Allahabad High Court
Arun Kumar Jain And 3 Others vs Presiding Officer Debts Recovery ... on 22 August, 2023
Author: Saurabh Shyam Shamshery
Bench: Saurabh Shyam Shamshery
HIGH COURT OF JUDICATURE AT ALLAHABAD AFR Neutral Citation No. 2023:AHC:168167 Reserved :- 10/08/2023 Delivered :- 22/08/2023 HIGH COURT OF JUDICATURE AT ALLAHABAD ***Court No. 48
*** Case :- WRIT - C No. - 10936 of 2014 Petitioner :- Arun Kumar Jain And 3 Others Through :- Sri H.N. Singh, Senior Advocate assisted by Sri Vineet Kumar Singh, Advocate vs. Respondent :- Presiding Officer Debts Recovery Tribunal And 7 Others Through :- Standing Counsel Sri Brijesh Kumar Kesharwani, Advocate CORAM : HON'BLE SAURABH SHYAM SHAMSHERY, JUDGE IMPUGNED ORDER
1. This writ petition is being filed by auction purchasers being aggrieved by impugned order dated 19.11.2013 passed by Debt Recovery Appellate Tribunal, Allahabad in Appeal No. R-214 of 2013 whereby said appeal filed by petitioners was dismissed. By amendment, petitioners have also challenged the order dated 23.10.2013 passed by Debts Recovery Tribunal, Allahabad in Securitization Application No. 153 of 2009.
FACTUAL MATRIX
2. M/s Firozabad Cold Storage Ltd., its Managing Director and others, who are respondents no. 4 to 8 (hereinafter referred to as "borrowers") have availed credit facility from the respondent bank (Bank of Baroda) sanctioned on 14.10.2005 for the business of cold storage.
3. The borrowers have failed to repay the loan amount, therefore, the respondent bank has issued a notice dated 06.04.2009 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "SARFAESI Act"). The borrowers have submitted their reply on 01.06.2009 under Section 13 (3A) of SARFAESI Act.
4. The borrowers remained failed to repay the loan, therefore, a notice dated 13.09.2009 under Section 13(4) of SARFAESI Act and Rule (8) of Security Interest (Enforcement) Rules, 2002 (for short "Rules") was issued by the bank. Later on, an auction notice dated 14.11.2009 was published by the respondent bank for auction of property in question.
5. The borrowers have filed a S.A. No. 153 of 2009 before the Debts Recovery Tribunal, Allahabad on 14.12.2009 challenging the notice dated 13.09.2009 i.e. a possession notice issued under Section 13(4) of SARFAESI Act and Rule 8(1) of Rules made therein.
6. The respondent bank took possession of property under auction on 23.09.2009 and auction sale was fixed on 16.12.2009, however, auction was not materialized on 16.12.2009.
7. During pendency of above referred S.A. No. 153 of 2009, the respondent bank has published a second auction notice on 05.07.2010 in newspapers, fixing 12.08.2010 for auction sale. The terms and conditions as mentioned in notice are reproduced hereinafter -:
"नियम व शर्तेः- (1) इच्छुक निविदाकर्ता सम्बन्धित सम्पत्ति क्रय करने हेतु अपने प्रस्ताव टेंडर राशि मांग ड्राफ्ट द्वारा जो प्राधिकृत अधिकारी बैंक ऑफ बड़ौदा के पक्ष में आहरित किया गया हो के साथ बंद लिफाफे में भेजें। असफल निविदाकर्ताओं को बयानों की राशि बिना किसी ब्याज के वापस कर दी जाएगी। यदि सफल बोलीदाता विक्रय की शर्तों समय का पालन नहीं करता या अन्य किसी प्रकार की चूक करता है तो बयान की राशि बिना किसी पूर्व सूचना के जब्त कर ली जाएगी। प्रस्ताव सम्बन्धित शाखा के पास दिनांक 12.8.10 को दोपहर 2 बजे तक या इससे पहले जमा कर दिए जाएँ। (2) सील बन्द निविदाएँ प्राधिकृत अधिकारी द्वारा उपस्थित निविदाकर्ताओं के समक्ष ऊपर दर्शित जगह व समय पर खोली जाएँगी। (3) निविदाएँ खुलने के बाद प्राधिकृत अधिकारी के विवेक पर इच्छुक खरीदारों को परस्पर सहमति द्वारा प्रस्तावित मूल्य को बढ़ाने का अवसर दिया जा सकता है। (4) सफल निविदादाता को विक्रय मूल्य की 25%धनराशि (बयाना राशि सहित) विक्रय तिथि को ही नकद अथवा उपरोक्तानुसार माँग ड्राफ्ट द्वारा जमा करनी होगी विक्रय मूल्य की शेष धनराशि प्राधिकृत अधिकारी अथवा सिक्योर्ड क्रेडिटर्स द्वारा विक्रय की पुष्टि के 15 दिन के भीतर अथवा दिए गये समय तक जमा करनी होगी। इसमें चूक होने पर उस समय तक जमा की गयी सम्पूर्ण रकम जब्त कर ली जाएगी। (5) सफल निविदादाता को सम्पत्ति की रजिस्ट्री कराने हेतु समस्त स्टॉम्प व रजिस्ट्रेशन शुल्क व अन्य व्यय स्वयं वहन करने होंगे। प्राधिकृत अधिकारी के पास बिना कारण बताए किसी भी निविदा को स्वीकृत/अस्वीकृत/स्थगित/रद्द करने का अधिकार और विक्रय नियमों एवं शर्तों में संशोधन करने के अधिकार सुरक्षित होंगे। (6) प्राधिकृत अधिकारी, मालिक/बोलीदाता/आम जनता को सूचना दिए बिना बिक्री को रद्द/स्थगित कर सकता है और/या किसी भी नियम व शर्तों को किसी भी समय बदल सकता है/ जोड सकता है/हटा सकता है। (7) इच्छुक खरीददार सम्बन्धित शाखा से किसी भी कार्य दिवस में सम्पर्क कर सम्पत्ति का मुआयना कर सकते है एवं अधिक जानकारी के लिए सम्पर्क कर सकते है।
स्थानः आगरा दिनांकः- 5.07.10 प्राधिकृत अधिकारी" (Emphasis supplied)
8. The petitioners were successful in auction proceedings being highest bidder for Rs. 1,05,00,000/-. They paid entire amount i.e. firstly, 25% (including earnest amount) and later on remaining 75% in different slots.
9. There is a dispute in regard to details of amount paid on different dates by the petitioners (auction purchasers), therefore, for reference, details provided by the auction purchasers are as follows -:
Date Amount Mode 16.08.2010 10.20 lakh Cheque 13.08.2010 16.05 lakh Cash 21.09.2010 15.00 lakh RTGS 23.09.2010 12.675 lakh Cheque 23.09.2010 21.00 lakh RTGS 24.09.2010 2.50 lakh Cash 25.09.2010 14.00 lakh Cheque 25.09.2010
8.00 lakh RTGS 25.09.2010 2.80 lakh Cash 25.09.2010 2.775 lakh Cash
10. Meanwhile, the Debts Recovery Tribunal, Allahabad passed following order dated 23.08.2010 in S.A. No. 153 of 2009 -:
"In support of its application, Ld. Counsel for the applicants stated that the bank published sale notice on 5.7.2010 and fixed 12.8.2010 for sale by fixing reserve price of the secured asset to Rs. 102.00 lacs. The bank had received a bid offering Rs. 105.00 lacs. Bank vide letter dt. 14.8.2010 offered the applicant for arranging a bidder whose offer is more than Rs. 102.00 lacs within' 10 days failing which the bank shall accept the bid of the bidder as per terms of advertisement of sale. In response to the bank's letter di 14.8.2010 applicant submitted a detailed proposal and submitted that applicant has a prospective buyer who has offered Rs. 108.50 lacs although it is more than the bid received by the bank.
Considered the rival contention of the parties. Seen the earlier sale notice dated 14.11.2009 showing the reserve price of the buyer who will purchase the said property in better price than the offer of Rs. 105.00 lacs received by the bank. Reportedly, they have a buyer offering Rs. 108.50 lacs. In view of this, I am of the opinion that applicant be given an opportunity of 30 days to arrange prospective buyer. If prior to 30 days, a more reasonable offer is received by the applicants, they are free to offer the said amount along with a token money of 25% of the said offer. The bank shall consider the same. Failing this the bank will be at liberty to act according to the terms and conditions of the sale notice.
Fix 27.09.2010 for further orders."
(Emphasis supplied)
11. The respondents, despite opportunity, was unable to produce any buyer who could offer more than what petitioners have offered and before 27.09.2010 i.e. next date fixed in the SA, the auction purchasers have deposited entire amount.
12. A sale certificate dated 27.09.2010 was accordingly issued to the petitioners, the auction purchasers and possession was also handed over to them.
13. The respondents, therefore, have approached this Court by filing a Writ C No. 74713 of 2010, however, this Court without allowing their prayer, disposed of the writ petition by an order dated 23.12.2010 with a direction to the Tribunal to decide pending matters.
14. Some other attempts of respondents were also failed, however, the Debts Recovery Tribunal by order dated 13.04.2013 allowed the S.A. No. 153 of 2009, filed by the respondents and held that process initiated by the bank under SARFAESI Act was defective and accordingly, it was set aside and status quo ante was restored. The auction sale, sale certificate and sale deed issued or executed by bank and all ancillary and subsequent steps taken by bank qua to auction of secured assets were set aside. The Debts Recovery Tribunal held that -:
(a) reply/objection of the debter dated 01.06.2009 to demand notice dated 06.04.2009 was not disposed.
(b) auction purchasers have deposited the remaining amount (25% of bid) on the next day of auction and not on the same day as per the terms of auction.
(c) The auction purchasers have deposited remaining 75% of bid amount after 30 days' time was expired on 23.09.2010. They have started depositing the said amount on 21.09.2010 and concluded in different installments/slots on 25.09.2010.
15. The petitioners (auction purchasers) being aggrieved by above order, preferred an Appeal No. 455 of 2013 under Section 18(1) of SARFAESI Act, which was rejected by impugned order dated 19.11.2013.
16. The Debts Recovery Appellate Tribunal has held that -:
"On the basis of the same, it is clear that the view which has been already taken by this Tribunal that towards 25% of the sale price which was deposited by the appellant immediately after the sale in that amount the earnest money cannot be included and therefore, under these circumstances, while depositing the amount there was no deposit of 25% of the amount immediately on the date by the appellant.
With reference to the balance of the amount it was deposited by the appellant by the end of 25.09.2010. The question arises for consideration is whether extension in absence time of under any the of agreement as per Rule 9 (4) of the Security Interest Enforcement Rules, 2002 whether it was a valid deposit in compliance to Rule 9 (4) of the Rules, 2002? In this regard, this is to be seen that the Tribunal passed an order on 23.08.2010 by which an opportunity was given by passing the interim order by the Tribunal to produce the prospective buyer who is ready to purchase the property for a higher amount in pursuance to the order passed by the Tribunal. The borrower failed to produce the prospective buyer who could offer the higher amount than offered by the appellant the auction purchaser. When the Tribunal passed the order, the appellant was not a party at that point of time. Thus, nothing prevented to the appellant to deposit 25% (sic 75%) of the amount within a period of 15 days from the date of the sale as per Rule 9 (4) of the Security Interest Enforcement Rules, 2002. It is also not the case of the appellant auction purchaser that he offered the Bank to deposit the balance of the amount but the bank did not accept the same. Under these circumstances, the appellant being the auction purchaser cannot shirk from his responsibility in not complying with the provision of Rule 9 (4) of the Security Interest Enforcement Rules, 2002. The Apex Court in G. M., Sri Siddeshwara Co- operative Bank Ltd. & Anr. Vs. Ikbal and others [2013 (2) D.R.T.C. 457 has held that the compliance of Rule 9 (3) and (4) of the Security Interest Enforcement mandatory Rules, nature 2002 but are the in mandatory condition can also be waived. The waiver of the mandatory condition is to be under an agreement between the parties. In the present case, the Bank alone can not extend the period of deposit and the appellant also has not applied for any extension of time. It may be that on 23.08.2013, the Tribunal while passing the interim order gave an opportunity to the borrower to produce some prospective buyer who is prepared to offer better price than received appellant by the Bank from who is the the auction purchaser. On the basis of the aforesaid order of the DRT, the appellant/auction purchaser was not prevented in any case either by the Tribunal or by the Bank to deposit balance of the amount and it is also not the case of the appellant auction purchaser that he offered to deposit but the same was not accepted and D.R.T. also did not ordered that the Bank will not accept the deposit from auction purchaser.
Under the facts and circumstances of the case, the judgment passed by the Apex Court in G. M., Sri Siddeshwara Co-operative Bank Ltd. & Anr. Vs. Ikbal and others [2013 (2) D.R.T.C. 457 (supra) applies with full force to the present case to hold that for the firstly there was no compliance of Rule 9 (3) as the 25% of the sale price was not deposited by the appellant immediately after the sale and the money deposited is inclusive of 10% of the amount of earnest money which cannot be adjusted towards the 25% of the sale price but it is deposited only as an earnest money to participate in the auction and as such the money is to be excluded from 25% of the sale price.
On the basis of my over all assessment, I am of the view that in the present case the Tribunal has rightly set aside the auction and the order passed by the DRT is not called for any interference.
The learned counsel for the appellant submitted that in the present case the Tribunal has committed a glaring mistake while setting aside the auction and directing to restore the possession it has not directed to refund the amount which was deposited by the appellant. This deserves to be accepted.
Under the circumstances, the Bank is directed to return the amount of auction purchaser alongwith the interest at the rate of 10% simple interest per annum and to this extent the appeal stands allowed."
(Emphasis supplied) SUBMISSIONS
17. Learned Senior Advocate Sri H.N. Singh assisted by Sri Vineet Kumar Singh, Advocate for petitioners has submitted that -:
(i) The petitioners/auction purchasers have paid entire auction amount i.e. 10% earnest amount, before the bid, 25% (including 10% earnest amount) on next working day of auction and remaining 75% of the amount also within the stipulated time i.e. time granted to borrowers, whereas respondents/borrower have neither deposited the outstanding loan amount nor has come forward with any buyer who could offer more than bid price of the petitioners.
(ii) The DRAT has rejected the appeal filed by the petitioners only on ground that 25% of bid amount required to be deposited soon after auction proceedings does not include 10% amount deposited at the time of bid and has placed reliance on General Manager, Sri Siddheswara Coop. Bank Ltd. and another vs. Ikbal and others (2013) 10 SCC 83 that Rule 9(3) and 9(4) of the Rules are mandatory except waived off expressly.
(iii) Learned Senior Advocate has further submitted that in the present case, bid were opened on 12.08.2010 at about 3.00 PM and process was finalized at about 4.30 PM and by that time, bank was closed and on very next date (i.e. 13.08.2010) Rs. 16,05,000/- was deposited in the form of draft making 25% whereas Rs. 10,20,000/- was already deposited being earnest amount.
(iv) Learned Senior Counsel referred the conditions mentioned in auction notice published in newspaper that successful bidder has to deposit 25% bid amount (including earnest money) on the day of auction.
(v) Learned Senior Counsel has further submitted that amended Rule 9(3) of the Rules (w.e.f. 04.11.2016) has clarified an ambiguity that purchaser shall on the day of auction or not later than next working day, pay a deposit of 25% of the amount of the sale price which is to be inclusive of earnest money deposited, if any. Amended Rule 9(3) of Rules, 2002 is as follows -:
"(3) On every sale of immovable property, the purchaser shall immediately, i.e. on the same day or not later than next working day, as the case may be, pay a deposit of twenty five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorized officer conducting the sale and in default of such deposit, the property shall be sold again."
(vi) Learned Senior Advocate has urged that at relevant time, unamended Rule 9 (3) of Rules was in force, but amended Rule has clarified the ambiguity, therefore, its benefit could be extended retrospectively in facts and circumstances of present case.
(vii) Learned Senior Advocate in order to buttress his argument has referred Zile Singh vs. State of Haryana and others, (2004) 8 SCC 1 that under certain circumstances, effect and benefit of an amendment would operate retrospectively from the date of its commencement. Relevant paragraphs 14 to 18 thereof are mentioned below -:
"14. The presumption against retrospective operation is not applicable to declaratory statutes.... In determining, therefore, the nature of the Act, regard must be had to the substance rather than to the form. If a new Act is "to explain" an earlier Act, it would be without object unless construed retrospectively. An explanatory Act is generally passed to supply an obvious omission or to clear up doubts as to the meaning of the previous Act. It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended.... An amending Act may be purely declaratory to clear a meaning of a provision of the principal Act which was already implicit. A clarificatory amendment of this nature will have retrospective effect (ibid., pp. 468-69).
15. Though retrospectivity is not to be presumed and rather there is presumption against retrospectivity, according to Craies (Statute Law, 7th Edn.), it is open for the legislature to enact laws having retrospective operation. This can be achieved by express enactment or by necessary implication from the language employed. If it is a necessary implication from the language employed that the legislature intended a particular section to have a retrospective operation, the courts will give it such an operation. In the absence of a retrospective operation having been expressly given, the courts may be called upon to construe the provisions and answer the question whether the legislature had sufficiently expressed that intention giving the statute retrospectivity. Four factors are suggested as relevant: (i) general scope and purview of the statute; (ii) the remedy sought to be applied; (iii) the former state of the law; and (iv) what it was the legislature contemplated. (p. 388) The rule against retrospectivity does not extend to protect from the effect of a repeal, a privilege which did not amount to accrued right. (p. 392)
16. Where a statute is passed for the purpose of supplying an obvious omission in a former statute or to "explain" a former statute, the subsequent statute has relation back to the time when the prior Act was passed. The rule against retrospectivity is inapplicable to such legislations as are explanatory and declaratory in nature. A classic illustration is the case of Attorney General v. Pougett [(1816) 2 Price 381 : 146 ER 130] (Price at p. 392). By a Customs Act of 1873 (53 Geo. 3, c. 33) a duty was imposed upon hides of 9s 4d, but the Act omitted to state that it was to be 9s 4d per cwt., and to remedy this omission another Customs Act (53 Geo. 3, c. 105) was passed later in the same year. Between the passing of these two Acts some hides were exported, and it was contended that they were not liable to pay the duty of 9s 4d per cwt., but Thomson, C.B., in giving judgment for the Attorney General, said: (ER p. 134) "The duty in this instance was, in fact, imposed by the first Act; but the gross mistake of the omission of the weight, for which the sum expressed was to have been payable, occasioned the amendment made by the subsequent Act: but that had reference to the former statute as soon as it passed, and they must be taken together as if they were one and the same Act;" (Price at p. 392)
17. Maxwell states in his work on Interpretation of Statutes (12th Edn.) that the rule against retrospective operation is a presumption only, and as such it "may be overcome, not only by express words in the Act but also by circumstances sufficiently strong to displace it" (p. 225). If the dominant intention of the legislature can be clearly and doubtlessly spelt out, the inhibition contained in the rule against perpetuity becomes of doubtful applicability as the "inhibition of the rule" is a matter of degree which would "vary secundum materiam" (p. 226). Sometimes, where the sense of the statute demands it or where there has been an obvious mistake in drafting, a court will be prepared to substitute another word or phrase for that which actually appears in the text of the Act (p. 231).
18. In a recent decision of this Court in National Agricultural Coop. Marketing Federation of India Ltd. v. Union of India [(2003) 5 SCC 23] it has been held -:
that there is no fixed formula for the expression of legislative intent to give retrospectivity to an enactment. Every legislation whether prospective or retrospective has to be subjected to the question of legislative competence. The retrospectivity is liable to be decided on a few touchstones such as: (i) the words used must expressly provide or clearly imply retrospective operation; (ii) the retrospectivity must be reasonable and not excessive or harsh, otherwise it runs the risk of being struck down as unconstitutional; (iii) where the legislation is introduced to overcome a judicial decision, the power cannot be used to subvert the decision without removing the statutory basis of the decision. There is no fixed formula for the expression of legislative intent to give retrospectivity to an enactment. A validating clause coupled with a substantive statutory change is only one of the methods to leave actions unsustainable under the unamended statute, undisturbed. Consequently, the absence of a validating clause would not by itself affect the retrospective operation of the statutory provision, if such retrospectivity is otherwise apparent."
(Emphasis supplied)
(viii) Learned Senior Advocate has also submitted that a registered notice dated 01.06.2009 was sent by an Advocate of respondents/borrowers which could not be considered to be an objection to the notice dated 06.04.2009 issued by the bank under Section 13(2) of SARFAESI Act, since contents of registered notice dated 01.06.2009 did not refer that it was in reply to said notice as well as it did not refer any objection or about discharge of complete liability in terms of notice either, rather it was a notice (not a reply) and a request to waive the interest or fine and fix four installments with simple interest for repayment. This would not fall under representation or objection required to be dealt with in terms of Section 13(3A) of SARFAESI Act.
18. Per contra, Sri Brijesh Kumar Kesharwani, learned counsel for the respondents (borrowers) has referred para 19 of General Manager, Sri Siddheshwara (supra) that -:
"19. There is no doubt that Rule 9(1) is mandatory but this provision is definitely for the benefit of the borrower. Similarly, Rule 9(3) and Rule 9(4) are for the benefit of the secured creditor (or in any case for the benefit of the borrower). It is settled position in law that even if a provision is mandatory, it can always be waived by a party (or parties) for whose benefit such provision has been made. The provision in Rule 9(1) being for the benefit of the borrower and the provisions contained in Rule 9(3) and Rule 9(4) being for the benefit of the secured creditor (or for that matter for the benefit of the borrower), the secured creditor and the borrower can lawfully waive their right. These provisions neither expressly nor contextually indicate otherwise. Obviously, the question whether there is waiver or not depends on the facts of each case and no hard-and-fast rule can be laid down in this regard."
(Emphasis supplied)
(i) Learned counsel has submitted that since auction had taken place on 12.8.2010, therefore, provisions of unamended Rule 9 (3) of Rules, 2002 would govern and not amended Rule 9 (3) of Rules, 2002 which came into effect from 4.11.2016. Retrospective effect has to be mentioned specifically in the amended statute and it cannot be inferred that 25% percent of sale amount did not include earnest money.
(ii) Learned counsel also referred an order dated 23.10.2013 passed by Debts Recovery Tribunal wherein the S.A. No.153 of 2009 filed by the respondents (borrowers) was allowed and entire auction proceedings being contrary to mandatory provisions was set-aside. Learned counsel has referred following findings returned by Debts Recovery Tribunal that -:
"Non disposal of a notice dated 1.6.2009 issued by the borrower and thus Bank failed to comply the provisions of Section 13 (3A) of SARFAESI Act, which states that -:
"[(3A) If, on receipt of the notice under sub-section (2), the borrower makes any representation or raises any objection, the secured creditor shall consider such representation or objection and if the secured creditor comes to the conclusion that such representation or objection is not acceptable or tenable, he shall communicate [within fifteen days] of receipt of such representation or objection the reasons for non-acceptance of the representation or objection to the borrower: Provided that the reasons so communicated or the likely action of the secured creditor at the stage of communication of reasons shall not confer any right upon the borrower to prefer an application to the Debts Recovery Tribunal under section 17 or the Court of District Judge under section 17A.]"
(iii) Learned counsel also referred that a specific reply to notice issued under section 13 (2) of SARFAESI Act, was sent on 30.12.2010, though delayed but it remained unanswered.
(iv) Auction purchasers have failed to deposit 25% of sale amount on the date of auction. The bank has failed to facilitate deposit after closure of cash amount considering the urgency. Undisputedly, remaining balance (25%) was deposited on the next day of auction, but including earnest amount which was not demand of statute.
(v) The auction purchasers have deposited remaining 75% amount in different slots which continued after 30 days of mandatory period.
(vi) There is no illegality or irregularity in the impugned order. The bank can initiate fresh proceedings of auction and money deposited by auction purchaser has been directed to be refunded with 10% interest and therefore, petitioners have no prejudice.
19. Learned counsel for the Bank has adopted the arguments of the petitioners and submitted that the appeal filed by the Bank against the order passed by Debts Recovery Tribunal is still pending before Debts Recovery Appellate Tribunal and he referred few paragraphs i.e. 17, 18, 22 and 23 of the counter affidavit filed on behalf of Bank, which are mentioned hereinafter:
"17. That, by the time i.e. 4.30 P.M. on 12-8-2010 the auction proceedings were finalized the banking hours had closed and cash counter of the Bank was closed therefore due to non - availability of the cash counter, the auction purchaser could not deposit the balance of 15% of the 25% of the bid amount on 12-8-2010 and they deposited the same on the very next working day i.e. 13-8-2010 and thus the requirement of complying with rule 9(3) was fulfilled.
18. That, under Rule 9(3) instead of having a mechanical of the word "immediately" to meaning of the mean simultaneously or synchronizing with which happens in the matter of private auction sale under the Sale of Goods Act 1930, where payment of the bid amount is required to be made by fall of the hammer and contrary to it here under clause the word "immediately" has been given contextual meaning to mean "with all reasonable quickness and within a reasonable prompt time" as the Hon'ble Apex Court has interpreted in the matter of Ram Mahmood Khan V/S Sh. Ranbir Singh and others AIR 1995 SC 2195 (2198) a similar and identical provision of the law dealing recovery and auction sale contained in Rule 285-D of the U.P. Zamindari Abolition and Land Reforms Rules, 1952.
22. That, the Tribunal itself put a restraint on the concerned branch to wait for 30 days to finalize the auction sale which the Tribunal totally misinterpreted in the final judgment that there was no stay order in this regard.
23. That, a requirement provided in an order to consider something if done within time is nothing but a stay order and after the clog in the form of the above stay order ended/ was over, the auction purchaser paid the balance 75% of the auction price between 21-9-2010 to 25-9-2010 as the borrowers were directed to approach prior to expiry of 30 days time and 21-9-2010 was 30th day from the date of the order dated 23-8-2010 and Tribunal grossly erred in law and on fact by holding that 30th day ended on 23-9-2010. "
CONSIDERATION & CONCLUSION
20. The issue of consideration is whether 25% of sale amount shall be inclusive of earnest amount or not and whether in some circumstances, said amount could be deposited on next working day also and effect of amendment carried out in Rule 9(3) of Rules, 2002 (i.e. 'Doctrine of Relation Back') has any bearing in facts and circumstances of present case?
21. In the background of undisputed facts that the petition (auction purchasers) have paid the earnest amount well before the auction proceedings and auction sale was finalized on 12.8.2010 at about 4.30 P.M. i.e. after working hours of Bank were over and remaining amount of 25% of sale amount (including earnest amount) was deposited on next working day i.e. 13.8.2010, the Court proceed to consider the rival submissions on facts and on law as well.
22. Before the amendment by substituting Rule 9 (3) of Rules 2002 words used were "purchaser shall pay immediately a deposit of twenty five percent of the amount of its sale price". Neither the word 'immediately' nor the words 'twenty five percent' were clear and there was some ambiguity, therefore, in 2016 Rule 9 (3) of Rules, 2002 was substituted and it was clarified i.e. words 'immediately' and 'twenty five percent' were clarified that:
"3. On every sale of immovable property, the purchaser shall immediately, i.e., on the same day or not later than next working day, as the case may be, pay a deposit of twenty-five per cent. of the amount of the sale price, which is inclusive of earnest money deposited, if any, to the authorised officer conducting the sale and in default of such deposit, the property shall be sold again."
23. As referred above earlier ambiguity has now been clarified. The Debts Recovery Tribunal has taken a very technical and strict approach that auction sale purchasers has to deposit 25% of sale amount on the day of auction only and for that Bank has to facilitate deposit of amount even after working hours. Compliance of provisions are mandatory but they could not be made complexed to the extent that provisions itself become impossible to follow.
24. The word 'immediately' means stronger than expression 'within a reasonable time' and imply prompt vigorous action, without any delay. It means with all convenient speed. The word 'immediately' should not be construed so as to require something which is impossible. (Halsbury's Law of England, 4th Ed., Vol.23, para 1618, p.1178)
25. As per Black's Law Dictionary (6th Edition) word 'immediately' means doing of a thing straight away or forthwith but when used in the context of contract, it is usually construed to mean within a reasonable time having due regard to the nature of circumstances of the case.
26. 'Immediately' means 'prompt', 'within reasonable time' or 'within stipulated period.' In the present case, admittedly, auction proceedings got over by 4.30 P.M. on 12.8.2010 when working hours of Bank were over and in normal circumstances, 25% of the sale amount at the earliest could be deposited no sooner than before next working day. The petitioners (auction purchasers), have immediately on next working day (13.8.2010) deposited the amount i.e. 25 % of sale price which includes the earnest amount. The act therefore, definitely was under the category of 'immediately', without any delay. Therefore, it could not be held that procedure prescribed was not complied.
27. Now by the amendment (by substitution) in Rule 9 (3) of Rules, 2002 (amended in 2016) has removed all ambiguity by clarification that "on the same day of not later than next working day". The approach of DRAT has, therefore, a legal flaw and the concerned finding could not be legally justified.
28. The connected issue as to whether 25% amount will be inclusive of earnest amount or not, has to be considered in the background that auction notice dated 5.7.2010 (published in newspaper), which is part of para 2 (v) of judgment, has clearly stipulates that 25% amount of sale to be deposited immediately would be inclusive of earnest amount. The specific words used are सफल निविदादाता के विक्रय मूल्य की २५% धनराशि (बयाना राशि सहित) विक्रय तिथि को ही नकद अथवा उपरोक्तानुसार मांग ड्राफ्ट द्वारा जमा करनी होगी, however this fact has completely skipped from consideration by the DRAT. Supreme Court in Sri Siddheshwara (supra) has held that Rule 9 (3) and 9 (4) being for benefit of the borrower, are mandatory provisions but could be waived of. This judgment has not dealt with an issue as to whether 25% would be inclusive of earnest amount or not, where it has dealt a case where borrower has given consent that remaining amount i.e. 75 % could be accepted by the auction purchaser belatedly or not.
29. The amendment by substitution carried out in 2016 has clarified that 25% amount shall be inclusive of earnest money already deposited. Therefore, considering the condition mention in notice, reply of the respondent bank and subsequent clarifications to the Rules, according to Court's opinion 25% of sale amount will be inclusive of earnest amount already deposited. Therefore, DRAT has made a legal error on this issue also. The amendment in Rules, by way of clarification could be considered retrospectively in certain circumstances as referred in Zile Singh (supra) that:
" Where a statute is passed for the purpose of supplying an obvious omission in a former statute or to "explain" a former statute, the subsequent statute has relation back to the time when the prior Act was passed."
30. The amended Rule 9 (3) of Rules, 2002 has clearly stipulated a clarification and part of Rule begins from i.e. ("that is" or "in other words"), which is shortening of the Latin expression 'id est' and it is normally used to introduce a further explanation or paraphrase. As referred in Zile Singh (supra) a clarification could be related back i.e. it could be applicable retrospectively. The amendment being explanatory, therefore, it may be construed as retrospective in nature.
31. The other issue urged is non-consideration of the alleged objections of borrowers to the notice of bank under Section 13 (4) of SARFAESI Act. I have carefully perused the legal notice dated 1.6.2009 (sent by an Advocate on behalf of the borrower and alleged to be reply to referred notice), however, contents thereof does not indicate that it was in reply to notice of bank. It does not refer about said notice either, therefore, it would not be deemed as an objection to notice issued by the Bank an as per rules a belated reply, if any, was not required to be considered.
32. The counsel for respondents (borrowers) has pointed out that 75% of sale amount was deposited after 15 days and thus, violated the mandatory conditions of Section 13 (2) of the Act.
33. The auction took place on 12.8.2010 and as referred above, 25% of sale amount including earnest amount was paid by the auction purchasers (petitioners) on very next working day. According to Section 13(4) of SARFAESI Act, remaining 75% amount of sale price was to be deposited on or before 26/27-8.2010. However, during intervening period on 23.8.2010 (i.e. before 15 days), the Debts Recovery Tribunal, on an application of the borrowers, granted them a period of 30 days to deposit Rs.1.08 Crore to clear outstanding loan amount and admittedly borrower has failed to deposit said amount. It appears that when auction purchasers found that the borrower might fail to deposit said amount, he started payment of 75% remaining amount in different slots between 21.9.2010 to 25.9.2010 i.e. before the date fixed before DRT and just two days after 30 days to borrower were over. The time of 15 days is not sacrosanct since it could be extended. In above circumstances, though there was no written agreement, still delay has been explained and said delay has not prejudiced the borrowers in any manner, since even during pendency of present writ petition, borrowers have failed to offer money.
34. In similar circumstances, Supreme Court in Varimadugu Obi Reddy Vs. B.Sreenivasulu & Ors, (2023) 2 SCC 168 , has held that delay in payment of 75% of sale amount would not be an illegality, when borrower has sought time for repayment and failed. Relevant paragraphs 44, 45 and 46, therefore, being relevant, are reproduced hereinafter -:
"44. In the instant case, although there was no written consent by all the three partners, namely, the secured creditors, borrowers and auction-purchaser, as being referred to by this Court in Sri Siddeshwara Cooperative Bank [Sri Siddeshwara Cooperative Bank Ltd. v. Ikbal, (2013) 10 SCC 83 : (2013) 4 SCC (Civ) 638] , but this fact cannot be ruled out that in the instant case, the peculiar situation has come forward when the respondent borrowers in the first instance approached the Tribunal assailing the e-auction notice issued by the respondent Bank (secured creditor) and were able to secure an interim order from the Tribunal dated 26-3-2015 permitting the auction proceedings to continue, subject to the condition that the borrower shall deposit Rs 6 lakhs directly with the respondent Bank within 15 days from the date of order, which admittedly expired on 9-4-2015 and the respondent borrowers failed to deposit the aforesaid amount.
45. On the last date when the period was to expire on 9-4-2015, IA No. 1687 of 2015 was filed seeking extension of time period by 15 days for depositing the sum of Rs 6 lakhs and as there was no stay in withholding the e-auction proceedings, the appellant deposited not only the earnest money but 25% of the bid amount in the first instance on 28-3-2015, the balance 75% of the bid amount was deposited on 15-4-2015 and the interregnum period was in incomplete phase of flux as to what will be the fate of the auction-purchaser pending proceedings before the Tribunal, more so when the application was filed by the respondent borrowers on 9-4-2015 seeking extension of time and that being the situation, 75% of the bid amount was deposited on 15-4-2015 and sale certificate was issued and still thereafter when the Tribunal granted extension of 15 days of time to the respondent borrowers by an order dated 17-4-2015 to deposit the sum of Rs 6 lakhs, the respondent borrowers failed to deposit the aforesaid amount, and as it reveals from the record, a further time was granted to the respondent borrowers to deposit a sum of Rs 6 lakhs by an order dated 1-5-2015 and much before that, the auction proceedings were finalised and even the rectification deed came to be executed on 21-4-2015.
46. In the given facts and circumstances, the four days' delay which was caused in terms of the original auction notice, in no manner, would frustrate or annul the auction proceedings and the Debts Recovery Tribunal has rightly held that because in such state of flux, particularly when the bank/secured creditor requested the auction-purchaser to wait for some time because the borrowers are negotiating with the bank in the light of interim order dated 26-3-2015 of the Tribunal, delay in depositing 75% of the bid amount by four days in no manner would frustrate the rights of the parties inter se, more so, when the conduct of the borrowers in getting extension orders on two different occasions and still not depositing Rs 6 lakhs in terms of the order of the Tribunal would clearly reflect that the intention of the borrowers was only to frustrate the auction-sale by one reason or the other, which they could not succeed."
(Emphasis supplied)
35. The outcome of above discussion is that impugned order dated 19.11.2013 passed by DRAT is erroneous and therefore, is liable to be set-aside, hence, set-aside.
36. The writ petition is allowed. Legal consequence thereof shall follow forthwith.
Order Date :- August 22, 2023 Nirmal Sinha [Saurabh Shyam Shamshery, J.]