IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. C.W.P. No. 975 of 2008 DATE OF DECISION : 22.01.2008 Rashpal Singh .... PETITIONER Versus Debts Recovery Appellate Tribunal and others ..... RESPONDENTS CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE RAKESH KUMAR GARG Present: Mr. Pankaj Gupta, Advocate, for the petitioner. * * * SATISH KUMAR MITTAL, J. This petition has been filed by a highest bidder in the public auction conducted by the Recovery Officer, Debts Recovery Tribunal, for sale of the mortgaged property measuring 12 bighas, seeking quashing of the judgment dated 5.1.2007 (Annexure P-16), passed by the Debts Recovery Tribunal, Chandigarh, whereby the appeal filed by respondents No.4 to 6 herein against the order dated 16.12.2004, passed by the Recovery Officer was allowed and the sale of the land in question was set aside; and the order dated 27.9.2007 (Annexure P-26), whereby the appeal filed by the petitioner against the said judgment has also been dismissed by the Debts Recovery Appellate Tribunal, New Delhi. CWP No. 975 of 2008 -2- In the present case, the brief facts are that the Punjab National Bank (respondent No.7 herein) filed an O.A. in the year 1998 before the Debts Recovery Tribunal against M/s Amrit Cellulose Limited and its Director, including respondents No.4 to 6, for recovery of Rs. 2,24,14,973/- along with interest. Vide judgment dated 21.1.1999, the said O.A. was allowed by the Debts Recovery Tribunal and recovery certificate bearing No. 555 of 2001, holding that the respondent bank is entitled to recover a sum of Rs. 2,24,14,973/- along with interest from the defendants including respondents No.4 to 6, was issued. Thereafter, Recovery Officer, Debts Recovery Tribunal, started recovery proceedings. Since in the aforesaid judgment and the Recovery Certificate dated 21.1.1999, respondents No.4 to 6 were proceeded against ex-parte, they filed an application under Order 9 Rule 13 CPC for setting aside the ex-parte judgment and the Recovery Certificate dated 21.1.1999. Vide order dated 22.12.2003, the ex-parte judgment and the Recovery Certificate were set aside qua respondents No.4 to 6. During the pendency of the application under Order 9 Rule 13 CPC, filed by respondents No.4 to 6, their mortgaged land measuring 12 bighas was put to sale by way of public auction by the Recovery Officer. At that time, the reserve price for the said land was fixed at Rs. 60.00 lacs. However, the said auction did not materialise. Subsequently, after setting aside of the ex-parte judgment and the Recovery Certificate, the matter was again heard by the Debts Recovery Tribunal on merits and again the CWP No. 975 of 2008 -3- judgment was passed in favour of the bank. A fresh Recovery Certificate dated 28.5.2004 for recovery of Rs. 2,24,14,973/- along with interest was issued. Thereafter, vide order dated 21.12.2004, the Recovery Officer issued proclamation of sale for selling the mortgaged property by way of public auction to be conducted on 21.1.2005. Against the order of proclamation of sale, respondents No.4 to 6 filed an appeal before the Debts Recovery Tribunal. In the appeal, after hearing the appellants (respondents No.4 to 6 herein) and the respondent bank, the Debts Recovery Tribunal passed the interim order that the auction proceedings shall continue, but the sale shall not be confirmed till the disposal of the appeal. Subsequently, in pursuance of the proclamation of sale, the auction took place on 29.1.2005, in which the petitioner gave the highest bid of Rs. 31.80 lacs. The bid of the petitioner was accepted by the Recovery Officer. The petitioner also filed an application for becoming party to the said appeal. The application was allowed. The Debts Recovery Tribunal, after hearing all the concerned parties, allowed the appeal and set aside the proclamation of sale as well as the auction sale, in which the petitioner was the highest bidder. Against the said judgment, the petitioner filed an appeal before the Debts Recovery Appellate Tribunal, New Delhi, which has also been dismissed. Hence, this writ petition has been filed by the petitioner. We have heard learned counsel for the petitioner and perused the impugned judgment and order, as well as the other documents, annexed CWP No. 975 of 2008 -4- with this petition. In our opinion, in the facts and circumstances of the case, no case is made out by the petitioner for interference in the impugned order in exercise of the extra ordinary power of this Court conferred under Artilce 226/227 of the Constitution of India. Undisputedly, in the present case, initially the Recovery Certificate No. 555 of 2001 was issued on 21.1.1999. In pursuance of the same, the process of selling the mortgaged land by way of public auction was initiated and mortgaged land in question was put to sale by way of public auction, in which the reserve price was fixed at Rs. 60.00 lacs, on the basis of verification report dated 23.3.2001. The said proceeding and the sale was not materialised. Those sale proceedings were conducted during the pendency of the application by respondents No.4 to 6 for setting aside the ex-parte judgment and the Recovery Certificate. Ultimately, vide order dated 22.12.2003, the ex-parte judgment and the Recovery Certificate were set aside and the matter was again heard on merits, after providing an opportunity of hearing to respondents No.4 to 6. Again, the Debts Recovery Tribunal passed a judgment, whereby the bank was again held entitled to recovery the amount in question and consequently, a fresh Recovery Certificate was issued on 28.5.2004. Again, the Recovery Officer initiated the proceedings for sale of the mortgaged property by public auction and order of proclamation of sale was passed. This time, without any justification, the Recovery Officer fixed the reserve price for the sale of the mortgaged property at Rs. 30.00 lacs. Before the mortgaged property was put to auction, an appeal was filed against the order CWP No. 975 of 2008 -5- of proclamation of sale on various grounds and the Debts Recovery Tribunal, while entertaining the appeal, passed an interim order that auction proceedings would continue, but the sale shall not be confirmed till the final disposal of the appeal. Thereafter, the auction took place on 29.1.2005, in which the petitioner offered the highest bid of Rs. 31.80 lacs. The Debts Recovery Tribunal allowed the appeal and set aside the auction sale on various justifiable grounds. The judgment of the Debts Recovery Tribunal has been confirmed by the Debts Recovery Appellate Tribunal while holding that by permitting the mortgaged property to be sold in public auction by fixing the reserve price at Rs. 30.00 lacs, in pursuance of a valuation report dated 16.3.2004, the Recovery Officer has acted illegally. It was found that the respondents have placed on record a valuation report dated 22.1.2005, according to which the distress value of the property in question in the year 2005 was Rs. 1.50 crores. It was also observed that even earlier in the year 2001, the property in question was valued at Rs.60.00 lacs. Keeping in view all these facts, it was held that the Recovery Officer has illegally fixed the reserve price of the mortgaged property at Rs.30.00 lacs, which was much low from the prevalent market rate. Secondly, it was observed that respondents No.4 to 6 were not required to file separate objections, when their appeal was pending, in which the confirmation of sale was stayed till the final disposal of the appeal. The contention of the petitioner that he was not made aware of the said order at the time of auction sale was not accepted. It was also held that the petitioner CWP No. 975 of 2008 -6- has no right in the property, as the sale has not been confirmed. It was thus held by the Appellate Tribunal that the mortgaged property in question was put to public auction on the reserve price of Rs. 30.00 lacs and the highest bid of Rs. 31.80 lacs was accepted by the Recovery Officer in an illegal and arbitrary manner. In this Regard, the Debts Recovery Appellate Tribunal has observed as under : “... I have perused the valuation report dated 16.4.2003 on the basis of which the reserve price was fixed at Rs. 30 lakhs and on which great emphasis has been placed by the learned counsel for the defendant. I find that it gives no data, facts or material for fixing the value of the property in question at Rs.30 lakhs. The said valuation was seemingly fixed arbitrarily without the backing of any facts, data, material or grounds. There could hardly be any justification for significant drop in the value of the property from Rs. 60 lakhs on 23.3.2001 to Rs. 30 lakhs on 16.4.2003. It is also noticed that this report dated 16.4.2003 does not make any mention of the notification under Section 4 of the Land Acquisition Act having been issued in respect of certain area comprising this disputed property. Moreover, there is no document to show that any further notification came to be issued by the Government after that of Section 4 of the Land Acquisition Act. Further, the date of notification under Section 4 of the Land Acquisition Act is CWP No. 975 of 2008 -7- mentioned as 9.8.2004 in Annexure A-11 and A-12 of the paper book relied upon by the learned counsel for the appellant. So, it could hardly have any nexus to the valuation report prepared 16 months before on 16.4.2003. Therefore, there is no sound basis to presume that there was a fear psychosis of acquisition prevailing all around as a result of which market value of the property in question surprisingly dipped to one half from Rs. 60 lakhs to Rs. 30 lakhs.” Regarding the objections raised by the petitioner that since respondents No.4 to 6 did not file any application for setting aside the auction sale held on 29.1.2005 under Rules 60 and 61of the Second Schedule to the Income Tax Act, 1961, therefore, the Debts Recovery Tribunal was not justified in setting aside the sale, it has been observed that when the appeal filed by respondents No.4 to 6 against the proclamation of sale was already pending before the Debts Recovery Tribunal, there was hardly any necessity for them to have applied for setting aside the auction sale held on 29.1.2005. We do not find any illegality in the impugned judgment and order passed by the Debts Recovery Tribunal and the Debts Recovery Appellate Tribunal, respectively. However, in this case, respondents no.4 to 6 have already paid the outstanding amount of the bank as during the pendency of the appeal, a settlement took place between the bank and respondents No.4 to 6 and in One Time Settlement, the entire outstanding amount of the bank was paid. . It has been held by the Supreme Court in CWP No. 975 of 2008 -8- M/s Seth Kashi Ram Chemical (India) v. State of Haryana and others, AIR 1991 Supreme Court 478 that claim of the highest bidder at auction for the acceptance of the bid is not maintainable and the auction sale cannot be effectuated when the payment of the loan has been made by the debtor to the creditor after auction of the property before confirmation of sale by the court. Even otherwise, the Appellate Tribunal has protected the interest of the petitioner, while ordering that he shall be entitled to get back the amount deposited as sale consideration with interest, whatever has accrued thereon in case of its having been deposited in the bank. In view of the above, we do not find any merit in this petition and the same is hereby dismissed. ( SATISH KUMAR MITTAL ) JUDGE January 22, 2008 ( RAKESH KUMAR GARG ) ndj JUDGE