,00,67,563/-respectively, stands in direct contradiction to the Respondents' own official record and is ex facie arbitrary and unsustainable, thereby, the aforesaid acts of the Respondents are acts of commission and omission which are to be found fault with.
7. This Court observes that Respondents violated the mandatory procedure contemplated under Section 126 of the Act, which governs the assessment for unauthorized use of electricity. The said provision requires that a provisional assessment be issued by the designated assessing officer, 18 followed by an opportunity to file objections and a final order to be passed within thirty days. In the instant case, the so-called inspection report dated 02.07.2014, alleging "indicative unauthorized drawal of power" and levying Rs.1,17,31,158/-, was neither preceded nor followed by any provisional assessment, notice, or hearing. Petitioner was never put on notice or afforded an opportunity to explain. Consequently, the alleged assessment and all proceedings based thereon are rendered void ab initio, being in violation of sub-sections (2) and (3) of Section 126 of the Act.
8. Respondents invocation of Section 24 of the Indian Electricity Act, 1910, in the impugned Form 'A' and Form 'B' notices, is patently without jurisdiction. The said Act stood repealed upon the enforcement of the Electricity Act, 2003, by virtue of Section 185 thereof, which expressly repeals the Indian Electricity Act, 1910, the Electricity (Supply) Act, 1948, and the Electricity Regulatory Commissions Act, 1998. Any reliance upon repealed provisions is impermissible in law and demonstrates total non-application of mind on the part of the authorities. The impugned notices, having been issued under a repealed enactment, are legally non est.
9. This Court further finds that the demands raised are clearly barred by limitation under Section 56(2) of the Act, 19 which mandates that "no sum due from any consumer shall be recoverable after the period of two years from the date when such sum first became due, unless such sum has been shown continuously as recoverable as arrears." The alleged period of consumption and assessment pertains to 2013-14, whereas the first demand notice was issued only in 2015, followed by further demands in 2016 and 2019. There is no material placed on record to demonstrate that the alleged dues were ever shown continuously as recoverable in the subsequent billing cycles. Therefore, the demands are ex facie time-barred and unenforceable.
10. The position of law in this regard is no longer res integra. The Hon'ble Supreme Court in Ajmer Vidyut Vitran Nigam Ltd. v. Rahamatullah Khan (Civil Appeal No.1672 of 2020) categorically held that "the period of limitation of two years would commence from the date on which the electricity charges became first due, and any disconnection or recovery after the expiry of that period, without showing continuous arrears, would defeat the very object of Section 56(2)." Similarly, the Hon'ble Bombay High Court in Maharashtra State Electricity Distribution Co. Lad. v. Electricity Ombudsman (W.P. No.10764 of 2011) held that "unless the amount sought to be recovered has been continuously shown as arrears in the 20 bills, the Distribution Licensee is precluded from demanding charges beyond two years. The ratio of these binding precedents squarely applies to the facts of the present case.
11. Respondents' subsequent action in issuing Memo dated 19.03.2020, rejecting Petitioner's detailed representation dated 02.03.2019 without considering the factual and legal objections, further exhibits non-application of mind and procedural irregularity. The rejection is devoid of any reasoning and contrary to the requirement of a speaking order under administrative law principles. Likewise, letter dated 18.03.2021, addressed by the 5th Respondent to the Sub-Registrar, Seetharampet, Tandur, directing that no registration or transfer of the Petitioner's property in Survey Nos.36, 38, 41, and 43, Jakkepally Village, be affected, is wholly without authority under the Electricity Act, 2003. No provision of the Act empowers Respondents to impose restrictions upon property transactions of consumers. Such an action, de hors any statutory backing, constitutes a blatant violation of Article 300- A of the Constitution, which guarantees protection against deprivation of property save by authority of law.
12. It is further apparent, as mentioned supra, that during the subsistence of the interim order dated 29.04.2021, Respondents proceeded to request the District Collector, 21 Vikarabad, through Letter dated 23.09.2021, to initiate recovery proceedings under Section 5 of the A.P. State Electricity Board (Recovery of Dues) Act, 1984, culminating in the issuance of Demand Notice dated 28.02.2023, by the Tahsildar, Yalal Mandal. Such actions, undertaken during the pendency of Writ Petition, amount to willful disobedience of the subsisting stay order and are in flagrant violation of judicial discipline. The subsequent letter of Petitioner dated 09.10.2023, expressing willingness to pay the dues in installments, followed by the permission granted under Letter dated 25.10.2023, was evidently issued under coercion and pressure of unlawful recovery proceedings. Such consent obtained under duress cannot validate an otherwise illegal and time-barred demand. The conduct of the Petitioner is bona fide. It had made repeated representations requesting waiver of UI charges, and their requests have been rejected arbitrarily and Petitioner's subsequent request for installment facility was under the adverse circumstances created at the instance of Respondents, which is made under coercion of illegal recovery proceedings and thereby the said act of Petitioner cannot be construed as an admission of liability. The alleged acceptance of installments was under duress and cannot extinguish Petitioner's substantive legal rights or render Writ Petition infructuous. At 22 this juncture, this Court is bound to follow the law laid down by the Hon'ble Apex Court in Celir LLP v. Sumati Prasad Bafna1 case wherein it was laid down that all the acts that are down in violation of the court orders are nullity and as a consequence of the same, said acts are liable to be set aside. Relevant Portion from the said order are extracted hereunder :-
"C. ISSUES FOR DETERMINATIN DETERMINATION
109. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the following questions fall for our consideration:-
I. Whether any act of contempt could be said to have been committed by the respondent nos. I to 4 respectively of the judgment and order dated 21.09.2023 passed by this Court in Civil Appeal Nos. 5542-5543 of 2023? In other words, whether the respondents herein in light of the aforesaid decision of this Court were duty bound to cancel the Release Deed dated 28.08.2023 and hand over the physical possession along with the original title deeds of the Secured Asset to the petitioner herein?
II. Whether, the proceedings arising out of S.A. No. 46 of 2022 could have continued after this Court's judgment and order dated 21.09.2023 directing the issuance of the Sale Certificate of the Secured Asset to the petitioner herein? In other words, whether the petitioner by virtue of the Sale Certificate dated 27.09.2023 is said to have acquired a clear title to the said property?
III. Whether the transfer of the Secured Asset in favour of the Subsequent Transferee by way of the Assignment Agreement dated 28.08.2023 is hit by lis pendens? In other words, whether the absence of any registration in accordance with Section 52 of the TPA as amended by the State of Maharashtra renders the lis pendens inapplicable?
***** iii. Whether any contempt is said to have been committed by the respondents herein?
1 2024 SCC On line SC 3727 23
182. In order to decide whether the appellants are guilty of civil contempt, it would be apposite to refer to Section 2(b) of the Act, 1971, which reads as under:-
2.Definitions. In this Act, unless the context otherwise requires, xxx xxx xxx
(b) "civil contempt" means wilful disobedience to any judgment, decree, direction, order, writ or other process of a court or wilful breach of an undertaking given to a court;"
183. The Black's Law Dictionary, Sixth Edition, at page 1599, defines "willful" as hereunder:-
"Proceeding from a conscious motion of the will; voluntary; knowingly, deliberate. Intending the result which actually comes to pass; designed; intentional; purposeful; not accidental or involuntary. Premeditated; malicious; done with evil intent, or with a bad motive or purpose, or with indifference to the natural consequences; unlawful; without legal justification. An act or omission is "willfully" done, if done voluntarily and intentionally and with the specific intent to do something the law forbids, or with the specific intent to fail to do something the law requires to be done, that is to say, with bad purpose elther to disobey or to disregard the law. It is a word of many meanings, with its construction often influenced by its context. In civil actions, the word (willfully) often denotes an act which is intentional, or knowing, or voluntary, as distinguished from accidental. But when used in a stubbornly, obstinately, perversely.
184. In Ashok Paper Kamgar Union v. Dharam Godha, (2003) 11 SCC 1, the expression 'wilful disobedience in the context of Section 2 (b) of the Act, 1971 was read to mean an act or omission done voluntarily and intentionally with the specific intent to do something, which the law forbids or with the specific intention to fail to do something which the law requires to be done. Wilfulness signifies deliberate action done with evil Intent and bad motive and purpose. It should not be an act, which requires and is dependent upon, either wholly or partly, any act or omission by a third party for compliance.
185. Hence, the expression or word "wilful" means act or omission which is done voluntarily or intentionally and with the specific intent to do something which the law forbids or with the specific intent to fail to do something the law requires to be done, that is to say with bad purpose either to disobey or to disregard the law. It signifies a deliberate action done with evil intent or with a bad motive or purpose.
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186. Article 129 of the Constitution declares this Court as a "a court of record" and states that it shall have all the powers of such a court including the power to punish for contempt of itself. The provisions of the Act, 1971 and the Rules framed thereunder form a part of a special statutory Jurisdiction that is vested in courts to punish an offending party for its contemptuous conduct. It needs no emphasis that the power of contempt ought to be exercised sparingly with great care and caution. The contemptuous act complained of must be such that would result in obstruction of justice, adversely affect the majesty of law and impact the dignity of the courts of law.
187. It must also be understood that contempt proceedings are sui generis inasmuch as the Law of Evidence and the Criminal Procedure Code, 1973 are not to be strictly applied. At the same time, the procedure adopted during the contempt proceedings must be fair and just that is to say the principles governing the Rule of law must be extended to the party against whom contempt proceedings have been initiated. The party must have every opportunity to place its position before the Court. Such a party must not be left unheard under any circumstances.
188. In Ram Kishan v. Tarun Bajaj, (2014) 16 SCC 204 it was held that the contempt jurisdiction conferred on to the law courts power to punish an offender not only for his wilful disobedience but also for contumacious conduct or obstruction to the majesty of law. It further observed that such power has been conferred for the simple reason that the respect and authority commanded by the courts of law are the greatest guarantee to an ordinary citizen that his rights shall be protected and the entire democratic fabric of the society will crumble down if the respect of the judiciary is undermined. The relevant observations read as under:-
"11. The contempt jurisdiction conferred on to the law courts power to punish an offender for his wilful disobedience/contumacious conduct or obstruction to the majesty of law, for the reason that respect and authority commanded by the courts of law are the greatest quarantee to an ordinary citizen that his rights shall be protected and the entire democratic fabric of the society will crumble down if the respect of the judiciary is undermined. Undoubtedly, the contempt jurisdiction is a powerful weapon in the hands of the courts of law but that by itself operates as a string of caution and unless, thus, otherwise satisfied beyond reasonable doubt, it would neither be fair 25 nor reasonable for the law courts to exercise jurisdiction under the Act. The proceedings are quasi criminal in nature, and therefore, standard of proof required in these proceedings is beyond all reasonable doubt. It would rather be hazardous to impose sentence for contempt on the authorities in exercise of the contempt jurisdiction on mere probabilities. [...]"
(Emphasis supplied)
189. In Murray & Co. v. Ashok Kr. Newatia, (2000) 2 SCC 367 this Court held that the purpose of contempt jurisdiction is to uphold the majesty and dignity of the courts of law since the image of such a majesty in the minds of the people cannot be led to be distorted, as any Indulgence which can even remotely be termed to affect the majesty of law would result in the society losing its confidence and faith in the judiciary and the law courts forfeiting the trust and confidence of the people in general. The relevant observations read as under:-
"9 [...] The purpose of contempt jurisdiction is to uphold the majesty and dignity of the courts of law since the image of such a majesty in the minds of the people cannot be led to be distorted. The respect and authority commanded by courts of law are the greatest guarantee to an ordinary citizen and the entire democratic fabric of the society will crumble down if the respect for the judiciary is undermined. It is true that the judiciary will be judged by the people for what the judiciary does, but in the event of any indulgence which can even remotely be termed to affect the majesty of law, the society is bound to lose confidence and faith in the judiciary and the law courts thus, would forfeit the trust and confidence of the people in general."
(Emphasis supplied)
190. In Pushpaben v. Narandas Badiani, (1979) 2 SCC 394, it was held that contempt of court is a special jurisdiction to be exercised sparingly and with caution whenever an act adversely affects the administration of justice or which tends to impede its course or tends to shake public confidence in the judicial institutions. It further held that this jurisdiction is to be exercised not for the protection of the dignity of an individual judge but to protect the administration of justice from being maligned and ensure that the authority of the courts is neither imperilled nor is the administration of justice by it interfered with in any manner. The relevant observations read as under:-
42. The contempt of court is a special jurisdiction to be exercised sparingly and with caution whenever an act adversely affects the administration of 26 justice or which tends to impede its course or tends to shake public confidence in the judicial institutions. This jurisdiction may also be exercised when the act complained of adversely affects the majesty of law or dignity of the courts. The purpose of contempt jurisdiction is to uphold the majesty and dignity of the courts of law. It is an unusual type of jurisdiction combining "the jury, the judge and the hangman" and it is so because the court is not adjudicating upon any claim between litigating parties. This jurisdiction is not exercised to protect the dignity of an individual judge but to protect the administration of justice from being maligned. In the general interest of the community it is imperative that the authority of courts should not be imperilled and there should be no unjustifiable interference in the administration of justice. It is a matter between the court and the contemner and third parties cannot intervene. It is exercised in a summary manner in aid of the administration of justice, the majesty of law and the dignity of the courts. No such act can be permitted which may have the tendency to shake the public confidence in the fairness and impartiality of the administration of justice." (Emphasis supplied)
191. In Reliance Petrochemicals Ltd. v. Proprietors of Indian Express Newspapers, Bombay Pvt. Ltd. (1988) 4 SCC 592 it was observed that the process of due course of administration of justice must remain unimpaired, Public interest demands that there should be no interference with judicial process and the effect of the judicial decision should not be pre-empted or circumvented. The relevant observations read as under:-
"35. The question of contempt must be judged in a particular situation. The process of due course of administration of justice must remain unimpaired. Public interest demands that there should be no interference with judicial process and the effect of the judicial decision should not be pre-empted or circumvented by public agitation or publications. It has to be remembered that even at turbulent times through which the developing countries are passing, contempt of court means interference with the due administration of justice." (Emphasis supplied)
192. In Rita Markandey v. Surjit Singh Arora, (1996) 6 SCC 14, it was observed that even if parties have not filed an undertaking before the court but if the court was induced to sanction a particular course of action or inaction on the representation made by a party and the court ultimately finds that the party never intended to act on the said representation or such 27 representation was false, the party would be guilty of committing contempt. The relevant observations read as under:-
12. Law is well settled that if any party gives an undertaking to the court to vacate the deliberate from which he is liable to be evicted underlivres an us of the court and there is a clear and de did n breach thereof it amounts to civil contempt but since, in the present case, the peling punished for file any undertaking as envisaged in the not but sings Court the question of his being punished for breach thereof does not arise. However, in our considered view even in a caset if the court undertaking is given, a party to a litigation may be held liable for such contempt if the court of induced to sanction a particular course of action or inaction on the basis of the representation of such a party and the court ultimately finds that the party never intended to act on such representation or such representation was false In other words, if on the representation of the respondent herein the Court was persuaded to pass the order dated 5-10-1995 extending the time for vacation of the suit premises, he may be held guilty of contempt of court, notwithstanding nont furnishing of the undertaking, if it is found that the representation was false and the respondent never intended to act upon it. [...]" (Emphasis supplied)
193. The Borrower and the Subsequent Transferee/the alleged contemnors herein placing reliance on the decision of this Court in Patel Rajnikant (supra) have contended that in the absence of any disobedience or wilful breach of a prohibitory order no contempt could be said to have been committed. It has been further canvased that this Court in the Main Appeals never issued any specific direction either to the Borrower or the Subsequent Transferee, & therefore no contempt could be said to have been committed.
194. In Patel Rajnikant (supra) this Court upon examining Section 2
(b) of the Act, 1971 held that to hold a person guilty of having committed contempt, there must be a judgment, order, direction etc. by a court, there must be disobedience of such judgment, order, direction etc and that such disobedience must be willful. The relevant provisions read as under:-
"58. The provisions of the Contempt of Courts Act, 1971 have also been invoked. Section 2 of the Act is a definition clause. Clause (a) enacts that contempt of court means "civil contempt or criminal contempt. Clause (b) defines "civil contempt" thus.
"2. (b) civil contempt" means wilful disobedience to any judgment, decree, direction, order, wit or other process of a court or wilful breach of an undertaking given to a court;" Reading of the above clause makes it clear 28 that the following conditions must be satisfied before a person can be held to have committed a civil contempt:
(i) there must be a judgment, decree, direction, order, writ or other process of a court (or an undertaking given to a court); (ii) there must be disobedience to such judgment, decree, direction, order, writ or other process of a court (or breach of undertaking given to a court); and (iii) such disobedience of judgment, decree, direction, order, writ or other process of a court (or breach of undertaking) must be wilful."
195. However, the subsequent observations made by this Court in Patel Rajnikant (supra) are significant. It observed that the court should not hesitate in wielding the potent weapon of contempt, It is for the proper administration of justice and to ensure due compliance with the orders passed by it in order to uphold and maintain the dignity of courts and majesty of law. The relevant observations read as under:-
"70. From the above decisions, it is clear that punishing a person for contempt of court is indeed a drastic step and normally such action should not be taken. At the same time, however, it is not only the power but the duty of the court to uphold and maintain the dignity of courts and majesty of law which may call for such extreme step. If for proper administration of justice and to ensure due compliance with the orders passed by a court, it is required to take strict view under the Act, it should not hesitate in wielding the potent weapon of contempt." (Emphasis supplied)
196. What can be discerned from the above exposition of law is that any act of disobedience, defiance, or any attempt to malign the authority of the court would amount to contempt because they undermine the respect and trust that the public reposes in judicial institutions. The judicial process relies on the confidence of society, and any act that disrupts or disrespects this process threatens to erode the foundation of justice and order.
197. Contempt jurisdiction exists to preserve the majesty and sanctity of the law. Courts are the guardians of justice, and their decisions must command respect and compliance to ensure the proper functioning of society. When Individuals or entities challenge the authority of courts through wilful disobedience or obstructive behaviour, they undermine the rule of law and create the risk of anarchy. Contempt serves as a mechanism to protect the integrity of the courts, ensuring that they remain a symbol of fairness, impartiality, and accountability.
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198. When judicial orders are openly flouted or court proceedings are disrespected, it sends a signal that the rule of law is ineffective, leading to a loss of trust in the system. Judicial decisions must remain unimpaired, free from external pressures, manipulation, or circumvention. Acts that attempt to mislead the court, obstruct its functioning or frustrate its decisions distort the process of justice and would amount to contempt.
199. The contempt jurisdiction of this court cannot be construed by any formulaic or rigid approach. Merely because there is no prohibitory order or no specific direction issued the same would not mean that the parties cannot be held guilty of contempt. The Contempt jurisdiction of the court extends beyond the mere direct disobedience of explicit orders or prohibitory directions issued by the court. Even in the absence of such specific mandates, the deliberate conduct of parties aimed at frustrating court proceedings or circumventing its eventual decision may amount to contempt. This is because such actions strike at the heart of the judicial process, undermining its authority and obstructing its ability to deliver justice effectively. The authority of courts must be respected not only in the letter of their orders but also in the broader spirit of the proceedings before them.
200. Any contumacious conduct of the parties to bypass or nullify the decision of the court or render it ineffective, or to frustrate the proceedings of the court, or to enure any undue advantage therefrom would amount to contempt. Attempts to sidestep the court's jurisdiction or manipulate the course of litigation through dishonest or obstructive conduct or malign or distort the decision of the courts would inevitably tantamount to contempt sans any prohibitory order or direction to such effect.
201. Thus, the mere conduct of parties aimed at frustrating the court proceedings or circumventing its decisions, even without an explicit prohibitory order, constitutes contempt. Such actions interfere with the administration of justice, undermine e the respect and authority of the judiciary, and threaten the rule of law.
202. However, at the same time, the power of contempt ought to be exercised sparingly and with caution and care. It operates with a string of caution and unless otherwise satisfied beyond doubt, it would neither be fair nor reasonable for the courts to resort to such powers. The standard of proof required before a person is held guilty of committing contempt of court must be beyond all reasonable doubt.
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203. The courts while exercising its contempt jurisdiction must remain circumspect, more particularly, where there exists a possibility of the order being amenable to more than one interpretation. In Jhareshwar Prasad Paul v. Tarak Nath Ganguly reported in (2002) 5 SCC 352 it was held that if an order does not contain any specific direction regarding a matter or if there is any ambiguity in the directions issued therein then it would be appropriate to direct the parties to approach the court which disposed of the matter for necessary clarification of the order instead of the court exercising its contempt jurisdiction thereby taking upon itself the power to decide the original proceeding in a manner not dealt with by the court passing the judgment or order. The relevant observations read as under:-
"The contempt jurisdiction should be confined to the question whether there has been any deliberate disobedience of the order of the court and if the conduct of the party who is alleged to have committed such disobedience is contumacious. The court exercising contempt jurisdiction is not entitled to enter into questions which have not been dealt with and decided in the judgment or order... The court has to consider the direction issued in the judgment or order and not to consider the question as to what the judgment or order should have contained. At the cost of repetition, be it stated here that the court exercising contempt jurisdiction is primarily concerned with the question of contumacious conduct of the party, which is alleged to have committed deliberate default in complying with the directions in the judgment or order. If the judgment or order does not contain any specific direction regarding a matter or if there is any ambiguity in the directions issued therein then it will be better to direct the parties to approach the court which disposed of the matter for clarification of the order instead of the court exercising contempt jurisdiction taking upon itself the power to decide the original proceeding in a manner not dealt with by the court passing the judgment or order.
(Emphasis supplied)
204. It is true that this Court in its decision rendered in the Main Appeals had not issued any specific direction either to the Borrower or the Subsequent Transferee as regards the handing over of physical possession and the original title deed to the Secured Asset, or the proceedings pending before the DRT in S.A. No. 46 of 2022. However, the same would not mean that the decision of this Court in the Main Appeal was bereft of any direction as to the outcome of its findings. This Court in the operative portion of the 31 Main Appeals stated in unequivocal terms that the confirmation of the sale by Bank under Rule 9(2) of the SARFAESI Rules had vested the petitioner herein with a right to obtain the certificate of sale of the Secured Asset. It further held categorically that the Borrower herein could not have redeemed the mortgage upon publication of the 9th auction notice. Furthermore, this Court explicitly directed the Bank to not only issue the Sale Certificate to the petitioner herein in accordance with Rule 9(6) of the SARFAESI Rules but also directed the refund of the amount of Rs. 129 crore paid by the Borrower. Moreover, the impugned order of the High Court had been set aside by this Court in toto. As already discussed in paragraph 154, the natural corollary to the aforesaid was that the judgment and order dated 21.09.2023 of this Court in Civil Appeals Nos. 5542-5543 of 2023 had held as under:-
(i) The auction proceedings and the sale conducted thereto in favour of the petitioner herein pursuant to the 9th auction notice dated 12.06.2023 had been categorically affirmed and upheld. (ii) After having directed the issuance of the Sale Certificate in terms of Rule 9(6) of the SARFAESI Rules, nothing remained thereafter, as issuance of sale certificate is absolute and as such the proceedings before the DRT had been rendered infructuous. (iii) Having directed not only the issuance of the Sale Certificate to the Secured Asset but also the refund of the amount paid by the Borrower, towards redemption of mortgage, necessarily entailed that the Borrower was duty bound to return the possession and title deeds of the secured asset to the Bank for the purpose of handing the same over to (iv) Having set aside the impugned order passed by the High Court the petitioner in toto rendered any and all acts done pursuant thereto as null and void, and the Borrower and the Subsequent Transferee herein were required to get the Release Deed and the Assignment Agreement dated 28.08.2023 cancelled.
(v) Having expressly directed the issuance of the Sale Certificate it necessarily excluded all other inconsistent and contrary rights and reliefs including the right to pursue the DRT proceedings in view of the maxim Expressio Unius Est Exclusio Alterius.
205. Where a decision is rendered and the impugned order is set aside, it behoves any logic that an express direction to act must be given in respect of every aspect of the decision. The parties are duty bound to act in accordance with common sense. It is axiomatic that a party should obey both the letter and the spirit of a court order, and it is neither open for the parties to adopt a myopic and blinkered view of such decision nor any such interpretation or 32 view that sub-serves their own interests. It is ultimately the purpose for which the order was granted that will be the lodestar in guiding the parties as to the true effect of the order and determination of the court.
206. If at all the parties are in doubts over the judgment and order of a court, the correct approach is to prefer a miscellaneous application for seeking clarification rather than proceeding to presume a self-serving interpretation of the decision. At this stage, we may also explain the correct approach to be adopted by the other courts and forums where a party seeks to espouse a cause based on its own understanding or interpretation of a decision of an higher authority. In such situations, the courts or forums should neither aid the parties in their attempt to reinterpret the decision of a higher court nor should they embark on an inquisitorial exercise of their own in order to derive the scope or intent of the order in question. The courts and tribunals should not conflate a decision of a higher court that declares a law with a decision that declares the inter-se rights of a parties, the former only operates as a precedent and thus, it is open for the lower courts to apply their minds to assess whether the same is applicable to the issues before it or what law has been laid down therein. However, the latter not only has precedential value but also carries with it the weight of determination of the issues directly involved between the very parties before it, the subject-matter itself and by extension the entire cause of action. Since such decisions have directly decided or given a finding on the inter-se rights and issues of the same parties that are before it and as such has to a certain extent a direct and palpable effect on the cause of action before it, in such circumstances, the courts and tribunals should refrain from interpreting or examining the scope or effect of such decisions on their own as the same would amount to relitigating the very same issues and rather should relegate the parties to seek clarification from the court that passed the order and adjourn further proceedings sine die.
207. We further take note of the fact that both the Borrower and the Subsequent Transferee made several attempts to prevent the effective implementation of the judgment and order dated 21.09.2023 passed by this Court and thereby thwart the attempts of the Bank to hand over the physical possession and the original title deeds of the Secured Asset to the petitioner.
(i) First, both the Borrower and the Subsequent Transferee addressed a letter to the MIDC in whose industrial area the Secured Asset was situated asking them not to entertain any request from the Bank or the petitioner regarding 33 the transfer of the leasehold rights of the Secured Asset in favour of the petitioner.
(ii) Secondly, the Subsequent Transferee vide its letter dated 05.10.2023 even asked the Sub-Registrar Office, Nerul Thane not to entertain any request of the petitioner regarding the transfer of the Secured Asset
(iii) The self-serving stance of the Borrower to initially contend that it no longer had any role or authority over the secured asset in view of its transfer and thus, cannot handover the physical possession and the original title deeds to the same, yet in the same breath filing an application seeking stay of the notice for obtaining physical possession of the Secured Asset.
(iv) The police complaint lodged by the Subsequent Transferee against the Bank by distorting the decision of this Court in the Main Appeals and to thwart the attempts for its implementation.
(v) The patently false contention of the Subsequent Transferee that it instituted the suit to prevent its unlawful dispossession of the Secured Asset due to the alleged illegal attempts of the petitioner to take the same forcefully yet, in the said suit instead of seeking permanent injunction, the Subsequent Transferee not only sought the relief of declaration of title in its favour but also the Invalidation of the Sale Certificate issued to the petitioner, contrary to the decision of this Court in the Main Appeals.
208. In the facts of the case, we are convinced that both the Borrower and the Subsequent Transferee have committed contempt of this Court's judgment and order dated 21.09.2023 in the Main Appeals. The aforementioned acts of the contemnors are nothing more than a gamble on their part to circumvent and undermine the findings and directions passed by this Court in the Main Appeals. Similarly, the lame excuses offered by them for explaining their conduct are also nothing more than a calculated attempt in the hope that they would get away with legitimizing the illegal Assignment Agreement even after the decision of this Court, and is equally contemptuous.
209. However, on an overall conspectus of the facts of the present case, while the initial acts of the Borrower and the Subsequent Transferee are in violation of this Court's judgment and order dated 21.09.2023, yet the efforts on their part to take steps and make amends by withdrawing the Special Civil Suit No. 5 of 2024 along with their belated unconditional undertaking to comply with any further order that this Court may deem fit and proper to pass, demonstrates their effort and willingness to purge themselves of their 34 contemptuous conducts. Thus, we are inclined to provide one last order dated 21.09.2023 passed by this Court and further comply with the directions issued in the present contempt petition, and thus, deem it fit not to hold them guilty of contempt for the present moment. iv. Circumstances when a sale of property by auction or other means under the SARFAESI Act may be set-aside after its confirmation.
210. We must also address one very important aspect as regards when the sale of secured asset either by auction or any other method under the SARFAESI Act may be challenged or set-aside after its confirmation.
211. In B. Arvind Kumar v. Govt of India, (2007) 5 SCC 745 this Court whilst dealing with a plea to set aside the sale of the property therein by way of public auction by the official receiver, it was held that when the sale is confirmed by the court, the sale becomes absolute and therefrom the title vests in the auction purchaser. The relevant observations read as under:-
"12. [...] When a property is sold by public auction in pursuance of an order of the court and the bid is accepted and the sale is confirmed by the court in favour of the purchaser, the sale becomes absolute and the title vests in the purchaser. A sale certificate is issued to the purchaser only when the sale becomes absolute. The sale certificate is merely the evidence of such title. It is well settled that when an auction purchaser derives title on confirmation of sale in his favour, and a sale certificate is issued evidencing such sale and title, no further deed of transfer from the court is contemplated or required. In this case, the sale certificate itself was registered, though such a sale certificate issued by a court or an officer authorised by the court, does not require registration. Section 17(2)(xii) of the Registration Act, 1908 specifically provides that a certificate of sale granted to any purchaser of any property sold by a public auction by a Civil or Revenue Officer does not fall under the category of non-testamentary documents which require registration under subsections (b) and (c) of Section 17(1) of the said Act. We therefore hold that the High Court committed a serious error in holding that the sale certificate did not convey any right, title or interest to plaintiff's father for want of a registered deed of transfer."
(Emphasis supplied)
212. In LICA (P) Ltd. v. Official Liquidator, (1996) 85 Comp Cas 788 (SC) this Court held that the purpose of an open auction is to get the most remunerative price with the highest possible public participation, and as 35 such the courts shall exercise their discretion to interfere where the auction suffers from any fraud or inadequate pricing or underbidding that too with circumspection, keeping in view the facts of each case. The relevant observations read as under:-
"The purpose of an open auction is to get the most remunerative price and it is the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value. If that path is cut down or closed the possibility of fraud or to secure inadequate price or underbidding would loom large. The court would, therefore, have to exercise its discretion wisely and with circumspection and keeping in view the facts and circumstances in each case." (Emphasis supplied)
213. This Court in Valji Khimji (supra) held that once an auction is confirmed the objections to the same should not ordinarily be allowed, except on very limited grounds like fraud as otherwise no auction would ever be complete. The relevant observations read as under:-
"11. It may be noted that the auction-sale was done after adequate publicity in well-known newspapers. Hence, if any one wanted to make a bid in the auction he should have participated in the said auction and made his bid. Moreover, even after the auction the sale was confirmed by the High Court only on 30-7-2003, and any objection to the sale could have been filed prior to that date However, in our opinion, entertaining objections after the sale is confirmed should not ordinarily be allowed, except on very limited grounds like fraud, otherwise no auction-sale will ever be complete. xxx 29. [...] It may be mentioned that auctions are fuctiolypesub(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 held. 30. In the first case mentioned above, le. 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." (Emphasis supplied)
214. In Ram Kishun v. State of Uttar Pradesh reported in (2012) 11 SCC 511 this Court although held that where public money is to be recovered such 36 recovery should be done expeditiously, yet the same must be done strictly in accordance with the procedure prescribed by law. However, this Court after examining a plethora of other decisions further held that once the sale has been confirmed it cannot be set aside unless a fundamental procedural error has occurred or sale certificate had been obtained by misrepresentation or fraud. The relevant observations read as under:-
"13. Undoubtedly, public money should be recovered and recovery should be made expeditiously. But it does not mean that the financial institutions which are concerned only with the recovery of their loans, may be permitted to behave like property dealers and be permitted further to dispose of the secured assets in any unreasonable or arbitrary manner in flagrant violation of the statutory provisions.
28. In view of the above, the law can be summarised to the effect that the recovery of the public dues must be made strictly in accordance with the procedure prescribed by law. The liability of a surety is coextensive with that of the principal debtor. In case there are more than one surety the liability is to be divided equally among the sureties for unpaid amount of loan. Once the sale has been confirmed it cannot be set aside unless a fundamental procedural error has occurred or sale certificate had been obtained by misrepresentation or fraud." (Emphasis supplied)
215. In PHR Invent Educational Society v. UCO Bank, (2024) 6 SCC 579 it was again reiterated that an auction-sale which stands confirmed can only be interfered with when there was any fraud or collusion, and entertaining of issues regarding the validity of such auction would amount to reopening issues which have achieved finality. The relevant observations read as under:-
"34. In our view, the High Court ought to have taken into consideration that the confirmed auction-sale could have been interfered with only when there was a fraud or collusion. The present case was not a case of fraud or collusion. The effect of the order of the High Court would be again reopening the issues which have achieved finality.
216. In V.S. Palanivel v. P. Sriram, 2024 INSC 659 this Court again reiterated unless there are some serious flaws in the conduct of the auction as for example perpetration of a fraud/collusion, grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside keeping in mind the domino effect such an order would have. The relevant observations read as under:-
37
"36.14. This Court must underscore the well settled legal position that once an auction is confirmed, it ought to be interfered with on fairly limited grounds. (Refer: Valji Khimji and Co. v. Hindustan Nitro Product (Gujarat) Ltd. (Official Liquidator) (2008) 9 SCC 299: 2008: INSC: 925 and Celir LLP v. Bafna Motors (Mumbai) Private Limited (2024) 2 SCC 1: 2023:
INSC: 838). Repeated interferences in public auction also results in causing uncertainty and frustrates the very purpose of holding auctions. (Refer: K. Kumara Gupta v. Sri Markendaya and Sri Omkareswara Swamy Temple (2022) 5 SCC 710: 2022: INSC: 207). Unless there are some serious flaws in the conduct of the auction as for example perpetration of a fraud/collusion, grave irregularities that go to the root of such an auction, courts must ordinarily refrain from setting them aside keeping in mind the domino effect such an order would have. Given the facts noted above, we shall refrain from cancelling the sale or declaring the Sale Deed as vold. Instead, it is deemed appropriate to balance the equities by directing the Auction Purchaser to pay an additional amount in respect of the subject property."
(Emphasis supplied)
217. In the present lis, it is not the case of the Borrower herein that the 9th auction conducted by the Bank was a result of any collusion or fraud either at the behest of the Bank or the Successful Auction Purchaser herein. Aside from the lack of any 15-days gap between the notice of sale and the notice of auction, no other illegality has been imputed to the aforesaid auction proceedings. It is also not the case of the Borrower that due to the absence of the aforesaid statutory period, any prejudice was caused or that it was prevented from effectively exercising its rights due to such procedural infirmity. Despite a total of eight auctions being conducted by the Bank from April, 2022 to June, 2023, not once did the Borrower express its desire to redeem the mortgage. Even when the auction notice came to be issued on 12.06.2023, the Borrower never intimated that it was in process of redeeming the mortgage with the aid of the Subsequent Transferee and that the auction be delayed even though, as per the parties own submissions, they started exploring the possibility of redeeming the mortgage and thereafter transferring in June, 2023 itself. In such circumstances, given the fact that although the S.A. No. 46 of 2022 was still pending, yet since there was nothing before this Court to doubt the validity of the 9th auction, this Court in the Main Appeals confirmed the sale in favour of the petitioner and brought the auction proceedings to its logical conclusion by directing the 38 issuance of the sale certificate. The Borrower never raised the issue of the validity of the 9th auction notice despite having sufficient opportunities to do so even after the pronouncement of the decision in the Main Appeals, and that such pleas are being raised only after the auction was confirmed in favour of the petitioner, we find no good reason to interfere with the 9th auction conducted by the Bank.
218. Any sale by auction or other public procurement methods once already confirmed or concluded ought not to be set aside or interfered with lightly except on grounds that go to the core of such sale process, such as either being collusive, fraudulent or vitiated by inadequate pricing or underbidding. Mere irregularity or deviation from a rule which does not have any fundamental procedural error does not take away the foundation of authority for such proceeding. In such cases, courts in particular should be mindful to refrain entertaining any ground for challenging an auction which either could have been taken earlier before the sale was conducted and confirmed or where no substantial injury has been caused on account of such irregularity.
219. In the present lis, apart from the want of statutory notice period, no other challenge has been laid to the 9th auction proceedings on the ground of it being either collusive, fraudulent or vitlated by inadequate pricing or underbidding, thus, the auction cannot be said to suffer from any fundamental procedural error, and as such does not warrant the interference of this Court, particularly when the plea sought to be raised to challenge the same could have been raised earlier.
220. The aforesaid may be looked at from one another angle. Even if the 9th auction were to be held illegal and bad in law by virtue of the aforesaid S.A. No. 46 of 2022, it would not mean that the auction purchaser would by virtue of such finding lose all its rights to the secured asset, even after having the sale confirmed in its favour. In this regard we may refer to the decision of this Court in Janak Raj v. Gurdilal Singh, AIR 1967 SC 608 wherein it was held that even if a decree pursuant to which auction was previously conducted was later set aside, the successful auction purchaser's rights will remain unaffected and he would still be entitled to confirmation of sale in its favour. The relevant observations read as under:-
"27. For the reasons already given and the decisions noticed, it must be held that the appellant auction purchaser was entitled to a confirmation of the sale notwithstanding the fact that after the holding of the sale the decree had been set aside. The policy of the Legislature seems to be that unless a 39 stranger auction-purchaser is protected against the vicissitudes of the fortunes of the suit, sales in execution would not attract customers and it would be to the detriment of the interest of the borrower and the creditor alike if sales were allowed to be impugned merely because the decree was ultimately set aside or modified. The Code of Civil Procedure of 1908 makes ample provision for the protection of the interest of the judgment-debtor who feels that the decree ought not to have been passed against him. On the facts of this case, it is difficult to see why the judgment-debtor did not take resort to the provisions of O. XXI r. 89. The decree was for a small amount and he could have easily deposited the decretal amount besides 5 per cent of the purchase money and thus have the sale set aside. For reasons which are not known to us he did not do so.
(Emphasis supplied) E. FINALORDER
221. Before we close this judgment, we may address yet another submission canvassed on behalf of the respondents herein. It was contended by the Borrower and the Subsequent Transferee that the petitioner herein having not prayed for the relief of physical possession in the original proceedings cannot be permitted to expand the scope of the said proceedings and now seek the relief which it previously did not. In this regard, we may only refer to the decision of this Court in Baranagore Jute Factory Plc. Mazdoor v. Baranagore Jute Factory Plc., AIR 2017 OnLine SC 410 wherein it was held the court not only has a duty to issue appropriate directions for remedying or rectifying the things done in violation of its orders but also the power to take restitutive measures at any stage of the proceedings. The relevant observations read as under:-
"... As held by this Court in Delhi Development Authority v. Skipper Construction Co. (P) Ltd., and going a step further, the Court has a duty to issue appropriate directions for remedying or rectifying the things done in violation of the orders. In that regard, the Court may even take restitutive measures at any stage of the proceedings. [...]"
(Emphasis supplied) 222. Similarly, a Three-Judge Bench of this Court in the case of State Bank of India v. Dr. Vijay Mallya, 2022 SCC OnLine SC SC 826, in clear terms said that apart from punishing the contemnor for his contumacious conduct, the majesty of law may demand that appropriate 40 directions be issued by the Court so that any advantage secured as a result of such contumacious conduct is completely nullified. The approach may require the Court to issue directions either for reversal of the transactions in question by declaring said transactions to be void or passing appropriate directions to the concerned authorities to see that the contumacious conduct on the part of the contemnor does not continue to enure to the advantage of the contemnor or anyone claiming under him
223. In view of the aforesaid, we pass the following orders and directions:-
(1) The legality and validity of the 9th auction proceedings conducted pursuant to the notice of sale dated 12.06.2022 is upheld. The sale of the Secured Asset to the petitioner is hereby confirmed and the title conferred through the Sale Certificate dated 27.09.2023 is declared to be absolute.
(ii) The Borrower and the Bank shall immediately take steps for the cancellation of the Release Deed dated 28.08.2023 within a period of one week from the date of pronouncement.
(iii) The Borrower shall also unconditionally withdraw the S.A. No. 46 of 2022 pending before the DRT within a period of one week from the date of pronouncement.
(iv) The Assignment Agreement dated 28.08.2023 is hit by lis pendens and hereby declared void. The Subsequent Transferee shall hand over the peaceful physical possession of the Secured Asset along with its original title deeds to the Bank within a period of one week from the date of pronouncement of this judgment. In the event of any further hinderance or any obstruction that may be caused by the Borrower or the Subsequent Transferee while taking over the possession of the property then in such circumstances the Bank shall take the assistance of police.
(v) The Subsequent Transferee shall also withdraw the police complaint dated 17.01.2024 lodged by it within a period of one week from the date of pronouncement of this judgment.
(vi) We clarify that the Subsequent Transferee is not entitled to recover the amount paid by it towards redeeming the second charge over the Secured Asset or any other dues or amount paid in respect of the same from the petitioner herein.
vii) The Bank shall refund the amount of Rs. 129 crore paid by the Borrower towards the redemption of mortgage without any interest only after the aforesaid directions have been compiled to the letter and spirit. 41
(viii) The Subsequent Transferee is at liberty to recover the amount paid by it towards the Assignment Agreement dated 28.06.2023 and any other amount from the Borrower by availing appropriate legal remedy as may be available under the law.
224. Let this matter be notified once again before this Bench after a period of two weeks to report compliance of the aforesaid directions.
225. There shall be no order as to costs."
13. The ratio laid down by the Hon'ble Apex Court is directly applicable to the present lis inter alia, issuance of the money recovery proceedings as against Petitioner and issuance of notices for putting the properties of Petitioner to auction. Under the compulsive and adverse circumstances created at the instance/s of Respondents, Petitioner was left no option to give a letter requesting payments to be made in installments and to prove his bona fides had paid part of the amounts. This conduct of Petitioner cannot be viewed and projected by Respondents that Petitioner having accepted the payment of money under installments cannot now turn around and contest this Writ Petition. This argument of Respondents is to be received only to be rejected, as the acts of commission of the Respondents is/are during the continuation of the Interim Orders and thus are illegal.
14. Respondents' actions also violate Clauses 5.9.4.2 and 5.9.4.3 of the GTCS, which mandate that upon termination of the HT Agreement, the licensee must issue a final statement 42 of account, and no further claim can be raised unless based on fresh cause and lawful assessment. The reopening of a terminated agreement, without statutory authority or notice, amounts to procedural impropriety and administrative arbitrariness.
15. The ratio laid down in the decisions, supra, squarely applies to the present case and the impugned demands are wholly time-barred. The invocation of Section 24 of the repealed Indian Electricity Act, 1910, in the impugned notices is patently illegal, as that Act stood repealed by virtue of Section 185 of the Electricity Act, 2003, which specifically provides that the earlier enactments shall stand repealed, thereby the impugned notices, having been issued under a repealed statute, are void ab initio and non est in the eye of law and as a consequence of the same are liable to be set aside.
16. Upon careful consideration of the pleadings of both the parties, the documents placed on record and the submissions advanced and in view of the above discussion, this Court finds that the impugned proceedings of Respondents suffer from serious legal infirmities, arbitrariness, and violation of statutory provisions and principles of natural justice. The entire action of Respondents, commencing from the alleged inspection of Petitioner's premises and culminating in the 43 impugned notices and recovery proceedings, is unsustainable in law.
17. For all the reasons and discussions made supra, this Court holds that the impugned notices dated 15.12.2015, 21.03.2016 and 02.08.2019, the consequential Memo dated 19.03.2020, and the letter dated 18.03.2021 issued by the 5th Respondent to the Sub-Registrar are illegal, arbitrary, violative of Sections 56(2), 126, and 185 of the Electricity Act, 2003, and Clauses 5.9.4.2 and 5.9.4.3 of the GTCS, and contrary to the law laid down by the Hon'ble Supreme Court and High Courts. The same are accordingly set aside and quashed. Further, Respondents are directed to refrain from taking any coercive steps, including recovery proceedings under the A.P. State Electricity Board (Recovery of Dues) Act, 1984 or communication with revenue or registration authorities, in respect of the subject matter of this Writ Petition. It is further directed that any future demand or assessment, if warranted, shall be made strictly in accordance with the Electricity Act, 2003, after issuance of a lawful notice and granting of an opportunity of hearing to Petitioner.
18. This Court, therefore, concludes that Respondents have acted in excess of their jurisdiction, in violation of 44 statutory provisions, and in contravention of the principles of natural justice. The writ petition deserves to be allowed.
19. Accordingly, the Writ Petition is allowed. The impugned notices dated 15.12.2015, 21.03.2016, and 02.08.2019, Memo dated 19.03.2020, and letter dated 18.03.2021 issued by the 5th Respondent are hereby quashed and set aside. All consequential proceedings initiated pursuant thereto, including those under the A.P. State Electricity Board (Recovery of Dues) Act, 1984, are declared void. It is needless to say that the contesting Respondents can avail the remedies available to them in accordance with law. No costs.
20. Consequently, the miscellaneous Applications, if any shall stand closed.
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NAGESH BHEEMAPAKA, J 24th April 2026 ksld 45