SUMAN KISHORE vs PUNJAB NATIONAL BANK on 2 August 2019

FINAL ORDER

The present appeal has been filed by the appellant under Section 30 of the Recovery of Debts Due to Banks and Financial Institution Act, 1993 against the impugned order dated 20.09.2016 passed by the Ld. Recovery Officer of this Tribunal in RC No. 11/2015 and cancel the auction dated 01.09.2016 conducted by the respondent no. 2 along with other relief(s).

2. The brief facts of the case are that present appeal is being preferred the appellant herein, seeking the immediate intervention and interference of this Tribunal from being forcibly, illegally and unauthorized declared the highest bidder of the property in question bearing Ground Floor of C-6/467, Yamuna Vihar, Delhi – 110 053. The case of the appellant is that property has been put on auction by Ld. Recovery Officer-II, DRT-III, Delhi through E-auction i.e. respondent no. 2, wherein it is stated that a sum of Rs. 85,10,597/- is the outstanding due against the appellant along with 13% interest w.e.f. 19.08.2010. The reserve price of the property in question is fixed by Ld. Recovery Officer for an amount of Rs. 56.61 lac. It is further stated that auction of the property in question was held in view of the sale proclamation issued by Ld. Recovery Officer through E-Auction i.e. respondent no. 2 and there was one bidder, who deposited the EMD amount of Rs. 6.0 lac on 30.08.2016, as stated by Ld. Recovery Officer in the impugned order. The auction has been taken place on 01.09.2016 at 11.30 AM through e-auction and the bidders has to take part in the said auction through online procedure only. As per information and inspection of the file carried out by the appellant herein, it is found that no bidders participated during the E-auction time from 11.00 am to 12.00 am and the agent stated in its report, that there is no bidders during that time. The appellant also received one certified copy of the complaint filed by the only bidder regarding the respondent no. 2, wherein it is stated that the officers of the respondent no. 2 had called several occasions and asked to bidder to extend Rs. 50,000/- from the reserve price of Rs. 56.61 to Rs. 57.11 lac but the bidder states that when no one is extending the bid amount, why he shall extend the amount. Further, the bidder has made allegation against the agency / respondent no. 2 that they have told the bidder that there are 3 to 4 persons having in the online biding. It is also stated that during the conversation, the timing of bidding expired and bidder was not granted time to even participate or bidding the auction procedure. It is further stated by the said officer to the bidder, that since you failed to increase the bid amount, the money deposited by yourself has been forfeited. It is also alleged in the said complaint filed by the bidder that respondent no. 2 wants to extract illegal money from the said bidder to save the forfeited amount by respondent no. 2. It is further stated that Ld. Recovery Officer, without going into the controversy and the report filed by the agency, declared the said bidder as highest bidder, who has even not participated in the E-auction and further as per bidder’s allegation, his EMD has been forfeited by respondent no. 2. It is further stated in the appeal that appellant has also been informed that no bidders participated during the bidding process i.e. in the Auction Process and on last date of hearing i.e. on 09.09.2016, the CH bank’s counsel urged the Ld. Recovery Officer to put the property on fresh auction, however, no order has been stated by the Ld. Recovery Officer and merely put the matter for orders on 20.09.2016. Ld. Recovery Officer even failed to make the submissions of the applicant’s counsel and simply declared the bidder as highest bidder and even ignored the bid sheet filed by the agency / respondent no. 2. Accordingly, it has been prayed to allow the present appeal.

3. Reply to this appeal has been filed on behalf of respondent no. 1 bank vehemently opposing the same. It is stated in the reply that appellant herein has no right to file the appeal as the appellant is not the owner of the property and applicant is the proprietor of M/s R.S. Perfumers who has obtained the credit facilities from the respondent no. 1 bank and in order to secure the facilities, Mrs. Madhu (wife of appellant herein) created mortgage in respect of her property. Since the appellant failed to pay the amount, the account of the appellant was declared as NPA and accordingly, the respondent bank initiated the process of SARFAESI Act and simultaneously filed the suit for recovery against the appellant. It is further stated in the reply that on the directions of Ld. Recovery Officer, respondent bank filed the statement of account and further Ld. Recovery Officer, directed the parties to submit the valuation report and accordingly, the respondent no. 1 bank filed the valuation of the suit property, however, appellant failed to submit the valuation report, accordingly, the Ld. Recovery Officer put the ground floor for auction. Thereafter, against the order of Ld. Recovery Officer, the appellant filed an appeal before this Tribunal to allow the sale of top floor instead of ground floor as the value of the ground floor is higher and this Tribunal directed the appellant to deposit a sum of Rs. 2.0 lac with the bank and submit the valuation report with respect to the same, however, appellant failed to file the valuation report nor deposited a sum of Rs. 2.0 lac, Thereafter, the ground floor of secured property no. C-32/2, Yamuna Vihar was put to auction through online auction through auctioneer agency and auction purchaser / Sh. Ashish Garg lodged in under the password provided by the auctioneer and he offered to purchase the said property at a sum of Rs. 56.61 lac and in the auction, only the bid of Sh. Ashish Garg was received and no other bid was received, accordingly, his bid was declared as final. The sale was confirmed in his favour vide order dated 04.10.2016 and in terms of said order a Sale Certificate dated 13.10.2016 was issued and which was registered in the office of Sub-Registrar of

Assurances. Thus, it is clear that auction has been conducted in accordance with the law, hence it has been prayed to dismiss the present appeal.

4. In the present appeal, it is being submitted on behalf of appellant that the auction purchaser has been wrongly and illegally declared as highest bidder with regard to property i.e. Ground Floor of property bearing no. C-6/467, Yamuna Vihar, Delhi – 110 053 (hereinafter referred to as `property-in-question’). It is also submitted by the appellant herein that the reserve price of the property was fixed for a sum of Rs. 56.61 lac and the Ld. Recovery Officer was pleased to auction the property-in-question as per the 2nd Schedule of Income Tax Act but the same was not conducted in the same manner and even there was dispute with respect to the increase of the amount of the bid and in fact, no bidder was there, as per the report submitted by the auction agency and even one application was moved on behalf of the auction purchaser that the demands were being made on behalf of the auction agency and there was no scheduled time fixed by the agency, therefore, the entire proceedings qua the auction of the property- in-question are illegal, malafide and accordingly, not binding upon the rights of the borrower / guarantor / mortgagor.

5. In the present matter, Ld. counsel for appellant further argued that the impugned order passed by Ld. Recovery Officer is appealable. Further it is also contended that one complaint was moved by the auction purchaser who has participated in the auction regarding the illegal conduct of the auction agency, therefore, it is apparent on the record that fair auction proceedings were not there. Accordingly, appellant herein has prayed for acceptance of the appeal.

6. On the other hand, Ld. counsel for respondent bank filed the detailed reply stating therein that auction was conducted by the Ld. Recovery Officer in a fair manner. It is also stated that though some illegal demands were made by the official of auction agency, however, bid was accepted in favour of Auction Purchaser namely Sh. Ashok Garg as he was declared highest bidder for a sum of Rs. 56.61 lac and Sale Certificate has already been issued in his favour, hence there was no illegality or ambiguity in the auction proceedings, accordingly, prayed for dismissal of present appeal. Further, at the same juncture, Ld. counsel for respondent bank vehemently contended that present appeal is not maintainable because of the reason that the mortgagor of the property-in- question, in whose name it was registered, never came forward for filing such like objections and appeal has not been filed by the mortgagor Ms. Madhu and rather, the same has been filed by her husband Sh. Suman Kishore who is simply a CD in the present matter and he was not a mortgagor of the property- in-question. He further contended that if the CD has any grievance, he would have filed objections before the Ld. Recovery Officer under Rule 60 of Schedule II

of Income Tax Rules and accordingly prayed for dismissal of the appeal.

7. Heard and the record has also been thoroughly perused. So far as, the contention of Ld. counsel for respondent bank qua non-maintainability of the present appeal is concerned, apparently, the present appeal has been filed on behalf of husband of defendant/CD no. 3 Ms. Madhu and the same has not been filed on behalf of Ms. Madhu / CD no. 3, who was the mortgagor of the property-in-question. In the present matter, no doubt, property-in-question was mortgaged by Ms. Madhu who was one of the defendant in the OA No. 199/2010 i.e. defendant no. 3 and the same has been auctioned by Ld. Recovery Officer in the auction proceedings, whereas, the present appeal has been filed on behalf of Sh. Suman Kishore, who is husband of Madhu/one of the CD herein in the present matter. Merely that the property pertains to Smt. Madhu and not Sh. Suman Kishore, the present appellant; it could not be said that he is not entitled to file the present appeal, the appellant being one of the CDs, of course, is entitled to raise the said question that the property-in-question has not been sold for an appropriate amount and the auction has been conducted in illegal manner because if the property-in-question is being sold in open auction, fairly and impartially; and maximum amount is to be recovered, then certainly, the other CDs are entitled to decrease of the amount which they have been held liable to pay, therefore, the arguments raised on behalf of respondent bank are not striking to the judicious consensus of this Tribunal and this Tribunal is of the affirm view that present appeal is maintainable on behalf of CD. Accordingly, said contention stands discarded

8. Now it is to be seen whether the auction proceedings had been carried out by Ld. Recovery Officer in appropriate manner or not or there was any illegality or irregularity in the same or not. In the present matter, no doubt, on behalf of Sh. Ashok Garg / auction purchaser, an application was moved before the Ld. Recovery Officer wherein certain allegations were raised against the auction agency. In the said application, it is being stated by the auction purchaser that the said official of the auction agency was asking him to raise the bid amount and otherwise the earnest money would be forfeited by it, therefore, he had been pressurized by the official of the auction agency, accordingly, he prayed for taking action against the said official of auction agency. On the basis of said complaint, Ld. counsel for appellant raised the objection that auction was not conducted by the Ld. Recovery Officer in impartial manner, hence, the same is liable to be quashed. Apparently, only allegation is that auction purchaser was unnecessarily pressurized to raise the bid amount by the official of Auction Agency. In this context, it is to be mentioned that since no other bidder was there, merely on the said basis, it could not be said that entire auction was not conducted in fair manner, that too, when the auction purchaser had fairly participated in the said proceeding and also gave the bid for an amount of Rs. 56.61 lac and 25% of the EMD was deposited by way of DD on the date of auction itself. Thereafter, the amount of Rs. 6.0 lac was deposited on 30.08.2016, whereas, another amount of Rs. 8,36,000 was deposited by way of DD dated 01.09.2016 and the rest of the amount i.e. Rs. 42,31,000/- was deposited on 12.09.2016. Further, agency fees was also paid on 14.09.2016. Therefore, there was nothing on record to say that the auction was not conducted in fair and impartial manner. The official of auction agency has asked the present bidder i.e. auction purchaser for raising the amount of the bid, does not mean that the entire proceedings had gone illegal and irregular one. Apart that, said application was merely moved by the auction purchaser with an intent to take appropriate action against the said official of the auction agency so that they could not do so in future to extract money from the participants in the auction. Apart that, the Ld. Recovery Officer has passed a detailed order on 20.09.2016 and thereafter the matter was again taken up on 04.10.2016. On that date of hearing, the detailed order was passed by which, the auction was confirmed in favour of Auction Purchaser, being satisfied. Merely on the ground that single bid has come, does not mean that the said auction was held illegally. Apart that, it is the satisfaction of the Ld. Recovery Officer and if Ld. Recovery Officer satisfied that the auction has fetched a good price, he can confirm the auction and apparently qua that there is no illegality or ambiguity in the same. So far as auction notice is concerned, the same was issued on 26.07.2016 and the auction was conducted on 30.08.2016, vide publication was made and accordingly, the auction was held by the Ld. Recovery Officer following appropriate provisions of the Second Schedule of the Income Tax Act, 1961. The details of the property-in-question have been duly mentioned and notice of 30-days was also there, therefore, this Tribunal is of affirm view that there is no apparent illegality or ambiguity in the auction proceedings conducted by Ld. Recovery Officer and consequently, there is also no illegality and ambiguity committed qua confirmation of the sale in favour of auction purchaser on the basis of single bid. Accordingly, finding no merits in the present appeal, the same stands dismissed with no orders to costs. File be consigned to the records.

(DHARMINDER SINGH) PRESIDING OFFICER DRT-III, DELHI (Pronounced in open court) Dated: 02.08.2019 AB