Gujarat High Court
M/S Vision Organics Ltd vs Fatehsinh M Chauhan on 16 December, 2022
Author: N.V.Anjaria
Bench: N.V.Anjaria, Bhargav D. Karia
C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3159 of 2020
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy
of the judgment ?
4 Whether this case involves a substantial question
of law as to the interpretation of the Constitution
of India or any order made thereunder ?
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M/S VISION ORGANICS LTD.
Versus
FATEHSINH M CHAUHAN
==========================================================
Appearance:
PARTY IN PERSON(5000) for the Petitioner(s) No. 1,2
MR RUSHABH R SHAH(5314) for the Respondent(s) No. 1
MR. PRERAK R BHATT(11381) for the Respondent(s) No. 1
RULE SERVED for the Respondent(s) No. 2
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CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 16/12/2022
CAV JUDGMENT
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C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1.Heard party-in-person Mr. Jatin H. Shah - petitioner no.2 and Managing Director of petitioner no.1 company - original borrower and learned advocate Mr. Rushabh R. Shah for respondent no.1 (auction purchaser). Though served, no one appears for respondent no.2 - Bank of Baroda.
2.The petitioner has challenged the order dated 2.07.2019 passed by the Debts Recovery Appellate Tribunal, Mumbai (For short "DRAT") in Misc. Appeal No.5/2018 filed by respondent no.1-auction purchaser feeling aggrieved by the judgment and order dated 1.11.2017 in Appeal No.4/2013 passed by the Debts Recovery Tribunal-II, Ahmedabad (For short "DRT").
3.Facts leading to filing of this writ petition are narrated in nutshell as under : Page 2 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022
C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 3.1) The long drawn legal battle that has raged over past two decades or so has its genesis in a loan which respondent no.2 bank advanced to the petitioner no.1 company. Loan was advanced on the basis of equitable mortgage of the properties owned by petitioner no.1 company. The borrower having defaulted in the repayment of loan amount, respondent no.2 bank filed Original Application No.300/2001 and 326/2001 against the petitioners for recovery of its outstanding dues before the Debts Recovery Tribunal.
3.2) The Debts Recovery Tribunal allowed the Original Applications filed by respondent no.2 bank along with other banks vide common order dated 17.09.2010 and issued a Recovery Certificate in favour of the lender bank against the petitioners.Page 3 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022
C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 3.3) Thereafter recovery proceedings being Recovery Proceeding No.90/2010 and Recovery Proceeding No. 91/2010 were filed for execution of the Recovery Certificate in favour of the banks. The Recovery Officer of DRT in pursuance to the Recovery Certificate issued Sale Proclamation for sale of Naroli property and Daman property for the first time on 9.12.2011 for auction sale to be held on 27.12.2011. However, due to various objections, sale could not take place and thereafter re-auction notice was issued fixing the auction date on 9.07.2013 in which respondent no.1 auction purchaser became the successful bidder for Rs. 260.1 lakh. 3.4) The auction purchaser deposited 25% of the reserved price as per the terms and conditions of the auction sale notice. The auction purchaser was further directed to Page 4 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 deposit balance 75% of the bid amount within a period of 15 days along with requisite poundage fee; however, the auction purchaser filed an application dated 23.07.2013 to extend the time to deposit the balance 75% amount. The Recovery Officer granted further time to the auction purchaser by order dated 24.07.2013 to deposit 75% amount along with poundage fee on or before 8.08.2013, failing which, the Earnest Money deposited by the auction purchaser was ordered to be forfeited.
3.5) The auction purchaser thereafter deposited the balance amount of 75% before 8.08.2013 within the extended time. 3.6) On 8.08.2013, the petitioners filed review application under Rule 87 of the Second Schedule to the Income Tax Act, 1961 (For short "the Rules") before respondent Page 5 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 no.2 to review the order dated 24.07.2013 to the extent of Naroli property and to declare the auction sale held on 9.07.2013 as nullity.
3.7) Respondent no.1 auction purchaser also filed an application requesting the Recovery Officer to confirm the sale. The Recovery Officer by order dated 4.09.2013 rejected the review application dated 08.08.2013 filed by the petitioners and confirmed the auction sale dated 9.07.2013 and ordered to issue Sale Certificate. Recovery Officer also directed Ex-officio Court Receiver to handover possession of the said secured property to auction purchaser. On 10.09.2013, Sale Certificate was issued to the auction purchaser recording that possession was handed over prior thereto. On 11.09.2013, sale proceeds were released in favour of respondent no.2 bank and on Page 6 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 19.09.2013, affidavit before the Recovery Officer was filed by respondent no.2 bank showing appropriation of money. 3.8) Feeling aggrieved by order dated 4.09.2013 the petitioners preferred Appeal No. 4/2013 before the Presiding Officer of the DRT. Respondent no.2 bank raised preliminary objection as to maintainability of the appeal without depositing any money. 3.9) DRT rejected the preliminary objection by order dated 27.06.2016 holding that the appeal was maintainable without making any pre-deposit. Thereafter the Presiding Officer of the DRT by order dated 1.11.2017 allowed the appeal by which auction held on 9.07.2013 which was confirmed on 4.09.2013, was quashed and set aside with a direction to the Recovery Officer to re- auction the property and further directing Page 7 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 respondent no.2 bank to refund money deposited by the auction purchaser. 3.10) Respondent no.2 bank being aggrieved by order dated 27.06.2016 whereby preliminary objection of respondent no.2 bank was rejected by DRT; preferred Appeal No. 217/2016 before DRAT.
3.11) Respondent no.1 auction purchaser being aggrieved by the order dated 1.11.2017 preferred Misc. Appeal No.5/2018 before the DRAT.
3.12) DRAT heard both the appeals together and by the impugned order dated 2.07.2019 allowed Misc. Appeal No.5/2018 quashing and setting aside order dated 1.11.2017 passed by the DRT and the auction held on 9.07.2013 which was confirmed on 4.09.2013, was upheld. DRAT dismissed the Appeal No. 217/2016 filed by respondent no.2 bank holding that such Page 8 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 appeal has become infructuous in view of order passed in Misc. Appeal No.5/2018.
4.Mr. Jatin H. Shah appearing as party in person submitted that the auction purchaser has committed default in deposit of the balance amount of 75% contrary to Rules 57 and 58 of the Rules. It was submitted that the Recovery Officer has no jurisdiction to extend the time to deposit the balance amount of 75% by the auction purchaser beyond 15 days. It was submitted that the petitioners were never informed or served with a copy of the application filed by the auction purchaser for extension of time. It was therefore, submitted that the Recovery Officer has committed an error of law by granting further 60 days' time to the auction purchaser resulting into the entire auction sale in nullity.
Page 9 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 4.1) It was submitted that the Recovery Officer has passed order dated 4.09.2013 contrary to the decision of the Apex Court in case of C.M. Paramsivan and another v. Sunrise Plaza TR. Partners and others in Civil Appeal No.154/2013 and therefore, the DRT rightly held by arriving at the conclusion to quash and set aside the auction sale.
4.2) It was submitted that DRAT has committed an error in holding that as the petitioner did not prefer application under sections 60 and 61 of the Rules and hence, Recovery Officer has rightly rejected the review application filed by the petitioner under Rule 87 of the Rules. It was submitted that as per the provisions of section 29 of the Recovery of Debts and Bankruptcy Act, 1993 (For short "the RDB Act") and Rules framed under, schedule II of the Income Tax Page 10 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 Act,1961 is applicable in the recovery proceedings before the Recovery Officer and therefore, such Rules are mandatory Rules. It was therefore, submitted that the petitioner was bound to deposit 75% of the purchaser price with poundage fee within a period of 15 days from 9.07.2013 and further extension of time to deposit balance 75% amount up to 8.08.2013 granted by Recovery Officer is not as per the Rules and therefore, the Recovery Officer was bound to cancel the bid and forfeit 25% of amount deposited by the auction purchaser.
4.3) It was submitted that DRAT has misinterpreted Rules 60 and 61 read with Rule 87 of the Rules holding that the petitioner did not avail the statutory remedy for setting aside the auction sale and without availing such remedy, the petitioner could not have availed the remedy of review, as the Page 11 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 auction sale was nullity for breach of the Rules 57 and 58, there was no need to file application under the Rules 60 and 61 to challenge the auction.
4.4) It was therefore, submitted that DRAT has committed an error by allowing the appeal filed by the respondent no.1 auction purchaser when admittedly Recovery Officer has no jurisdiction to extend the time to deposit the balance amount by the auction purchaser beyond 15 days from the date of auction sale and therefore, entire auction sale has become nullity and therefore, review application filed by the petitioner under Rule 87 was maintainable which was rightly considered and allowed by the DRT by quashing and setting aside the order dated 4.09.2013 passed by the Recovery Officer whereby auction sale was confirmed and the application for review of the petitioner was Page 12 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 rejected.
4.5) It was further submitted that though review application was pending before the Recovery Officer filed by the petitioner on 8.8.2013, the Recovery Officer could not have passed the order for confirmation of sale and to transfer the said property to the auction purchaser.
4.6) It was submitted that though respondent no.1 auction purchaser was served with notice of the Appeal No.4/2013 filed by the petitioner in DRT, respondent no.1 neither orally nor in writing disputed or opposed the appeal filed by the petitioner and thereafter to frustrate the order of DRT without intimation to the DRT, respondent no.1 sold the auction property to Matrubhav Enterprise whose owner is one Mr. Manish Chauhan and brother-in-law of respondent Page 13 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 no.1. Reliance was placed on sale deed dated 8.10.2013 executed by respondent no.1 to submit that respondent no.1 has acted illegally by selling the property during the pendency of the appeal before the DRT and thereafter challenged the order of DRT before DRAT when respondent no.1 was not the owner of the property, as such, DRAT could not have entertained the appeal filed by respondent no.1 who was not the owner of the property in question at the relevant point of time in the year 2018. It was therefore, submitted that the impugned order passed by DRAT is required to be quashed and set aside.
5.On the other hand, learned advocate Mr. Rushabh Shah for auction purchaser submitted that the impugned order passed by DRAT is just and proper, as the petitioners have failed to challenge the auction sale held on 9.07.2013 and therefore, auction has become Page 14 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 final in favour of respondent no.1 who was the highest bidder.
5.1) It was further submitted that respondent no.1 preferred an application on 23.07.2013 before the Recovery Officer for extension of time as per the terms and condition of the auction as per clause 30 which provides for extension of time limit in payment of 75% of the bid amount. 5.2) It was submitted that the petitioners were informed about such application and though petitioner remained present on 24.07.2013, did not raise any objection for extension of time upto 8.08.2013 by Recovery Officer. It was submitted that the petitioners never challenged clause no. 30 of the sale proclamation which permitted the Recovery Officer to extend the time. It was submitted Page 15 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 that as per Rules 60 and 61 of the Rules, the petitioners were required to file an application objecting the auction sale, failing which, the petitioners could not have preferred review application invoking Rule
87. 5.3) It was submitted that reliance placed by the petitioner on the decision of Apex Court in case of C.M. Paramsivan and another(supra) would not be applicable in facts of the case inasmuch as the respondent bank which was the first charge holder of the property in question was having Recovery Certificate issued by DRT. It was submitted that Recovery Officer has also considered the written submissions filed by the petitioners while passing the order dated 4.09.2013 rejecting the application for review dated 8.08.2013 filed by the petitioners. Page 16 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 5.4) It was pointed out by learned advocate Mr. Shah that the petitioners filed one more Review Application on 21.08.2013 to review order dated 26.06.2013 whereby objections raised by the petitioners were decided by the Recovery Officer. It was therefore, submitted that the Recovery Officer has passed the order dated 4.09.2013 in accordance with law and has rightly issued Sale Certificate and direction to hand over the possession of the property to the auction purchaser.
5.5) It was submitted that there was no stay with regard to the property in question granted by the DRT and therefore, auction purchaser was legally justified in selling the property to third party. It was submitted that the auction purchaser has continued to remain part of the litigation upto DRAT and also before this Court and therefore, it Page 17 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 cannot be said that sale deed was executed to create any multiplicity of proceedings against the petitioners.
5.6) It was submitted that DRT in the order dated 1.11.2017 has committed an error by referring to the decision of the Apex Court in case of C.M. Paramsivan and another(supra) though the same is not applicable in facts of the case. It was submitted that DRT has failed to invoke the Rules 60 and 61 of the Rules which provide for mandatory requirement to challenge the auction sale by the Certificate Debtor i.e. the petitioners and in absence of such challenge, the petitioner could not have invoked Rule 87 of the Rules which provides for rectification for mistakes apparent on record. It was therefore, submitted that DRAT has rightly considered Rules 60 and 61 of the Rules vis-a-vis Rule 87 of the Rules to hold Page 18 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 that DRT has committed an error by quashing and setting aside the auction sale which has already been completed in the year 2013. It was therefore, submitted that no interference is required to be made in the impugned order dated 2.07.2019 passed by DRAT in Misc. Appeal No.5/2018 filed by the auction purchaser while exercising extraordinary jurisdiction under Article 227 of the Constitution of India.
6.Having heard the learned advocates for the respective parties and having considered the materials placed on record, the short question which arises is, whether in view of the Rules 57 and 58 of the Rules prescribed in Schedule-II of the Income Tax Act, 1961 for procedure for recovery of tax as applicable to RDB Act, would be applicable in absence of application to set aside the sale of the immovable property prescribed under Page 19 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 Rules 60 and 61 of the Rules and whether review application as per Rule 87 would be maintainable.
7.It would therefore, be germane to refer to the aforesaid Rules which read as under:
"Deposit by purchaser and resale in default
57. (1) On every sale of immovable property, the person declared to be the purchaser shall pay, immediately after such declaration, a deposit of twenty- five per cent on the amount of his purchase money, to the officer conducting the sale; and, in default of such deposit, the property shall forthwith be resold.
(2) The full amount of purchase money payable shall be paid by the purchaser to the Tax Recovery Officer on or before the fifteenth day from the date of the sale of the property.
Procedure in default of payment.
58. In default of payment within the period mentioned in the preceding rule, the deposit may, if the Tax Recovery Officer thinks fit, after defraying the expenses of the sale, Page 20 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 be forfeited to the Government, and the property shall be resold, and the defaulting purchaser shall forfeit all claims to the property or to any part of the sum for which it may subsequently be sold.
Application to set aside sale of immovable property on deposit.
60. (1) Where immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing-
(a) the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, with interest thereon at the rate of "one and one-fourth per cent for every month or part of a month, calculated from the date of the proclamation of sale to the
(b) for payment to the purchaser, as penalty, a sum equal to five per cent of the purchase money, but not less than one rupee.
(2) Where a person makes an
application under rule 61 for
setting aside the saleof his
immovable property, he shall not, unless he withdraws that application, entitled to make or prosecute an application under this Page 21 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 rule.
Application to set aside sale of immovable property on ground of non- service of notice or irregularity.
61. Where immovable property has been sold in execution of a certificate, [such Income-tax Officer as may be authorised by the "[Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Com- missioner in this behalf], the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Schedule or on the ground of a material irregularity in publishing or conducting the sale:
Provided that-
(a) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non-service or irregularity; and
(b) an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in the of the certificate.Page 22 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022
C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 Review.
87. Any order passed under this Schedule may, after notice to all persons interested, be reviewed by the "[Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner], Tax Recovery Officer or other officer who made the order, or by his successor in office, on account of any mistake apparent from the record."
8.On perusal of the above Rules, Rule 87 provides for review of any order on account of any mistake apparent on record. Whereas Rules 60 and 61 prescribes for application to set aside sale of immovable property on two counts, (1) when the Certificate Debtor whose interest is affected by the sale may apply to the Recovery Officer to set aside the sale on depositing the amount specified in proclamation of sale and payment of penalty of five percent of the purchase money to the purchaser or (2) make an application under Rule 61 on ground of non service of notice or Page 23 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 irregularity.
9.Rules 57 and 58 of the Rules prescribe for stipulation with regard to deposit by the purchaser and procedure in default of payment.
10. Admittedly in the facts of the case the petitioner did not prefer any application to set aside the sale which was conducted on 9.7.2013 either under Rules 60 or 61 of the Rules to point out the irregularity, if any, committed by the Recovery Officer as per Rules 57 or 58 of the Rules. Moreover clause(b) of proviso to Rule 61 provides that the application made by a defaulter shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the certificate.
11. In view of the above Rules, when the Page 24 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 petitioner did not deposit any amount recoverable from them, the petitioners could not have made any application either under Rule 60 or 61 of the Rules. There is no mistake apparent on record and therefore, DRAT as well as the Recovery Officer has rightly held that the application under Rule 87 of the Rules was not maintainable.
12. DRT in the order dated 1.11.2017 has brushed aside the Rules 60 and 61 and relied only on the Rules 57 and 58 without referring to the clause 30 of terms and conditions of the e-auction sale which reads as under :
"30. The balance purchase-price plus poundage fee of 1% of the purchase- price plus Rs. 10/-should be paid within fifteen days from the date of auction-sale or within such period as may be extended, for the reasons to be recorded, by the Recovery Officer and if the payment is not made within the time as above stated, the sale shall sand automatically cancelled and that the deposit made till then will be forfeited."Page 25 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022
C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022
13. It also emerges from the facts on record that the petitioner participated in the hearing when the extension of time was granted by the Recovery Officer which is recorded in the order dated 24.07.2013 by which time was extended by Recovery Officer upto 8.08.2013. The relevant extract of order dated 24.07.2013 reads as under :
"R.O.-I, DRT-II, Ahmedabad I.P. No.88.2010,89/2010,90/2010 and 91/2010 24.07.2013 Present: Ld. Advocate Ms. Nimisha B. Kayastha for and on behalf of M/s Singhi & Co. for C.H. Bank (I.C.I.C.I. Bank) In R.P. No. 89/2010, Ld. Advocate Ms. Jayshri N. Rathod & Ms. Nalini Lodha for C.H. Bank (Bank of Baroda) In R.P.No.90/2010 and R.P. 91/2010 and Sh. Jatin Shah, the CD Party In person. Ld. Proxy Advocate for auction purchaser (Sh. Fateh Sinh Chauhan) & representative of auction purchaser (M/s. Sophisticate Marbles and Granite Industries)......Page 26 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022
C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 Orders
1. Request of the auction purchaser (l.e. M/s. Sophisticate Marbles and Granite Industries) is allowed and sale certificate be corrected/ amended accordingly.
2. The request of the auction purchaser (Sh. Fateh Sinh Chauhan) is allowed and the auction purchaser is directed to deposit balance 75% along with poundage fees on or before 8.08.2013, falling which the earnest money deposited by the auction purchaser shall be forfeited.
Matter is adjourned to 2.08.2013 for further proceeding.
Copy of this order is provide to all the parties concerned."
14. The DRT therefore, was not justified referring to the Supreme Court decision in case of Balram S/o. Bhasaram v/s. IlamSingh & Ors reported in (1996) 4 SCC 704 and decision in case of Pallavi Resources Ltd. v/ s. Protos Engineering company reported in 2010 (5) SCC 196 while coming to the conclusion as under :
Page 27 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022
C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 "18. Therefore, in the facts and circumstances of the present case, once the successful auction purchaser fails to deposit 75% of the purchase price, within a period of 15 days, Ld. Recovery Officer was having no but to cancel auction sale and forfeit earnest money it he deems fit. However he extended time vide order dtd: 24.07.2013 by exercising his inherent power. It does not matter, whether the certificate holder bank had consented for such extension or not.
Hon'ble Apex Court has specifically observed in the case of C.N.Paramsivan V/s. Sunrise Plaza that "there is nothing in the provision of Section 29 of the RDDBFI Act or the scheme of Rules under the Income Tax Act to suggest that a discretion wider than what is explained above was meant to be conferred upon the Recovery Officer under Section 29 of the RDDBFI Act or Rule 57 of the Income Tax Rule". The provision is mandatory in nature and the auction purchaser was bound to deposit 75% of the purchaser price with poundage fee within a period of 15 days: from: 09.07.2013. The extension of time to deposit the balance 75% of the amount on or before 08.08.2013 as granted by the Ld. Recovery Officer is not as per law. He was bound to cancel the bid and forfeit the 25% amount being Earnest Money, if he deems fit, as per Rule."
15. DRAT in the impugned order dated Page 28 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 2.07.2019 considered the issue of power of Recovery Officer to extend time for depositing 75% of amount as per terms and condition of sale which was not the subject matter before the Apex Court in case of C.M. Paramsivan and another(supra). The Apex Court in the said case observed that as per the provisions of section 29 of the RDB Act, Rules found in the Second Schedule to the Income Tax Act, 1961 are incorporated.
16. It is further observed by the Apex Court that as Rules 57 and 58 of the said Rules deal with process of recovery of amount of dues, the said Rules can be applied however, Rules 86 and 87 of the Rules do not have any application to the provisions of RDB Act. However, the DRT without considering the applicability of Rule 87 to the RDB Act as held by the Apex Court, allowed the appeal by setting aside the sale dated 9.7.2013 without Page 29 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022 C/SCA/3159/2020 CAV JUDGMENT DATED: 16/12/2022 there being any application under Rules 60 and 61 of the Rules preferred by the petitioners.
17. In view of the foregoing reasons, the petition stands dismissed. Rule is discharged. No order as to costs.
(N.V.ANJARIA, J) (BHARGAV D. KARIA, J) RAGHUNATH R NAIR Page 30 of 30 Downloaded on : Sat Dec 24 03:44:52 IST 2022