Gujarat High Court
Rammohansingh Badshahsingh Tomar vs Debts Recovery Appellate Tribunal on 6 September, 2018
Author: Harsha Devani
Bench: Harsha Devani, A.S. Supehia
C/SCA/3131/2018 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 3131 of 2018
FOR APPROVAL AND SIGNATURE:
HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR.JUSTICE A.S. SUPEHIA
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1 Whether Reporters of Local Papers may be allowed to Yes
see the judgment ?
2 To be referred to the Reporter or not ? Yes
3 Whether their Lordships wish to see the fair copy of the No
judgment ?
4 Whether this case involves a substantial question of law No
as to the interpretation of the Constitution of India or any
order made thereunder ?
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RAMMOHANSINGH BADSHAHSINGH TOMAR
Versus
DEBTS RECOVERY APPELLATE TRIBUNAL
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Appearance:
MR SP MAJMUDAR(3456) for the PETITIONER(s) No. 1
MR DIGANT M POPAT(5385) for the RESPONDENT(s) No. 5
MR RA MISHRA(481) for the RESPONDENT(s) No. 4
NOTICE SERVED BY DS(5) for the RESPONDENT(s) No. 1
RULE SERVED(64) for the RESPONDENT(s) No. 2,3
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CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI
and
HONOURABLE MR.JUSTICE A.S. SUPEHIA
Date : 06/09/2018
Page 1 of 53
C/SCA/3131/2018 JUDGMENT
ORAL JUDGMENT
(PER : HONOURABLE MS.JUSTICE HARSHA DEVANI)
1. By this petition under Articles 226 and 227 of the Constitution of India, the petitioner has challenged the order dated 28.8.2017 passed by the Debts Recovery Appellate Tribunal in Appeal No.138 of 2009, the order dated 24.12.2008 passed by the Debts Recovery Tribunal-I in Miscellaneous Appeal No.50 of 2008 as well as the order dated 10.7.2008 passed by the third respondent Recovery Officer. The petitioner has also prayed that all consequential actions and proceedings taken pursuant to the aforesaid orders also be quashed and set aside. The petitioner also seeks a direction to the third respondent Recovery Officer to confirm the sale of the property in question in favour of the petitioner.
2. The facts stated briefly are that the fourth respondent Oriental Bank of Commerce had filed Original Application No.309 of 2000 before the Debts Recovery Tribunal, Ahmedabad (hereinafter referred to as "the Tribunal") for recovery of its dues. The Presiding Officer of the Tribunal allowed the application pursuant to which Recovery Proceedings No.53 of 2006 came to be initiated. In furtherance thereto, the third respondent Recovery Officer fixed an auction sale of Tenement No. A/5, Ambalal Park, CHSL, Sabarmati, Ahmedabad (the subject property) on 16.5.2008 wherein the reserve price was fixed at Rs.31,00,000/- The petitioner along with the other bidders participated in the auction and the petitioner's offer of Rs.33,90,000/- being the highest bid, he was declared as the successful bidder/purchaser of the subject property for a sum of Rs.33,90,000/-. In compliance with the auction procedure, the petitioner deposited the entire bid Page 2 of 53 C/SCA/3131/2018 JUDGMENT amount within the stipulated time period and the next date for confirmation was fixed on 23.6.2008. In the meanwhile, the fifth respondent Ashok Jasraj Surana filed an application, inter- alia, stating willingness to purchase the subject property for Rs.39,00,000/-. In view thereof, the matter was adjourned to 30.6.2008 without confirmation of sale in favour of the petitioner. The Recovery Officer directed that a copy of the application be served to the other parties, including the petitioner.
2.1 On 10.7.2008, the petitioner filed his reply and the matter was argued. During the course of hearing, the Recovery Officer directed the petitioner and the fifth respondent to bid inter se; however, the petitioner refused to do so. In the aforesaid circumstances, by the impugned order dated 10.7.2008, the Recovery Officer directed that the amount deposited by the petitioner along with the poundage fees be refunded and confirmed the sale in favour of the fifth respondent. Being aggrieved, the petitioner went in appeal before the Tribunal in Miscellaneous Appeal No.50 of 2008. By the impugned order dated 24.12.2008, the appeal came to be dismissed. The petitioner carried the matter in further appeal before the Debts Recovery Appellate Tribunal (hereinafter referred to as the "Appellate Tribunal") being Appeal No.138 of 2009 under section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the RDDB Act"). By the impugned order dated 28.8.2017, the appeal came to be dismissed, which has given rise to the present petition.
2.2 In the meantime, despite the fact that the proceedings Page 3 of 53 C/SCA/3131/2018 JUDGMENT were pending, the sale has been confirmed in favour of the fifth respondent and a registered sale deed has also been executed.
3. Mr. S.P. Majmudar, learned advocate for the petitioner invited the attention of the court to the provisions of section 29 of the RDDB Act to submit that in view thereof, the provisions of the Second Schedule and the Third Schedule to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962 apply to the amount of debt due under the RDDB Act. It was submitted that in the facts of the present case, the auction proceedings had been conducted in accordance with the provisions contained in Part-III of the Second Schedule to the Income Tax Act wherein the petitioner's bid being the highest was accepted and the petitioner was declared to be the successful bidder.
3.1 The attention of the court was invited to the orders passed by the Recovery Officer from time to time to point out that upon acceptance of the petitioner's bid, the petitioner deposited 25% of the bid amount within the prescribed period. It was submitted that thereafter, the petitioner was directed to deposit the remaining amount on or before the next date and had, accordingly, deposited such amount by 30.5.2008 as is reflected from the orders passed by the Recovery Officer. It was submitted that on 16.6.2008, the matter came up for confirmation of sale, however as the steno was on leave, no order could be passed and the matter was adjourned to 23.6.2008; however, on 23.6.2008, the Recovery Officer recorded that an higher offer of Rs.39,00,000/- along with a demand draft had been received from the fifth respondent Page 4 of 53 C/SCA/3131/2018 JUDGMENT and, accordingly, adjourned the matter to 30.6.2008. On that date, the sale in favour of the highest bidder in case of the immovable property of lot No.1 came to be confirmed; however, insofar as the sale in favour of the petitioner is concerned, the same was not confirmed and the matter was adjourned to 9.7.2008. It was submitted that thereafter the petitioner was called upon to match the bid of the fifth respondent, and upon his refusing to do so, the sale was confirmed in favour of the fifth respondent. It was contended that in the light of the provisions contained in Part-III of the Second Schedule to the Income Tax Act, once the sale is accepted, the same can be set aside only in the contingencies provided under the said rules, namely when an application under rule 60, 61 or 62 has been made. It was submitted that in the facts of the present case, no application under rule 60, 61 or 62 of the Second Schedule has been made by any of the parties, and hence, it was incumbent upon the Recovery Officer to confirm the sale in favour of the petitioner.
3.2 Next, it was submitted that the rules do not envisage acceptance of a bid of a person who has not participated in the auction proceedings and is, therefore, a stranger to the proceedings and that the course of action adopted by the Recovery Officer of accepting the offer of a third party who has not participated in the auction proceedings is alien to the provisions of law. It was further submitted that the Recovery Officer after having accepted the offer of the petitioner and having adjourned the matter insofar as confirmation is concerned, only because the stenographer was not available, has set aside his own order which amounts to reviewing his own order despite the fact that no powers of review are vested Page 5 of 53 C/SCA/3131/2018 JUDGMENT in him. It was argued that, therefore, the order passed by the Recovery Officer was, therefore, without jurisdiction.
3.3 The attention of the court was invited to the impugned orders passed by the Recovery Officer as well as by the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal to point out that all the authorities have relied upon the decision of the Supreme Court in the case of Divya Manufacturing Company (P) Limited, v. Union Bank of India, (2000) 6 SCC 69. Reference was made to the decision of the Supreme Court in Vedica Procon Private Limited v. Balleshwar Greens Private Limited, (2015) 10 SCC 94, to point out that the Supreme Court in the said decisions has considered the case of Divya Manufacturing Company (P) Limited v. Union Bank of India (supra) and has held that in the said case, the court had failed to take note of the last sentence of paragraph 6 of Navalkha & Sons v. Ramanya Das, (1969) 3 SCC 537, but placed reliance on the penultimate sentence of the paragraph. It was pointed out that the court has emphasized upon the fact that it is well settled that once the Company Court recorded its conclusion that the price is adequate, a subsequent higher offer cannot be a ground for refusing confirmation. It was submitted that in the facts of the present case, the Recovery Officer had, at no point of time, found the price offered by the petitioner to be inadequate. There was no complaint either from the judgment debtor or from the creditor bank. Under the circumstances, merely because at a subsequent stage, a higher offer had been made, could not have been a ground for refusing the confirmation. It was urged that the impugned order passed by the Recovery Officer, is, therefore, without any authority of law and that the Page 6 of 53 C/SCA/3131/2018 JUDGMENT Debts Recovery Tribunal as well as the Debts Recovery Appellate Tribunal were not justified in confirming the sale and that the impugned orders deserve to be quashed and set aside and the sale is required to be confirmed in favour of the petitioner.
4. Vehemently opposing the petition, Mr. Digant Popat, learned advocate for the fifth respondent in whose favour the sale has been confirmed, invited the attention of the court to the impugned order passed by the Recovery Officer to submit that he has categorically noted that in the present case there is a clear suggestion that the property in question fetched low price at the public auction held on 16.5.2008 due to some cartel formed by the bidders. It was submitted that in the light of the above finding recorded by the Recovery Officer, to which both the Debts Recovery Tribunal as well as the Debts recovery Appellate Tribunal have concurred, the sale in favour of the petitioner was rightly set aside. It was submitted that the fact regarding a cartel having been formed being a finding of fact, the same does not warrant interference by this court.
4.1 Next, it was submitted that the sale was never confirmed in favour of the petitioner and, therefore, no right was created in his favour. Reference was made to the decision of the Supreme Court in the case of LICA (P) Ltd v. Official Liquidator and another, (2006) 6 SCC 79, and more particularly to paragraph 5 thereof wherein the court has recorded that 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 action so that the intending bidders would be free to participate and offer higher value. If that path is cut Page 7 of 53 C/SCA/3131/2018 JUDGMENT 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 circumstance of each case. It was submitted that in the facts of the present case, there was openness and that it is not as if the higher bid was accepted right away. It was submitted that that petitioner was duly put to notice and was called upon to match the price offered by the fifth respondent and that upon his refusing to do so, the sale was confirmed in favour of the fifth respondent. It was submitted that, therefore, there is no violation of the principles of natural justice. It was argued that there are concurrent findings of fact as well as law rendered by the Recovery Officer, the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal, and hence, the High Court would not interfere with such concurrent findings and more particularly, the finding regarding formation of a cartel.
4.2 It was further submitted that upon the confirmation of sale in favour of the fifth respondent, a sale certificate has been issued in the year 2008 and since then, he is in possession and is residing in the subject property and, therefore a right has been created in his favour by an involuntary sale. It was submitted that, therefore, the principle of lis pendens would not apply to the facts of the present case. It was submitted that the fifth respondent is a bona fide purchaser and the Recovery Officer having made the sale in his favour and no stay having been granted over a period of time by any of the authorities below, this court may not interfere at this stage.
Page 8 of 53C/SCA/3131/2018 JUDGMENT 4.3 Inviting attention to the reliefs prayed for in the petition, it was submitted that the petitioner has not prayed for setting aside the registered sale deed executed in favour of the fifth respondent and as such the registered sale deed cannot be set aside as a consequential relief and that such relief has to be specifically prayed for. It was urged that the same having been confirmed in favour of the fifth respondent and a registered sale deed having been executed pursuant thereto, a mere irregularity or lapse in following the procedure would not vitiate the same.
4.4 Another contention raised by Mr. Popat was that the petitioner ought to have made an application under rule 60 of the Second Schedule for setting aside the sale and that no such application having been made by him, the sale has rightly been confirmed in favour of the fifth respondent. It was submitted that rule 60 includes the defaulter or any person whose interest are affected by the sale and that the expression "any person" includes the petitioner. Reference was made to a Division Bench decision of this court in the case of Hasubhai Jewellers v. Union Bank of India, 2010 GLHEL-HC 223461, wherein the Division Bench held thus:
"4. In the present case, we have noticed that the original sale proclamation was made in between September 2005 and February 2006 on the basis of which the reserve price of Rs.9.02 lakhs was fixed, but the same was not challenged by the petitioner. After the subsequent sale proclamation when the auction took place on 17.10.2007, the said sale was not under challenge and only after the sale was complete, the petition under Section 30 of the Act was filed without challenging the sale either under Rule 60 or 61 of the Second Schedule of the Income Tax Act. The statutory amount was also not deposited which the petitioner was Page 9 of 53 C/SCA/3131/2018 JUDGMENT liable to deposit under Rule 60 or Rule 61 being defaulter. In this background, if the Tribunal or the Appellate Tribunal refused to interfere with the sale conducted by the Recovery Officer, no interference is called for."
4.5 Reference was also made to an unreported decision dated 18.2.2015 of the Supreme Court in Manu Tiling Co. P. Ltd. v. Patel Phoschem P. Ltd. rendered in Special Leave to Appeal (C) No.28790/2012, wherein the court held thus:-
"There is, in our opinion, merit in the submission made by Mr. Ravindra Kumar, learned counsel for respondent no.2-Official Liquidator. The question whether the High Court was correct in confirming the sale in favour of respondent no.1, is on account of the subsequent developments mentioned above, rendered totally academic. That is particularly so because about Rs.2.7 crores offered by respondent no.1 stood revised before us at the instances of the petitioner-company to Rs.4,00,00,000/-. That being so, the question of confirming the bid in favour of the petitioner at the original price of Rs.2.7 crores does not obviously arise. It is also evident that the property in question is no fetching something like Rs.6,00,00,000/- (Rupees Six Crores) offered by M/s. Manibhadra Sales Corporation. That process is obviously to be taken up to its logical conclusion before the High Court for which purpose we need to relegate the parties to the High Court for such orders as the High Court may deem fit and proper in the facts and circumstances of the case."
4.6 It was submitted that thus it is a general practice to accept the bid of a third party if the same is higher than the bid offered by the persons who have taken part in the auction. It was submitted that the rules and procedure are meant for the purpose of fetching higher amount for the property which is put to action so as to ensure the benefit of the creditors, workmen etc. and that a much higher amount having been Page 10 of 53 C/SCA/3131/2018 JUDGMENT fetched on account of the sale in favour of the fifth respondent, this court may not interfere.
4.7 Reference was made to the Terms & Conditions of Sale General in the Tender Form issued in connection with the public auction in question. It was submitted that under condition No.19, it has been stipulated that the Tribunal may set aside the sale in favour of the purchaser(s) even after the sale is confirmed and/or purchase consideration is paid, on such terms and conditions as the Tribunal may deem fit and proper for the interest and benefit of the creditors, contributors and all concerned and/or public interest. It was submitted that this being a term of the Terms and Conditions of Sale, the petitioner is bound by it. It was submitted that such practice of accepting higher offer at a subsequent stage is normally being adopted by the Recovery Officer, and hence, in view of the provisions of condition No.19, the Recovery Officer was wholly justified in accepting the higher offer made by the fifth respondent. It was urged that, therefore, the sale which has been confirmed in favour of the fifth respondent does not warrant any interference and that the petition being devoid of merits, deserves to be dismissed.
4.8 Alternatively, it was submitted that if for any reason the court is not inclined to sustain the sale made in favour of the fifth respondent merely because he had not participated in the auction proceedings, he cannot be totally ousted. It was submitted that in the light of the fact that the fifth respondent has continued to be in possession of the premises in question and a sale certificate has been issued in his favour and a registered sale deed has been executed, the court may pass Page 11 of 53 C/SCA/3131/2018 JUDGMENT an order for fresh auction so that the fifth respondent can also participate in the same. It was also submitted that if the court is not inclined to allow the petition, the respondents may be directed to refund the amount paid by the fifth respondent together with interest.
5. Mr. R. A. Mishra, learned advocate appearing on behalf of the fourth respondent Oriental Bank of Commerce submitted that the Recovery Officer has found the amount offered by the petitioner to be inadequate, and hence, he has not confirmed the sale in his favour. It was submitted that it is settled legal position, as held by the decisions of the Supreme Court on which reliance has been placed by the learned counsel for the respective parties, that if the Recovery Officer finds the highest bid to be inadequate, he can refuse confirmation of the sale. It was submitted that if at all the court comes to the conclusion that the sale has wrongly been confirmed in favour of the fifth respondent, a fresh auction is required to be ordered because the auction proceedings have not fetched the correct price. It was submitted that the highest offer being inadequate could not have been considered and hence, either the sale in favour of the fifth respondent deserves to be upheld or in the alternative, it may be ordered that a fresh auction be held.
6. In rejoinder, Mr. S. P. Majmudar, learned advocate for the petitioner submitted that the sale in favour of the petitioner was required to be confirmed within thirty days of the public auction and it was not on account of any default on his part that the sale was not confirmed. It was submitted that the petitioner had right at the inception raised an objection before Page 12 of 53 C/SCA/3131/2018 JUDGMENT the Recovery Officer that he had no power or authority to entertain the bid of the fifth respondent It was submitted that insofar as the finding regarding formation of a cartel is concerned, there is no factual foundation for the same and that the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal have not given any finding on this issue, and hence, it cannot be said that there are concurrent findings of three authorities regarding formation of a cartel. It was further submitted that the finding of a cartel by the Recovery Officer is not based on any material on record and is, therefore, perverse. It was submitted that insofar as the objection to formation of a cartel is concerned, the same should be raised by the person whose property is sold and that under rules 60 and 61 only the owner of the property could have objected to the sale. It was submitted that the Tax Recovery Officer on his own has no jurisdiction to give such a finding, more so, after he has accepted the bid of the petitioner.
6.1 It was submitted that the registered sale deed has been executed during the pendency of the proceedings and hence, when the order of the Recovery Officer is set aside as a necessary corollary thereof, all consequential exhibits would be required to be set aside. In support of such submission, the learned advocate placed reliance upon the decision of the Supreme Court in the case of Kalabharti Advertising v. Hemant Vimalnath Narichania, (2010) 9 SCC 437, for the proposition that once the basis of a proceeding is gone, all consequential acts, action, orders would fall to the ground automatically and this principle of consequential order which is applicable to judicial and quasi-judicial proceedings is equally Page 13 of 53 C/SCA/3131/2018 JUDGMENT applicable to administrative orders.
6.2 Reference was also made to the decision of the Supreme Court in the case of Kanwar Singh Saini v. High Court of Delhi, (2012) 4 SCC 307, wherein the court held that as the application under Order XXXIX rule 2A CPC itself was not maintainable all subsequent proceedings remained inconsequential. Legal maxim "sublato fundamento cadit opus" which means foundation being removed superstructure falls is attracted. It was submitted that in the facts of the present case, the application made by the fifth respondent making a higher bid was itself not maintainable and hence, all subsequent proceedings remain inconsequential. It was, accordingly urged that the petitioner cannot be prejudiced by an act of the court.
6.3 Dealing with the contention that in view of the condition No.19 of the tender conditions, the Recovery Officer was vested with the power to set aside the sale, it was submitted that under condition No.19 such power is vested in the Tribunal and not in the Recovery Officer and hence, reliance placed upon such condition is without any basis. Reference was made to condition No.11 of the Terms and Conditions of Sale which provides that the Recovery Officer may decline to accept the bid if he is of the opinion that the same is inadequate, to submit that the Recovery Officer has never stated that the bid is not adequate. It was submitted that as the fifth respondent has not participated in the auction proceedings he cannot seek to place any reliance upon the terms and conditions of the tender form.
Page 14 of 53C/SCA/3131/2018 JUDGMENT 6.4 Insofar as the contention advanced on behalf of the fifth respondent that the petitioner should have moved an application under rule 60 of the Second Schedule, it was submitted that the said rule refers to a sale which is not confirmed by any person affected by the sale. It does not contemplate a bidder challenging a sale which has been confirmed in favour of the third party. It was submitted that without any application under rule 60 of the Second Schedule, the sale in favour of the petitioner could not have been set aside, more so, when the defaulter and the bank were satisfied with the price. It was submitted that in the absence of any application under rule 60 of the Second Schedule, the sale made in favour of the petitioner should have been confirmed which is the mandate of the rules. Reference was made to rule 63 of the Second Schedule to submit that the same mandates that a sale has to be confirmed in favour of the auction purchaser where no application has been made for setting aside the sale under rule 60, 61 or 62.
6.5 Insofar as the decisions on which reliance has been placed by the learned counsel for the fifth respondent are concerned, it was submitted that the same relate to auction proceedings conducted by the Company Court and that the jurisdiction of the Company Court is much wider and cannot be compared with that of the Recovery Officer who has to act strictly in accordance with the rules.
6.6 As regards the submission advanced on behalf of the fifth respondent that it is a normal practice to accept higher bids even at a subsequent stage, it was submitted that any practice contrary to the rules should not be permitted. It was submitted Page 15 of 53 C/SCA/3131/2018 JUDGMENT that if the court finds that the order passed by the Recovery Officer is illegal, the fifth respondent does not have a right merely because the sale has been confirmed in his favour. It was submitted that at the time when the sale came to be confirmed in favour of the fifth respondent, the petitioner had already challenged the same and that the fifth respondent took a calculated risk and he has to face the consequence thereof and the mere fact that no interim relief was operating in favour of the petitioner would not create any equity in favour of the fifth respondent.
7. Before adverting to the merits of the rival submissions, it may be necessary to refer to the facts as emerging from the record.
8. For recovery of the dues of the fourth respondent bank, a proclamation came to be issued for holding a public auction on 16.5.2008. The reserved price of the property was fixed at Rs.31,00,000/-. Seven bidders had participated in the public auction and the highest offer of Rs.33,90,000/- was received from the petitioner which was accepted and the petitioner was declared as a successful auction purchaser. On 16.5.2008, the Recovery Officer recorded that for lot No.2, five bidders participated in the public auction and the highest offer of Rs.33,90,000/- is received from Shri Rammohan B. Tomar (the petitioner herein) against the reserve price of Rs.31,00,000/-. DD for an amount of Rs.7,75,000/- towards EMD is also deposited by him. Accordingly, he has ordered that Shri Rammohan B. Tomar being the highest bidder is declared as a successful auction purchaser for lot No.2. Thereafter, on 19.5.2008, the Recovery Officer recorded that the successful Page 16 of 53 C/SCA/3131/2018 JUDGMENT auction purchaser for lot No.2 submits a DD for an amount of Rs.72,500/- Accordingly, the auction purchaser has deposited Rs.8,47,500/-, that is, 25% of the bid amount within the prescribed time. It was further observed that the successful auction purchasers are further directed to deposit the remaining amount on or before the next date. On 30.5.2008, the Recovery Officer recorded that successful auction purchaser for lot No.2 submits DDs amounting to Rs.25,42,500/- being the remaining amount of his bid. Successful auction purchasers are directed to deposit the requisite poundage fees. The matter was thereafter adjourned to 16.6.2008. On 16.6.2008, the Recovery Officer recorded that the successful auction purchasers for both the lots submitted pay orders towards the poundage fees and requested to confirm the sale, but steno is on leave. Hence, no order can be passed. Matter is adjourned to 23.6.2008. On 23.6.2008, the Recovery Officer has recorded that the matter is fixed for sale confirmation but one higher offer of Rs.39,00,000/- along with DDs is received from Shri Ashokkumar Surana which is at Exhibit T/41; and posted the matters for orders on 30.6.2008. On 30.6.2008, the Recovery Officer recorded thus:
"Proxy Advocate & Nominated Officer of the Certificate Holder Bank are present.
The matter was kept for orders on 23.06.2008 with regard to the confirmation of the sale of the immovable properties at Lot no.1 & 2 auctioned on 16.05.2008. But one Shri Ashokkumar Surana appeared and submitted an application at Exh.T/41 offering thereby an amount of Rs.39.0 Lacs against the immovable property at Lot no.2. DDs amounting to Rs.39.0 lacs is also submitted by the third party offerer. Therefore, before any decision is Page 17 of 53 C/SCA/3131/2018 JUDGMENT taken in the matter, I think it just and proper to direct the third party offerer to serve his higher offer along with the copy of this order on the Certificate Holder Bank and the successful auction purchaser of Lot no.2.
The successful auction purchaser of Lot no.2 and the Certificate Holder Bank are directed to file their replies on the higher offer received from Shri Ashokkumar Surana.
So far as the immovable property at Lot no.1 is concerned, the mandatory period of 30 days from the date of auction is over and no application under Rule 60, 61 & 62 of Second Schedule of Income Tax Act is pending. Further the auction purchaser has already deposited the entire bid amount along with poundage fees. Hence, the sale of the immovable property at Lot no.1 auctioned on 16.05.2008 is hereby confirmed and made absolute in favour of Miss Bhartiben P. Shah.
Issue Sale Certificate accordingly in favour of the successful auction purchaser.
The Receiver is hereby directed to hand over the physical possession of the property qua at Lot no.1 along with the documents/papers, if any, to the successful purchaser. CH Bank is directed to file compliance affidavit on the next date. Thereafter CH Bank will be allowed to appropriate the sale proceed lying with this Tribunal. Matter is adjourned to 09.07.2008."
9. On 9.7.2008, the Recovery Officer recorded that the successful auction purchaser and third party offerer are present, that the advocate for the CH Bank as well as the successful auction purchaser have filed reply to the application and kept the matter for orders on 10.7.2008. Thereafter, on 10.7.2008 by the impugned order, the Tax Recovery Officer has recorded the submissions advanced by the respective parties as well as the decision of the Supreme Court in the case of Divya Manufacturing Company (P) Limited, v. Union Page 18 of 53 C/SCA/3131/2018 JUDGMENT Bank of India (supra) and has observed that in view of the averments, it is clear that the Apex Court is of the view that efforts should be made to fetch more price and in order to fulfill that objective, there is nothing wrong to keep the auction open. In the present case, there is clear suggestion that the property in question fetched low price at the public auction held on 16.5.2008 due to some cartel formed by the bidders. Therefore, in order to discourage such kind of tactics, he find it just and proper to accept the highest offer of Rs.39,00,000/- from Shri Ashok Jasraj Surana which is substantially higher than the sale consideration of Rs.33,90,000/-. The Recovery Officer has, accordingly, set aside the order dated 16.5.2008 made by him in respect of the property in question and has ordered that the amount of Rs.33,90,000/- along with poundage fees be refunded to the petitioner Shri Rammohan B. Tomar. He has further ordered that the sale of the immovable property in question is confirmed and made absolute in favour of the fifth respondent and directed to issue the sale certificate accordingly and to hand over the physical possession of the property qua along with the documents/papers, if any, to the successful purchaser.
10. Being aggrieved, the petitioner carried the matter in appeal before the Debts Recovery Tribunal. By the impugned order dated 24.12.2008, the Tribunal has observed that it is true that rules 60, 61 and 62 of the Tax Rules provide for setting aside the sale. Rule 63 of the Tax Rules provides for confirmation of sale. Specific written order of the Recovery Officer is required for the purpose of confirmation of sale and that the sale would not be confirmed automatically upon expiry of thirty days. The Tribunal recorded that the sale was held on Page 19 of 53 C/SCA/3131/2018 JUDGMENT 16.5.2008. The petitioner deposited the entire amount of Rs.33,90,000/- together with poundage fees and observed that the sale was not confirmed and made absolute in favour of the petitioner, as required under rule 63 of the Tax Rules. It further observed that it is true that auctions held by the court have legal sanctity and should not be set aside at the drop of the hat and that the reason is that the auctions are conducted after giving wide publicity so that bidders could participate in them. Further, transparency is also maintained because the bidders raise offer in presence of one another. Thereafter, the Tribunal has recorded that it is not the case of the petitioner that there was a fraud or irregularity on the part of the Recovery Officer or that the Recovery Officer was biased towards the fifth respondent. According to the Debts Recovery Tribunal, the fifth respondent having offered Rs.39,00,000/- for the disputed property which was higher than the offer of the petitioner and more particularly, considering the fact that the petitioner and the fifth respondent were asked to take part in the inter se bidding but the petitioner had refused, the Recovery Officer can be said to have taken all required precautions. The Tribunal was of the view that the regulation of practice gives much leeway to the Recovery officer as far as the sale by public auction is concerned. In the present case, the price offered and accepted by the fifth respondent was higher than the price paid and deposited by the petitioner. Sale was not confirmed in favour of the petitioner as required by law and the Recovery Officer was not guilty of any bias or favour in favour of the fifth respondent. The Tribunal recorded that it is true that such incidents would raise (sic. arise) in future because of the regulation of practice governing the Recovery Officer. Unless and until, the regulation of practices Page 20 of 53 C/SCA/3131/2018 JUDGMENT is amended, it would be difficult to check and curtail such practices and, accordingly, held that the Recovery officer had acted within the legal parameters in setting aside the sale in favour of the petitioner and dismissed the appeal.
11. The Debts Recovery Appellate Tribunal, in the impugned order dated 28.8.2017, has observed that from the record it was clear that the petitioner was given an opportunity to participate in the inter se bidding with the fifth respondent and if he was really interested he ought to have participated in the inter se bidding to offer a higher price than the price quoted by the fifth respondent but instead of doing so, he insisted upon the Recovery Officer to confirm sale in his favour for Rs.33,90,000/-. The Appellate Tribunal recorded that it is well settled that auction purchaser does not get any rights over the property till the sale is confirmed in his favour and that before the confirmation of sale, the fifth respondent offered higher price and the same was considered. The Appellate Tribunal, accordingly, did not find anything wrong in the order passed by the Tribunal and dismissed the appeal.
12. In the backdrop of the aforesaid facts and contentions, the question that arises for consideration is, whether the third respondent Recovery Officer had acted within the legal parameters in setting aside the sale in favour of the petitioner and confirming the same in favour of the fifth respondent.
13. It is an undisputed position that the public auction in question took place pursuant to a proclamation issued by the third respondent for holding a public auction on 16.5.2008 at 2.30 p.m. The Tender Form contains the Terms and Conditions of Sale General as well as Terms and Conditions of sale by Page 21 of 53 C/SCA/3131/2018 JUDGMENT Public Auction of immovable property.
14. Section 29 of the RDDB Act provides for application of certain provisions of the Income Tax Act and provides that the provisions of the Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under the Act instead of to the Income Tax Act. The proviso provides that any reference under the said provisions and the rules to the "assessee" shall be construed as a reference to the defendant under the Act.
15. Thus, section 29 of the RDDB Act is an enabling provision under which the Second and Third Schedule to the Income Tax Act, 1961 and the Income Tax Rules, 1962 can be applied, as far as possible, with necessary modifications as if the provisions and the rules are referable to the debt due instead of income tax due. Therefore, fictionally by virtue of section 29 of the RDDB Act, the mode and method by which recovery of income tax can be resorted to under the Second and Third Schedules to the Income Tax Act and the Income Tax Rules, 1962 have to be followed. (See Mathew Varghese v. M. Amritha Kumar, (2014) 5 SCC 610).
16. The Second Schedule to the Income Tax Act provides for Procedure for Recovery of Tax. Part-I thereof contains the General provisions, whereas Part-III thereof provides for attachment and sale of immovable property.
16.1 Rule 52 thereof bear the heading "Sale and
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proclamation of sale". Sub-rule (1) thereof provides that the Tax Recovery Officer may direct that any immovable property which has been attached or such portion thereof as may seem necessary to specify the certificate, shall be sold. Sub-rule (2) thereof provides that where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a proclamation of the intended sale to be made in the language of the district. Rule 22 of the Income-tax (Certificate Proceedings) Rules, 1962 makes provision for the forms which are to be used for the purpose mentioned against each. Item
(xii) thereunder reads thus:
"(xii) Form No. I.T.P.C. 13, for issuing a proclamation of sale of property under rule 37 or rule 52(1) of the principal rules;"
Form No. I.T.P.C. 13 thus provides for the format of Proclamation of sale. It is provided therein that the sale shall be subject to the conditions prescribed in the Second Schedule to the Income-tax Act, 1961, and the rules made thereunder and to the further conditions enumerated therein. Conditions
(iv) and (vii) which are relevant for the present purpose read thus:
"(iv) The highest bidder shall be declared to be the purchaser of any lot provided always that he is legally qualified to bid and provided further that @ the amount bid by him is not less than the reserve price @ it shall be in the discretion of the undersigned to decline acceptance of the highest bid when the price offered appears so clearly inadequate as to make it inadvisable to do so.
(vii) In case of immoveable 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 Page 23 of 53 C/SCA/3131/2018 JUDGMENT forthwith be put up again and resold. The full amount of the purchase money shall be paid by the purchaser to the undersigned on or before the 15th day from the date of sale of property, exclusive of such day, or if the 15th day be a Sunday or other holiday, then on the first office day after the 15th day. In default of payment within the period mentioned above, the property shall be resold, after the issue of fresh proclamation of sale. The deposit, after defraying the expenses of the sale, may, if the undersigned thinks fit, be forfeited to the Government and the defaulting purchaser shall forfeit all claims to the property or any part of the sum for which it may subsequently be sold."
16.2 Rule 53 provides for the "Contents of proclamation"
and lays down that a proclamation of sale of immovable property shall be drawn up after notice to the defaulter and shall state the time and place of sale, and shall specify, as fairly and accurately as possible, the details enumerated therein. Rule 54 provides for the "Mode of making proclamation".
16.3 Thus, in terms of the above provisions, a proclamation of sale came to be issued by third respondent Recovery Officer for holding a public auction on 16.5.2008 at 2.30 p.m., stipulating the Terms and Conditions of Sale General as well as the Terms and Conditions of Sale by Public Auction of Immovable Property.
16.4 Rule 56 of the rules bears the heading, "Sale to be by auction" and provides that sale shall be by public auction to the highest bidder and shall be subject to the confirmation by the Tax Recovery Officer, provided that no sale under the rule shall be made if the amount bid by the highest bidder is less than the reserve price, if any, specified under clause (cc) of rule 53. Thus, rule 53 contemplates a proclamation of sale of Page 24 of 53 C/SCA/3131/2018 JUDGMENT immovable property stating inter alia the time and place of sale. Rule 56 provides that the sale shall be by public auction to the highest bidder and shall be subject to confirmation by the Tax Recovery Officer. The proviso thereto says that the sale shall not be made if the bid of the highest bidder is less than the reserve price. In the facts of the present case, the place and time of sale is provided under the proclamation of sale whereby the public auction was to be held on 16.5.2008 at 2.30 p.m. In terms of the rules, the sale was to be made to the highest bidder in the public auction.
16.5 Rule 57 of the rules bears the heading "Deposit by purchaser and resale in default"and provides that on every sale of immovable property, the person declared to be the purchaser shall pay, immediately after such declaration, a deposit of twenty-five percent 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. Sub-rule (2) thereof provides that 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. The conditions incorporated in the rule are also stipulated as Terms and Conditions of Sale by Public Auction of the Immovable Property in the Tender Form.
16.6 Rule 58 provides for "Procedure in default of payment" and provides that 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, be forfeited to the Government, and the property shall be resold, and the defaulting purchaser shall forfeit all Page 25 of 53 C/SCA/3131/2018 JUDGMENT claims to the property or to any part of the sum for which it may subsequently be sold.
16.7 Rule 59 provides for "Authority to bid". Sub-rule (2) thereof provides that all persons bidding at the sale shall be required to declare, if they are bidding on their own behalf or on behalf of their principals. In the latter case, they shall be required to deposit their authority, and in default their bids shall be rejected.
16.8 On a conspectus of the above rules, it clearly emerges that the said rules envisage participation of bidders in the public auction, namely, those who have submitted the Tender Form pursuant to the proclamation issued by the Recovery Officer.
16.9 Rule 60 of the Second Schedule to the Income Tax Act provides for "Application to set aside sale of immovable property on deposit" and reads as under:-
"60. Application to set aside sale of immovable property on deposit. -
(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 the month calculated from the date of the proclamation of sale to the date when the deposit is made; and
(b) for payment to the purchaser, as penalty, a sum equal to five per cent of the purchase money, but Page 26 of 53 C/SCA/3131/2018 JUDGMENT not less than one rupee.
(2) Where a person makes an application under rule 61 for setting aside, the sale of his immovable property, he shall not, unless he withdraws that application, be entitled to make or prosecute an application under this rule."
16.10 Thus, sub-rule (1) of rule 60 provides for setting aside of the sale, subject to the defaulter or any person whose interests are affected by the sale depositing the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered with interest thereon as specified therein. The rule also provides for payment to the purchaser as penalty, a sum equal to five per cent of the purchase money, but not less than one rupee. Thus, the defaulter or any person whose interest are affected by the sale can make this application at any time within thirty days from the date of sale, namely, prior to the confirmation of sale to the Tax Recovery Officer, subject to complying with the conditions stipulated therein.
16.11 Rule 61 provides for "Application to set aside sale of immovable property on ground of non-service of notice or irregularity". Such application is also contemplated at the instance of the defaulter or any person whose interests are affected by the sale. Such application is also required to be made within thirty days from the date of the sale. The proviso thereto requires an application made by a defaulter to be disallowed unless he deposits the amount recoverable from him in execution of the certificate.
16.12 Rule 62 contemplates setting aside of the sale at the instance of the purchaser on the ground that the defaulter Page 27 of 53 C/SCA/3131/2018 JUDGMENT had no saleable interest in the property sold.
16.13 Rule 63 which is significant for the present case provides for "Confirmation of sale". Sub-rule (1) thereof provides that where no application is made for setting aside the sale under the foregoing rules or where such an application is made and disallowed by the Tax Recovery Officer, the Tax Recovery Officer shall (if the full amount of the purchase- money has been paid) make an order confirming the sale, and, thereupon, the sale shall become absolute. Sub-rule (2) thereof provides that where an application is made and allowed and where, in the case of an application made to set aside the sale on deposit of the amount and penalty and charges, the deposit is made within thirty days from the date of the sale, the Tax Recovery Officer shall make an order setting aside the sale. The proviso provides that no order shall be made unless notice of the application has been given to the persons affected thereby.
16.14 Thus, rule 63 provides for the eventualities in which a sale shall become absolute, namely, where no application has been made for setting aside the sale under rule 60, 61 or 62 and if the full amount of purchase money has been paid, in which case, the order confirming the sale is required to be passed whereupon the sale would become absolute. Sub-rule (2) provides for the contingencies in which the order can be made for setting the sale and provides that where any application, namely, application under rule 60, 61 or 62 is made and allowed, and the applicant has deposited the amount and penalty and charges, the Tax Recovery Officer can set aside the same. The rules do not contemplate any other Page 28 of 53 C/SCA/3131/2018 JUDGMENT contingency under which the sale can be set aside.
16.15 Rule 65 provides for "Sale certificate" and lays down that where a sale of immovable property has become absolute, the Tax Recovery Officer shall grant a certificate specifying the property sold, and the name of the person who at the time of sale is declared to be the purchaser. Such certificate shall state the date on which the sale became absolute. Thus, in the sale certificate, the Tax Recovery Officer has to specify the property sold and the name of the person who at the time of the sale is declared to be the purchaser. Thus, the rule contemplates issuance of a certificate in favour of the person who at the time of the sale is declared to be the purchaser. Form No. I.T.C.P. 20 prescribed under the Income- tax (Certificate Proceedings) Rules, 1962 provides the format of certificate of sale of immovable property whereby the Tax Recovery Officer certifies that the person named therein has been declared the purchaser at a sale by public auction on the date mentioned therein as well as other details.
17. In the facts of the present case, the time of the sale was 2.30 p.m. on 16.5.2008, that is, the date on which the public auction was held and, therefore, a sale certificate could have been issued in favour of a person who had been declared to be the purchaser at the time of the sale, namely, on the date when the public auction was held.
18. The facts of the present case have to be examined in the light of the above statutory provisions.
19. It is an admitted position that the sale proclamation was Page 29 of 53 C/SCA/3131/2018 JUDGMENT issued in accordance with rules 52 and 53 of the rules. The petitioner had complied with all the requirements as envisaged under the rules and had participated in the auction proceedings. He had also deposited Earnest Money Deposit amounting to Rs.7,75,000/- prior to the auction, which is evident from the copy of the Tender Form which has been placed on record by the learned advocate for the fifth respondent. In the sale proceedings, there were five bids for Lot No.2 with which we are concerned in the present case. The petitioner was declared to be the highest bidder and the successful purchaser and his offer was accepted. Upon acceptance of his offer, further orders came to be passed from time to time by the Recovery Officer requiring the petitioner to deposit the balance amount as well as the requisite poundage fees. The petitioner complied with all such requirements within the prescribed time limit. Since the auction was held on 16.5.2008, it could not be confirmed for a period of 30 days and could be confirmed only thereafter, that is, on 16.6.2008. When the matter was listed on 16.6.2008, the only reason why the sale was not confirmed was because the stenographer was on leave. Thereafter, the matter was adjourned to 23.6.2008 and in the meanwhile, the fifth respondent made an undated application, which does not even mention the authority to whom the same is made, submitting that he has come to know that the property in question has been sold to the petitioner for a sum of Rs.33,90,000/- on 16.5.2008 and that he is offering a sum of Rs.39,00,000/- for the said property and has annexed a pay order for the entire sum along with his application. He has, accordingly, requested that the property be confirmed in his name.
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20. A perusal of the above application made by the fifth respondent reveals that the same is not addressed to any authority. He merely says that he is ready and willing to pay Rs.39,00,000/- for the property in question and that the sale be confirmed in his favour. In the application, there is not even a whisper as to why he has not participated in the auction proceedings. On the basis of such application, the Recovery Officer has thought it fit not to confirm the sale in favour of the petitioner and has thereafter, issued notice to the petitioner and the CH Bank and after considering their replies, called upon the petitioner to match the price offered by the fifth respondent and upon his refusing to do so, has confirmed the sale in favour of the fifth respondent. While doing so, the Recovery Officer has placed reliance upon the decision of the Supreme Court in the case of Divya Manufacturing Company (P) Limited, v. Union Bank of India (supra).
21. At this juncture, it may be germane to refer to the decision of the Supreme Court in the case of Vedica Procon (P) Ltd.v. Balleshwar Greens (P) Ltd., (supra), wherein the court has referred to its earlier decision in Divya Manufacturing Company (P) Limited, v. Union Bank of India (supra) and held thus:-
"37. Divya Manufacturing Company (P) Ltd. v. Union Bank of India & Others, (2000) 6 SCC 69 was a case where the assets of the company in liquidation were sold in favour of the appellant before this court and the sale was confirmed by the Company Court. Within a week thereafter, an application came to be filed by one of the participants in the auction proceedings praying that the order of confirmation be recalled and the applicant was willing to offer an amount higher than what was offered by the appellant before this Court. Subsequently, more Page 31 of 53 C/SCA/3131/2018 JUDGMENT number of applications came to be filed before the Court offering higher amounts. Therefore, the Company Court recalled the order confirming the sale. Hence, the appeal before this Court.
38. This Court, while reiterating the principles laid down in Navalkha case (supra), declined to interfere with the order of the court and held as follows:
"16. ....As stated above, neither the possession of the property nor the sale deed was executed in favour of the appellant. The offer of Rs.1.30 crore is totally inadequate in comparison to the offer of Rs.2 crores and in case where such higher price is offered, it would be in the interest of the Company and its creditors to set aside the sale. This may cause some inconvenience or loss to the highest bidder but that cannot be helped in view of the fact that such sales are conducted in Court precincts and not by a business house well versed with the market forces and price. Confirmation of the sale by a Court at a grossly inadequate price, whether or not it is a consequence of any irregularity or fraud in the conduct of sale, could be set aside on the ground that it was not just and proper exercise of judicial discretion. In such cases, a meaningful intervention by the Court may prevent, to some extent, underbidding at the time of auction through Court. In the present case, the Court has reviewed its exercise of judicial discretion within a shortest time."
39. We cannot help pointing out that their Lordships came to such a conclusion placing reliance on para 6 of Navalkha case (supra). Their Lordships failed to take note of the last sentence of the paragraph but placed reliance on the penultimate sentence of the paragraph. No doubt, the penultimate statement of the paragraph recognises the discretion of the Company Court either for accepting or refusing the highest bid at the auction, it also emphasizes the obligation of the Court to see that the price fixed at the auction is adequate price even though there is no irregularity or fraud in the conduct of the sale. However, the penultimate sentence restricts the scope of such discretion in the following words:
Page 32 of 53C/SCA/3131/2018 JUDGMENT ""6... It is well to bear in mind the other principle which is equally well- settled namely that once the court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already received. (See the decision of the Madras High Court in Roshan & Co's case."
40. In other words, in Navalkha case, this Court only recognized the existence of the discretion in the Company Court either to accept or reject the highest bid before an order of confirmation of the sale is made. This Court also emphasized that it is equally a well-settled principle that once the Company Court recorded its conclusion that the price is adequate, subsequent higher offer cannot be a ground for refusing confirmation."
22. The court, in the above decision, after a survey of the decisions mentioned therein, has held that the same do not indicate that the Supreme Court has ever laid down a principle that whenever a higher offer is received in respect of sale of the property of a company in liquidation, the court would be justified in reopening the concluded proceedings. The court observed that the earliest judgment relied upon by the respondent therein in Navalkha & Sons v. Ramanya Das (supra) laid down the legal position very clearly that a subsequent higher offer is no valid ground for refusing confirmation of a sale or offer already made. The court observed that unfortunately, in Divya Manufacturing Company (P) Ltd. v. Union Bank of India & Others (supra) the court departed from the principle laid down in Navalkha & Sons v. Ramanya Das (supra) and explained what exactly the departure is and how such a departure was not justified. The court further observed thus: -
Page 33 of 53C/SCA/3131/2018 JUDGMENT "53. The first respondent submitted that the order dated 17.12.2013 only accepted the highest bid but it did not confirm the sale and, therefore, the Court is at liberty to decline confirmation of the sale in view of the subsequent developments. In our opinion, the said submission is to be rejected because there is no specific format in which a sale conducted by the official liquidator is to be confirmed by the Company Court. The mere absence of the expression "that the sale is confirmed" in the order dated 17.12.2013 is not determinative of the question. The totality of the circumstances, such as, the very tenor of the order (Footnote 1 supra) that none of the stake-holders of the Company in liquidation ever objected to the offer of the appellant herein on the ground that it is inadequate consideration for the property; the fact that the official liquidator himself understood the order dated 17.12.2013 to be an order not only accepting the highest bid of the appellant herein but also as an order confirming the sale in favour of the appellant, as evidenced by his letter dated 19.12.2013, (the relevant portion of which is already extracted earlier) and the fact that the first instalment of the payment of 25% of the sale consideration was accepted both by the official liquidator and the Company Court without raising any objection for the same and the fact that the first respondent withdrew its earnest money deposit without raising any objection regarding adequacy of the price offered by the appellant herein, in our view, clearly indicate that the sale in favour of the appellant was confirmed by the order dated 17.12.2013. Assuming for the sake of argument that there is no confirmation, in the absence of any legally tenable ground for not confirming the sale, it cannot be declined to the appellant as it was observed in Navalkha case (supra) that "6....no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already made".
23. It may be noted that the decision of the Supreme Court in the case of LICA (P) Ltd. v. Official Liquidator (supra) on which strong reliance has been placed by the learned advocate Page 34 of 53 C/SCA/3131/2018 JUDGMENT for the respondent No.5 has been considered by the Supreme Court in the case of Divya Manufacturing Company (P) Limited, v. Union Bank of India (supra) and the decision of the Supreme Court in Divya Manufacturing Company (P) Limited, v. Union Bank of India (supra) has been referred to in the above referred decision of Vedica Procon (P) Ltd. v. Balleshwar Greens (P) Ltd. (supra). Moreover in LICA (P) Ltd. v. Official Liquidator (supra), the Supreme Court has observed that 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. In the facts of the present case, insofar as participation of the fifth respondent is concerned, there was no open auction. The fifth respondent who had not participated in the auction proceedings had after the period of thirty days from the date when the petitioner was declared to be the successful purchaser made a higher offer than the petitioner and the Recovery Officer called upon the petitioner to match his bid and upon the petitioner refusing to do so, confirmed the sale in favour of the fifth respondent. Thus, the sale was confirmed in favour of the fifth respondent without there being an open auction.
24. At this juncture, it may be germane to refer to the decision of the Supreme Court in the case of Navalkha & Sons v. Sri Ramanya Das (supra). In the facts of that case, in winding up proceedings of Hyderabad Vegetable Products Co., Ltd., the respondents No.2, 3 and 4 therein were appointed as Commissioners for the sale of its properties and actionable claims. Accordingly, a sale proclamation was issued by them, one of the conditions being that the proclamation Page 35 of 53 C/SCA/3131/2018 JUDGMENT was to be advertised twice in each of the leading five dailies. The Commissioners got them published only in four dailies. No publication was made in the fifth daily nor was the advertisement made twice in any of the dailies. The appellant therein happened to be the sole offerer who complied with the formalities. The Commissioners made an application to the High Court for confirmation of the sale. In the High Court, one Gopaldas Darak made an offer saying that he could not do it in time as there was no adequate publicity. A learned Single Judge arranged for an open bid in the court itself between the appellant and Gopaldas Darak without directing a fresh auction. As the bid of the appellant was the highest, the sale was concluded in his favour. On the same day, one Padam Chand Agarwal made an enhanced offer complaining lack of publicity. But the sale in favour of the appellant was confirmed. Padam Chand Agarwal and one Ramaya Das, a contributory, preferred appeals to a Division Bench on the ground that the publicity given was inadequate and that the course followed did not achieve the object of getting adequate price for the property. The appeals were allowed by the Division Bench which directed that fresh steps should be taken for the sale of the property either by calling sealed tenders or by auction in accordance with law. The matter was carried in appeal to the Supreme Court. The Supreme Court observed that the condition of confirmation by the court being a safeguard against the property being sold at an inadequate price, it will be not only proper but necessary that the court in exercising the discretion which it undoubtedly has of accepting or refusing the highest bid at the auction held in pursuance of its order, should see that the price fetched at the auction is an adequate price even though there is no suggestion of Page 36 of 53 C/SCA/3131/2018 JUDGMENT irregularity or fraud. The court held that it is well to bear in mind the other principle which is equally well settled namely, that once the court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already received. The court held that the learned Single Judge having made up his mind to resort to auction confined the auction to only two persons namely the previous tendered and the fresh tenderer. The auction in question no doubt was conducted in a public place but it was not a public auction because it was not open to the general public but was confined to two named persons. Secondly, it was not held after due publicity. It was held immediately after it was decided upon. It is, therefore, obvious that the sale in question was not a public sale which implies sale after giving notice to the public wherein every member of the public is at liberty to participate. No doubt, the device resorted to considerably raised the previous bid yet it was not an adequate price having regard to the market value of the property. The court held that the denial of opportunity to purchase the property by persons who would have taken part in the auction bid but for want of notice is a serious matter and was of the opinion that the learned Judge having decided that the property should be put to auction should have directed auction by public sale instead of confining it to two persons alone. Since there was want of publicity and there was lack of opportunity to the public to take part in the auction, the acceptance of the highest bid by the learned Judge was not a sound exercise of discretion. It was contended on behalf of the appellant therein that confirmation was discretionary with the court and that the Division Bench ought not to have interfered with the discretion exercised by Page 37 of 53 C/SCA/3131/2018 JUDGMENT the Company Judge. The Supreme Court held that it is true that the discretion exercised by the Judge ought not to be interfered with unless the Judge has gone wrong on principle. The court recorded that as already pointed out the learned Company Judge having decided to put the property to auction went wrong in not holding the auction as a public auction after due publicity and this has resulted in prejudice to the company and the creditors in that the auction did not fetch adequate price. The prejudice was inherent in the method adopted.
25. As noted hereinabove, rule 56 of the Second Schedule to the Income Tax Act postulates that the sale shall be by public auction to the highest bidder. The Supreme Court in the case of Navalkha & Sons v. Sri Ramanya Das (supra), has held that a public sale implies sale after giving notice to the public wherein every member of the public is at liberty to participate. The court held that where the auction was confined to only two persons namely the previous tenderer and the fresh tenderer though conducted in a public place, was not a public auction because it was not open to the general public but was confined to two named persons. In the facts of the present case also, the Recovery Officer, after considering the offer made by the fifth respondent, did not hold a public auction by inviting fresh offers but only called upon the petitioner to match the bid of the fifth respondent and upon the petitioner refusing to do so, confirmed the sale in favour of the fifth respondent. Thus, the sale made in favour of the fifth respondent cannot be said to be a sale made in a public auction, as contemplated in rule 56 of the Second Schedule to the Income Tax Act.
26. On behalf of the fifth respondent, it has been contended Page 38 of 53 C/SCA/3131/2018 JUDGMENT that the rules and procedures are for the purpose of getting higher amount of the property and to ensure the benefit of the creditors, workmen, etc. and that the acceptance of a higher offer made by a third party is a practice which is normally adopted by the Recovery Officer in many cases.
27. At this juncture, reference may be made to the decision of the Supreme Court in the case of C. N. Paramsivam v. Sunrise Plaza, (2013) 9 SCC 460, wherein it has been held thus:-
"16. Section 29 of the RDDB Act is as under:
"29. Application of certain provisions of Income Tax Act.--The provisions of the Second and Third Schedules to the Income Tax Act, 1961 and the Income Tax (Certificate Proceedings) Rules, 1962, as in force from time to time shall, as far as possible, apply with necessary modifications as if the said provisions and the rules referred to the amount of debt due under this Act instead of to the income tax:
Provided that any reference under the said provisions and the rules to the 'assessee' shall be construed as a reference to the defendant under this Act."
A bare reading of the above leaves no manner of doubt that the Rules under the Income Tax Act were applicable only "as far as possible" and with the modification as if the said provisions and the Rules referred to the amount of debt due under the RDDB Act instead of the Income Tax Act. The question is whether the said two expressions render the provisions of Rule 57 directory no matter the same is couched in a language that is manifestly mandatory in nature."
"21. Applying the above principles to the case at hand Section 29 of the RDDB Act incorporates the provisions of the Rules found in the Second Schedule to the Income Tax Act for the purposes of realisation of the dues by the Recovery Officer under the RDDB Act. The Page 39 of 53 C/SCA/3131/2018 JUDGMENT expressions "as far as possible" and "with necessary modifications" appearing in Section 29 have been used to take care of situations where certain provisions under the Income Tax Rules may have no application on account of the scheme under the RDDB Act being different from that of the Income Tax Act or the Rules framed thereunder. The provisions of the Rules, it is manifest, from a careful reading of Section 29 are attracted only insofar as the same deal with recovery of debts under the Act with the modification that the "amount of debt" referred to in the Rules is deemed to be one under the RDDB Act. That modification was intended to make the position explicit and to avoid any confusion in the application of the Income Tax Rules to the recovery of debts under the RDDB Act, which confusion could arise from a literal application of the Rules to recoveries under the said Act. Proviso to Section 29 further makes it clear that any reference "to the assessee" under the provisions of the Income Tax Act and the Rules shall be construed as a reference to the defendant under the RDDB Act. It is noteworthy that the Income Tax Rules make provisions that do not strictly deal with recovery of debts under the Act. Such of the Rules cannot possibly apply to recovery of debts under the RDDB Act. For instance Rules 86 and 87 under the Income Tax Act do not have any application to the provisions of the RDDB Act, while Rules 57 and 58 of the said Rules in the Second Schedule deal with the process of recovery of the amount due and present no difficulty in enforcing them for recoveries under the RDDB Act. Suffice it to say that the use of the words "as far as possible" in Section 29 of the RDDB Act simply indicates that the provisions of the Income Tax Rules are applicable except such of them as do not have any role to play in the matter of recovery of debts recoverable under the RDDB Act. The argument that the use of the words "as far as possible" in Section 29 is meant to give discretion to the Recovery Officer to apply the said Rules or not to apply the same in specific fact situations has not impressed us and is accordingly rejected."
"26. It is, therefore, reasonable to hold that the phrase "as far as possible" used in Section 29 of the RDDB Act can at best mean that the Income Tax Rules may not apply where it is not at all possible to apply Page 40 of 53 C/SCA/3131/2018 JUDGMENT them having regard to the scheme and the context of the legislation.
27. There is nothing in the provisions of Section 29 of the RDDB Act or the scheme of the 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 RDDB Act or Rule 57 of the Income Tax Rules which reads as under:
"57. Deposit by purchaser and resale in default.--(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."
It is clear from a plain reading of the above that the provision is mandatory in character. The use of the word "shall" is both textually and contextually indicative of the making of the deposit of the amount being a mandatory requirement.
28. The provisions of Rules 57 and 58 of the Income Tax Rules have their equivalent in Order 21 Rules 84, 85 and 86 CPC which are pari materia in language, sweep and effect and have been held to be mandatory by this Court in Manilal Mohanlal Shah v. Sardar Sayed Ahmed Sayed Mahmad, AIR 1954 SC 349, in the following words:
"8. The provision regarding the deposit of 25 per cent by the purchaser other than the decree-holder is mandatory as the language of the rule suggests. The full amount of the purchase money must be paid within fifteen days from the date of the sale but the decree-holder is entitled to the advantage of a set- off. The provision for payment is, however, Page 41 of 53 C/SCA/3131/2018 JUDGMENT mandatory ... (Rule 85). If the payment is not made within the period of fifteen days, the court has the discretion to forfeit the deposit, and there the discretion ends but the obligation of the court to resell the property is imperative. A further consequence of non-payment is that the defaulting purchaser forfeits all claim to the property ... (Rule
86).
9. ... These provisions leave no doubt that unless the deposit and the payment are made as required by the mandatory provisions of the Rules, there is no sale in the eye of the law in favour of the defaulting purchaser and no right to own and possess the property accrues to him.
* * *
11. Having examined the language of the relevant Rules and the judicial decisions bearing upon the subject we are of the opinion that the provisions of the Rules requiring the deposit of 25% of the purchase money immediately on the person being declared as a purchaser and the payment of the balance within 15 days of the sale are mandatory and upon non-compliance with these provisions there is no sale at all. The Rules do not contemplate that there can be any sale in favour of a purchaser without depositing 25% of the purchase money in the first instance and the balance within 15 days.
When there is no sale within the contemplation of these Rules, there can be no question of material irregularity in the conduct of the sale. Non-payment of the price on the part of the defaulting purchaser renders the sale proceedings as a complete nullity. The very fact that the court is bound to resell the property in the event of a default shows that the previous proceedings for sale are completely wiped out as if they do not exist in the eye of the law. We hold, therefore, that in the circumstances of the present case there was no sale and the purchasers acquired no rights at all."
31. In the light of the above we see no reason to hold that Rules 57 and 58 of the Income Tax Rules are anything but mandatory in nature, so that a breach of the requirements under those Rules will render the auction non est in the eye of the law.
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28. Thus, in the above decision the Supreme Court has held that rules 57 and 58 of the Income Tax Rules are mandatory in nature, so that a breach of the requirements under those rules will render the auction non est in the eye of law.
29. Reference may also be made to the decision of the Supreme Court in the case of Mohan Wahi v. CIT, (2001) 4 SCC 362, wherein the court was considering a case wherein before the sale could be confirmed in favour of the successful purchaser, all the recovery certificates issued against the tenderer had been withdrawn. In the facts of the said case, the court held that the scheme of Part III of Second Schedule indicates that the sale proceedings terminate on their becoming absolute whereafter all that remains to be done is the issuance of sale certificate. However, an order confirming the sale by the Tax Recovery Officer is a must. The efficacy of the sale by public auction in favour of the highest bidder has been made to depend on the order of confirmation by the Tax Recovery Officer by incorporating rule 56 in the Schedule. The court held that it is true that ordinarily if there is no application filed for setting aside the sale under rule 60, 61 or 62 and thirty days from the date of the sale have expired, the Tax Recovery Officer has to make an order confirming a sale. Nevertheless, an order shall have to be actually made. The court further observed that under rule 63, confirmation of sale is not automatic. An order confirming the sale is contemplated to make the sale absolute. Ordinarily, in the absence of an application under rule 60, 61 or 62 having been made, or having been rejected if made, on expiry of thirty days from the Page 43 of 53 C/SCA/3131/2018 JUDGMENT date of sale, the Tax Recovery Officer shall pass an order confirming the sale. However, between the date of sale and the actual passing of the order confirming the sale if an event happens or a fact comes to the notice of the Tax Recovery Officer which goes to the root of the matter, the Tax Recovery Officer may refuse to pass an order confirming the sale.
30. Thus, the Supreme Court in the above decision has held that ordinarily, in the absence of an application under rule 60, 61 or 62 of the Second Schedule having been made, or having been rejected if made, on expiry of thirty days from the date of sale, the Tax Recovery Officer shall pass an order confirming the sale. However, an exception has been carved out that if between the date of sale and the actual passing of the order confirming the sale an event happens or a fact comes to the notice of the Tax Recovery Officer which goes to the root of the matter, the Tax Recovery Officer may refuse to pass an order confirming the sale.
31. Adverting to the facts of the present case, it is an admitted position that no application under rule 60, 61 or 62 of the Second Schedule to the Income Tax Act had been made. In the ordinary course, therefore, upon expiry of a period of thirty days from the date of sale, the Recovery Officer was required to pass an order confirming the sale. The only eventuality in which the Recovery Officer could have refused to pass an order confirming the sale is if an event had happened or a fact had come to his notice which goes to the root of the matter. In the facts before the Supreme Court in the above cited decision, the very basis for the proclamation of sale no longer existed, inasmuch as, the recovery notice had been withdrawn.
Page 44 of 53C/SCA/3131/2018 JUDGMENT Therefore, the event which had happened went to the root of the matter and, therefore, the Supreme Court held that it was an event which obliged the Tax Recovery Officer not to pass an order confirming the sale and rather annul the same. What is required to be examined in the present case is whether the subsequent higher offer made by the fifth respondent can be said to be the happening of an event or fact which goes to the root of the matter warranting refusal on the part of the Tax Recovery Officer to pass order confirming the sale.
32. In the opinion of this court, the Recovery Officer, during the course of the auction proceedings, having found the offer of the petitioner to be adequate and having accepted the offer and having called upon the petitioner to deposit the balance amount as well as requisite poundage fees, thereafter without there being any application under rule 60, 61 or 62 of the Second Schedule could not have refused confirmation of the sale in favour of the petitioner. This court is of the considered view that the mere fact that a person has come forth with a higher offer is not an event or fact which goes to the root of the matter, more so, when the amount offered by the petitioner was not found to be inadequate. The Recovery Officer in the impugned order has observed that there is a clear suggestion that the property in question fetched low price in the public auction held on 16.5.2008 due to some cartel formed by the bidders. However, such finding is not based upon any material or facts on the record. In fact, the amount offered by the petitioner is higher than the reserve price. The Recovery Officer himself had found the same to be adequate and had declared the petitioner to be the successful auction purchaser. Neither the CH Bank nor the defaulter had Page 45 of 53 C/SCA/3131/2018 JUDGMENT raised any objection to the bid made by the petitioner. Under the circumstances, in the absence of the offer of the petitioner having been found to be inadequate, the mere fact that subsequently a third party had come and made a slightly higher offer cannot be said to be an event which goes to the root of the matter warranting refusal of confirmation of sale in favour of the petitioner.
33. Apart from the above, as is evident from the facts noted hereinabove, the fifth respondent had not participated in the auction proceedings and was, therefore, a total stranger to the proceedings. A perusal of the Terms and Conditions of Sale reveal that under condition No.14 the Recovery Officer conducting the auction may insist on a suitable deposit amount by all the bidders who are taking part in the auction. The deposit amount in the case of the successful bidder would be adjusted toward the bid amount. In the case of unsuccessful bidders the deposit amount would be returned at the close of the auction. Condition No.16 provides that participation in the bid shall be deemed to be an acceptance of the conditions specified therein. Condition No.10 provides that every bidder shall clearly state his name and address, if he is bidding for himself or the name and address of a third party on whose behalf he has bid. Condition No.11 provides that the Recovery Officer may decline to accept the bid if he is of the opinion that the same is inadequate. Thus, those persons who participate in the auction proceedings are required to comply with the Terms and Conditions of Sale including depositing such amount as stipulated by the Recovery Officer and are bound by the terms and conditions of sale. Reverting to the facts of the present case, the fifth respondent having not participated in the Page 46 of 53 C/SCA/3131/2018 JUDGMENT auction proceedings has not deposited any amount as stipulated by the Recovery Officer nor has he otherwise complied with the terms and conditions of the sale. It is needless to state that even in the auction proceedings; it is only those persons who had complied with the Terms and Conditions of the Proclamation who would be permitted to participate. Even if the fifth respondent had appeared during the course of the public auction and made the highest offer, such offer could not have been accepted as he had not filled in the Tender Form and had not complied with the terms and conditions thereof. Therefore, any offer made by him at a subsequent stage, he not having been a participant in the auction process, could not have been accepted. At best, if the Recovery Officer was of the opinion that the amount fetched during the course of auction was inadequate, he could have set aside the sale in favour of the petitioner and issued a fresh proclamation of sale and held a fresh public auction. However, as held by the Supreme Court in the case of Navalkha & Sons v. Ramanya Das (supra) he could not have merely called upon the petitioner to match the bid of the fifth respondent as the same cannot be said to be a public auction whereas rule 56 of the Second Schedule envisages sale by public auction to the highest bidder. Besides, as noticed earlier rule 65 of the Second Schedule postulates grant of certificate of sale in favour of the person who at the time of sale is declared to be the purchaser and Form No. I.T.C.P. prescribed under Income-tax (Certificate Proceeding) Rules, 1962 provides for issuance of certificate in favour of the person who has been declared the purchaser at a sale by public auction on the date mentioned therein. In the facts of the present case, the fifth respondent not having participated in the auction proceedings, Page 47 of 53 C/SCA/3131/2018 JUDGMENT and not having been declared the purchaser at the sale by public auction on the date when such auction was held, was therefore, neither eligible nor entitled to the issuance of a certificate of sale. As noticed earlier, the application made by the fifth respondent making a higher offer does not bear any date nor does it reflect the name of the authority to which it is addressed. Under the circumstances, one fails to understand as to how such application was entertained by the Recovery Officer. Therefore, the entire procedure followed by the Recovery Officer while confirming the sale in favour of the fifth respondent is without any authority of law and totally without jurisdiction. The sale in favour of the fifth respondent, therefore, cannot be sustained.
34. While it is true that the Supreme Court in the case of Navalkha & Sons v. Ramanya Das (supra) has held that if the sale price is found to be inadequate, a fresh auction is required to be held, as noted hereinabove, during the course of the auction proceedings, no objection has been raised to the highest bid offered by the petitioner, the Recovery Officer has also found the amount to be adequate and has called upon the petitioner to pay the balance amount, which the petitioner has duly complied with within the prescribed period. The Supreme Court in the case of Mohan Wahi v. CIT (supra) has held that ordinarily unless there is an application under rule 60, 61 or 62 or an application having been made and rejected, the Recovery Officer is required to confirm the sale in favour of the successful purchaser. In the facts of the present case, it is an admitted position that no application had been made under rule 60, 61 and 62 of the Second Schedule and, therefore, in the absence of any other event happening in between which Page 48 of 53 C/SCA/3131/2018 JUDGMENT goes to the root of the matter, it was incumbent upon the Recovery Officer to confirm the sale in favour of the petitioner.
35. On behalf of the fifth respondent, the learned advocate has placed strong reliance upon the decision of the Supreme Court in the case of Manu Tiling Co. P. Ltd. v. Patel Phoschem P. Ltd. (supra). In this regard it may be noted that the decision of the Supreme Court in the case of Manu Tiling Co. P. Ltd. v. Patel Phoschem P. Ltd. (supra) was considered and relied upon by the Division Bench in the case of Vedica Procon Private Limited v. Balleshwar Greens Private Limited, (supra) and the Supreme Court reversed the decision of the Division Bench. Under the circumstances, reliance placed upon the learned advocate for the fifth respondent on the decision of the Supreme Court in Manu Tiling Co. P. Ltd. v. Patel Phoschem P. Ltd. (supra) does not carry the case of the fifth respondent any further.
36. Lastly, on behalf of the fifth respondent, it has been contended that since the certificate of sale issued in favour of the fifth respondent has not been challenged by the petitioner, the same cannot be set aside merely as a consequence of setting aside the order passed by the Recovery Officer confirming the sale in his favour.
37. It may be noted that the sale in favour of the fifth respondent came to be confirmed by order dated 10.7.2018. On the very next date, the petitioner herein filed an appeal before the Debts Recovery Tribunal. The order passed by the Debts Recovery Tribunal was immediately challenged by the petitioner before the Debts Recovery Appellate Tribunal and thereafter, before this court. Therefore, the petitioner has been Page 49 of 53 C/SCA/3131/2018 JUDGMENT consistently prosecuting the matter challenging the sale in favour of the fifth respondent and refusing to confirm the sale in his favour before various forums. The fifth respondent was, therefore, aware of pendency of these proceedings and that the confirmation of sale in his favour was in dispute and had not attained finality as well as the fact that in case the petitioner succeeded, it would have a direct adverse impact on the confirmation of sale in his favour. Besides, the execution of a registered sale deed in favour of the fifth respondent is merely a consequence of the confirmation of sale in his favour. If the confirmation of sale goes, the very basis for execution of the registered sale deed also goes and therefore, there is no necessity for separately challenging the registered sale deed. Besides, mere execution of a registered sale deed in favour of the fifth respondent would not defeat the right of the petitioner to challenge the illegal action of the respondents under the provisions of the RDDB Act.
38. At this stage, reference may be made to the decision of the Supreme Court in the case of Badrinath v. State of Tamil Nadu & Ors., AIR 2000 SC 3243, which finds reference in the decision of the Supreme Court in the case of Kalabharati Advertising v. Hemant Vimalnath Narichania (supra), wherein the court held that once the basis of a proceeding is gone, all consequential acts, action, orders would fall to the ground automatically and this principle of consequential order which is applicable to judicial and quasi-judicial proceedings is equally applicable to administrative orders. Thus, merely because the petitioner was not protected by virtue of any interim order during the pendency of the proceedings, if the petitioner ultimately succeeds in the proceedings, he cannot be deprived Page 50 of 53 C/SCA/3131/2018 JUDGMENT of the fruits of the litigation on the ground that he was not protected by any interim relief in the interregnum. In the opinion of this court, having regard to the manner in which the sale has been confirmed in favour of the fifth respondent, the fifth respondent is not entitled to any equity on account of the confirmation of sale in his favour. It goes without saying that once the confirmation of sale in favour of the fifth respondent is set aside; all consequential acts including execution of the registered sale deed in his favour would automatically fall to the ground. As a consequence of setting aside the confirmation of sale in favour of the fifth respondent, the sale certificate issued in his favour would be required to be set aside.
39. In the light of the above discussion, it is held that the confirmation of sale in favour of the fifth respondent being without any authority of law cannot be sustained. In the absence of any application under rule 60, 61 or 62 of the Second Schedule to the Income Tax Act or any other event or fact going to the root of the matter having intervened, the third respondent Recovery Officer was required to confirm the sale in favour of the petitioner. The action of the third respondent Recovery Officer in not confirming the sale in favour of the petitioner and accepting the offer of the fifth respondent being without any authority of law is, therefore, required to be set aside.
40. Insofar as the request that in case the court is inclined to set aside the sale in favour of the fifth respondent, a fresh auction may be ordered so that the fifth respondent can also participate in the same is concerned, in the light of the fact that the petitioner herein was declared as the successful Page 51 of 53 C/SCA/3131/2018 JUDGMENT purchaser and within thirty days thereof, no application under rule 60, 61 or 62 of the Second Schedule to the Income Tax had been made, and neither had the respondent - Recovery Officer found the amount offered by the petitioner to be inadequate, there is no reason to direct a fresh auction. Merely because on account of totally unauthorized action on the part of the Recovery Officer, the sale was confirmed in favour of the fifth respondent, would not create any equity in his favour. Under the circumstances, the request for holding a fresh auction does not merit acceptance.
41. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order dated 28.8.2017 passed by the Debts Recovery Appellate Tribunal as well as the order dated 24.12.2008 passed by the Debts Recovery Tribunal and the order dated 10.7.2008 passed by the Recovery Officer as well as all further action and proceedings taken pursuant thereto, including issuance of sale certificate and execution of registered sale deed in favour of the fifth respondent are hereby quashed and set aside. The third respondent Recovery Officer is directed to confirm the sale of the property in question in favour of the petitioner and to take all consequential actions thereof. Since the sale in favour of the fifth respondent has been set aside, he would be entitled to refund of the amount deposited by him. Since the fifth respondent has enjoyed the property for all these years, the question of grant of interest would not arise. Rule is made absolute accordingly with no order as to costs.
42. At this stage, the learned advocate for the fifth respondent has prayed for stay of this order for a period of two Page 52 of 53 C/SCA/3131/2018 JUDGMENT months so as to enable the said respondent to approach the higher forum. Such request is opposed by the learned advocate for the petitioner.
43. Having regard to the facts and circumstances of the case, the request is declined.
(HARSHA DEVANI, J) (A. S. SUPEHIA, J) Z.G. SHAIKH Page 53 of 53