IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD (Special Original Jurisdiction) MONDAY, THE TWENTY FIRST DAY OF DECEMBER TWO THOUSAND AND NINE PRESENT HON’BLE SRI JUSTICE A.GOPAL REDDY AND HON’BLE SRI JUSTICE NOUSHAD ALI WRIT PETITION No.26429 of 2007 Between: State Bank of India, Commercial Branch, Ongole, Prakasham District, represented by its Chief Manager … Petitioner And The Debts Recovery Appellate Tribunal, represented by its Registrar, Chennai and eight others. … Respondents This Court made the following: HON’BLE SRI JUSTICE A.GOPAL REDDY AND HON’BLE SRI JUSTICE NOUSHAD ALI WRIT PETITION No.26429 of 2007 ORDER: - (Per Hon’ble Sri Justice A.GOPAL REDDY) By means of filing this writ petition under Article 226 of the Constitution of India, petitioner-Bank challenges the order dated 07.11.2007 passed in M.A.No.101 of 2007 by the Debts Recovery Appellate Tribunal, Chennai in allowing the appeal setting aside the order of the Debts Recovery Tribunal, Visakhapatnam, passed in I.A.No.425 of 2006 in O.A.No.209 of 2002, dated 11.04.2007 wherein the I.A. filed by respondent Nos.3 and 4, for setting aside the sale held on 30.03.2004 and for cancellation of the Sale Certificate issued in favour of M/s.Vizag Profiles Limited-respondent No.9 herein, was dismissed. Petitioner-Bank filed O.A.No.209 of 2002 (old O.A.No.8 of 2001) before the Debts Recovery Tribunal for recovery of a sum of Rs.7,41,13,998.47 ps., with future interest and costs against respondent Nos.3 to 8. In the said O.A., an Advocate Commissioner was appointed to take inventory of the assets of respondent No.3 and later on, by order dated 27.03.2001 in I.A.No.734 of 2001, the Advocate Commissioner was directed to dispose of the plant and machinery. Since the Commissioner could not dispose of the same, the Tribunal by order, dated 12.07.2001 directed him to lease the plant and machinery along with the land and buildings, against which, the petitioner-bank filed M.A.No.43 of 2001 before the Debts Recovery Appellate Tribunal and the appellate tribunal by order dated 24.12.2001 directed the Commissioner to invite offers for agency agreement to run the business and also to fix royalty and deposit the same with the Tribunal towards the satisfaction of interest part. Further, it was directed that the Presiding Officer, Debts Recovery Tribunal shall see that the appropriate amount by way of royalty is fixed by the Commissioner and after approval of the same by the Presiding Officer of the Tribunal, the Commissioner may be permitted to enter into agency agreement and the terms and conditions of the agency agreement also to be approved by the Presiding Officer. In the event, the Commissioner is not able to get any appropriate offers and no agency agreement can be entered into, liberty was granted to the petitioner-bank to apply afresh to the Tribunal for sale of the property. In view of the same, since the Commissioner expressed his inability to get an agency agreement to run the business, the bank filed I.A.No.135 of 2002 under Sections 19(12) and (25) of Recovery of Debts Due to Banks and Financial Institutions Act, 1993 to dispose of the plant and machinery along with the land and buildings and the Tribunal by order dated 19.09.2002 allowed the I.A. appointing Sri D.Narayana Murthy, Advocate, Guntur as a Commissioner, directing him to invite the offers for agency agreement to run the business and other reliefs and for submitting the report along with the bids. On filing the report, the petitioner – bank filed I.A.No.402 of 2002 seeking permission of the Debts Recovery Tribunal to dispose of the plant and machinery along with land and buildings described in the schedule of property, pending disposal of the O.A. The Tribunal, by its order dated 25.03.2003 permitted the Advocate Commissioner to sell the plant and machinery along with the land and buildings and submit a report. Questioning the said order respondents 3 and 4 filed M.A.No.82 of 2003 before the Debts Recovery Appellate Tribunal. The Appellate Tribunal after taking into consideration the earlier order passed in M.A.No.43 of 2001, dated 24.12.2001 dismissed M.A.No.82 of 2003. On dismissal of the above M.A., the Tribunal by order dated 12.02.2004 in I.A.No.402 of 2002, directed the Commissioner to hold the auction as per the direction of the Tribunal and on the Advocate Commissioner filing his report, the Tribunal by its further order dated 19.03.2004 in I.A.No.402 of 2002, directed the Commissioner to advertise the sale of properties again in Hindu and Andhra Jyothi, A.P.State Edition and fix the date as 31.03.2004 for submitting report and to fix the upset price at Rs.1.03 crores from where the bid would start. The Advocate Commissioner, who conducted the auction, filed his report along with the bids received by him on 29.03.2004, to the Tribunal on 31.03.2004. The Tribunal, by its order dated 23.04.2004 posted the matter for confirmation of sale on 30.04.2004 and after expiry of 30 days, the Tribunal issued Sale Certificate on 15.06.2004 in the name of M/s. Vizag Profiles Limited – respondent No.9 herein. On issuance of the Sale Certificate, respondent Nos.3 and 4 filed I.A.No.425 of 2006, before the Debts Recovery Tribunal for setting aside the sale and to cancel the Sale Certificate issued in favour of respondent No.9 and the same may be allotted to them by handing over the possession, contending that the Advocate Commissioner in collusion with the applicant-bank and the auction purchaser, conducted a fresh auction on 30.03.2004 and in the said sale, M/s.Vizag Rebars Private Limited, was the auction purchaser, but the Sale Certificate was directed to be issued in favour of M/s.Vizag Profiles Private limited, who is a previous auction purchaser, which was conducted on 22.08.2003 for Rs.1,08,00,000/- and committed default in payment of the sale amount and hence the issuance of the Sale Certificate in favour of respondent No.9 herein, is against law, which clearly shows the collusion of applicant-bank with the auction purchaser. Moreover, respondent No.9 is a customer of the State Bank of India, Visakhapatnam Branch. Therefore, the entire sale including the issuance of Sale Certificate, may be set aside, for which, the applicant- bank filed a counter, but has not denied the factum of respondent No.9 participating in the earlier auction and committing default in deposit of the amount and, therefore, the sale was not proceeded through and the resale was ordered. The Tribunal, by its impugned order dated 11.04.2007 after extracting the averments and counter averments, dismissed the I.A., only on the sole ground that Respondent Nos.3 and 4 has filed an appeal against the order of the Tribunal in I.A.No.402 of 2002, before the Appellate Tribunal in M.A.No.82 of 2003 and the said appeal was dismissed stating that the Presiding Officer, Debts Recovery Tribunal rightly ordered for sale of the plant and machinery including the land and buildings. Subsequently, no proceedings took place and since the order in M.A.No.82 of 2003, dated 18.06.2003 has become final, the question of setting aside the sale will not arise at all. Aggrieved by the same, respondent Nos.3 and 4 filed M.A.No.101 of 2007 and the same was allowed by the Appellate Tribunal by its impugned order dated 07.11.2007, on the ground that except extracting the pleadings about the various irregularities alleged against respondent Nos.3 and 4 in I.A.No.425 of 2006 and the counter averments made therein and except stating that the earlier order passed in M.A.No.82 of 2003 confirming the order of sale made by the Tribunal has become final, the Tribunal has not assigned any reasons for dismissal of the I.A.No.425 of 2006 and accordingly the order of the Debts Recovery Tribunal, Visakhapatnam was set aside remitting the matter to the Tribunal for fresh disposal after giving an opportunity to both the sides, in accordance with law. Questioning the correctness of the same, the present writ petition has been filed. Sri M.Narender Reddy, learned counsel for the petitioner-Bank strenuously contended that once the order passed by the Tribunal in I.A.No.402 of 2002 ordering for sale, has become final on dismissal of the M.A.82 of 2003, if respondent No.4, who was present at the time of the auction is aggrieved by the sale, he has to file an application for setting aside the sale within 30 days as per Rules 60 and 61 of II Schedule of the Income Tax Act, 1961 and the procedure for recovery of the tax is made applicable to the sales and hence, the above I.A.No.425 of 2006, which was filed nearly 2 ½ years after the sale was confirmed and the Sale Certificate was issued, at the instance of respondent Nos.3 and 4, is not at all maintainable. Therefore, the Tribunal rightly dismissed the I.A., which ought not to have been set aside by the Appellate Tribunal for want of reasons. He further contends that respondent Nos.3 and 4 also made a counter claim application in 2006 against the bank raising all the grounds about the illegalities in conducting the sale and the same can always be gone into by the Tribunal in the main O.A. Therefore, the impugned order passed by the appellate tribunal is liable to be set aside. Respondent No.9 who is supporting the bank filed a counter stating that M/s.Vizag Profiles Limited has been taken over by M/s.Steel Exchange India Limited and they obtained a loan for business from petitioner-bank by depositing the title deeds of respondent No.9 company as security, apart from other immovable property. It is further stated that the auction conducted by the Tribunal is in accordance with law and if the auction held by the Tribunal is set aside, respondent No.9 merged with M/s.Steel Exchange India Limited will suffer loss. Refuting the above submissions, Sri D.Prakash Reddy, learned counsel for respondent Nos.3 and 4 contends that respondent Nos.3 and 4 are not challenging the sale order, but for the illegalities and irregularities in conducting the sale and issuance of the Sale Certificate, as pointed out in I.A., which have not been denied by the petitioner- bank. Therefore, Rules 60 and 61 of II Schedule of Income Tax Act, 1961 will not apply to the facts of the case. When the commissioner in collusion with the bank officials committed fraud and issued a Sale Certificate in favour of a person, who has not participated in the auction, the petitioner can file an application within three years to set aside such sales. Hence, the fraud vitiates the entire sales. He further contends that the auction purchaser, who remained ex parte in I.A.No.425 of 2006 and in the appeal in M.A.No.101 of 2007, has not challenged the order passed by the Appellate Tribunal and the bank which is taking the cause of the auction purchaser remaining ex parte, also substantiates the contention of respondent Nos.3 and 4 about the collusion of the bank officials with the auction purchaser, the person in whose favour the Sale Certificate has been issued, which itself is sufficient for setting aside the sale. As rightly pointed out by the appellate Tribunal, when respondent Nos. 3 and 4 specifically pleaded the illegalities and irregularities in conducting the sale and issuance of sale certificate, the bank has not denied the said fact. It is not disputed that the I.A.No.425 of 2006 was not dismissed by the Tribunal on the ground that the said I.A. has not been filed within 30 days as contemplated under Rules 60 and 61 of the II Schedule of the Income Tax Act, 1961 made applicable to the sales nor on the ground that respondent No.4, who was present at the time of conducting the auction has not raised any objection for sale of the property. The bank has not explained as to how the Sale Certificate has been issued in favour of respondent No.9, who committed default in payment of balance sale consideration in the earlier sale conducted on 22.08.2003, which necessitated conducting of re-auction. it was categorically held by the Hon’ble Supreme Court in S.P.Chengalvaraya Naidu v. Jagannath[1] that a judgment or decree obtained by playing fraud on the Court is a nullity and non est in the eyes of law. Such a judgment/decree by the first Court or by the highest Court has to be treated as a nullity by every Court, whether superior or inferior. It can be challenged in any Court, even in collateral proceedings. In view of the same, it is not for us to go into the allegations made by respondent Nos.3 and 4 that the bank officials and the Commissioner committed a fraud in conducting the sale and issued the Sale Certificate contrary to the directions issued by the Tribunal in its order dated 19.03.2004 in I.A.No.402 of 2002, wherein the Tribunal specifically directed the Commissioner to issue an advertisement in Hindu and Andhra Jyothi of A.P.State Edition fixing the date of auction as 31.03.2004, and the Commissioner for the reasons best known to him said to have conducted the auction on 29.03.2004 and received the bids and submitted the report on 31.03.2004. Further, the auction was done in favour of M/s.Vizag Rebars Private Limited, who is the highest bidder, but the Sale Certificate was issued in favour of respondent No.9. All these matters have to be gone into by the Tribunal in I.A.No.425 of 2006, which is now remitted to the Tribunal for passing speaking order after giving an opportunity to both the parties. In view of the same, the impugned order passed by the lower Appellate Tribunal in M.A.No.101 of 2007, which is the subject matter of challenge in this writ petition, does not suffer from any manifest illegality or infirmity, warranting interference. The writ petition fails and is accordingly dismissed. No costs. _________________ A.GOPAL REDDY, J ________________ NOUSHAD ALI, J 21st December 2009 LMV [1] AIR 1994 SC 853