Kobe Steels P Ltd vs J.M. Financial Asst. Reconstruction Co. P. Ltd &Anr. on 7 March 2026

**JUDGMENT**

- 1. This appeal is preferred under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as "the

RDDB Act") by the Appellants, being original Defendant Nos. 1 and 2 in OA No. 134/1998, challenging a series of orders passed by the Ld. Recovery Officer in **RP No. 56/2007 arising out of OA No: 134/1998**, more particularly the orders dated **28-08-2008, 02-09-2011, 22-12-2011 and 27-06-2014** relating to attachment and sale of the properties belonging to the Appellant.

1. 2. The brief facts of the case are that the Appellants were Defendant Nos. 1 and 2 in the Original Application filed by the Certificate Holder Bank for recovery of its dues. The Original Application came to be allowed and a Recovery Certificate dated **04.04.2007** was issued for recovery of **Rs. 2,83,36,972.70/-** with further interest.

2. 3. Accordingly, in execution of the Recovery Certificate, recovery proceedings were initiated and Demand Notice was issued followed by attachment and sale of movable and immovable properties of Appellant No.1. The movable assets were auctioned in November 2008 and the sale was confirmed. The immovable property was thereafter put to auction multiple times and ultimately auctioned on **20.10.2011**, wherein Respondent No.2 – M/s. Monali Textile – was declared the successful Auction Purchaser for a sum of Rs. 41,00,000/-. The sale was confirmed on **22.12.2011**, and a sale certificate was issued on **16.01.2012**.

3. 4. Subsequent proceedings were initiated by the Recovery Officer under Sections 25(b) and 28(4-A) of the Act, resulting in issuance of warrant of arrest dated 27.06.2014 against the Appellants.

4. 5. Aggrieved thereby, the Appellants preferred the present appeal in the year 2014 challenging multiple orders passed between 2008 and 2014 as well as the auction sale of the immovable property.

5. 6. It is submitted that pursuant to initiation of RP No. 56/2007 before the Ld. Recovery Officer, the records revealed that initially directions were issued to the Bank to furnish interest certificates and to take steps for issuance of demand notice. The appellants have consistently contended that mandatory demand notice under the RDDB Act and Rules was never duly served upon

them. The so-called compliance affidavits filed by the Bank were accompanied only by postal receipts, without proof of actual service.

1. 7. It is further submitted that despite absence of proof of service, the Ld. Recovery Officer proceeded to pass an order dated **28-08-2008** directing attachment and sale of the immovable property of Appellant No.1, namely factory land and building situated at Village Timba, Taluka Godhra, along with plant and machinery.

2. 8. It is further submitted that in the original judgment and Recovery Certificate permission for sale of movables properties such as plant and machinery was passed and there was no direction authorising sale of immovable property but the Recovery Officer sold the immovable property exceeding the scope of the Recovery Certificate.

3. 9. It is further submitted that the reserve price of the immovable property was repeatedly reduced from **Rs. 73,82,000/-** to **Rs. 62.75 lakhs**, and thereafter to **Rs. 38,81,000/-**, without notice or consent of the Appellants and the property was ultimately auctioned on **20.10.2011**, wherein **M/s. Monali Textile** was declared as the successful bidder for a consideration of **Rs. 41,00,000/-**. Consequential orders were passed by the Recovery Officer confirming the auction sale.

4. 10. It is further submitted that in the auction process all the members of the successful purchaser of Mr. Mulchand Modi (Prop: Monali Textile) had participated and that the successful Purchaser had not deposited auction amount, Poundage fees in accordance with public advertisement and also had not produced I. D. proof in accordance with the terms and conditions of the public advertisement/tender form and hence the whole process of the auction conducted by the Ld. Recovery officer requires to be cancelled.

5. 11. It is further submitted that the Appellants filed **Special Civil Suit No. 15/2014** before the competent Civil Court at Godhara, wherein a Court Commissioner was appointed and a Panchama dated **13.04.2014** was drawn. The Appellants contended that the said proceedings indicate their continued physical possession of the property and hence the successful

Auction Purchaser has no authority to obtain the physical possession of the property in question.

12. The Appellant has challenged the orders dated 07-01-2008, 02-09-2011, 20-10-2022 and 27-06-2014 passed by the Ld. Recovery Officer in RP No: 56/2007 and submitted that the entire recovery and auction process is illegal, arbitrary, and without jurisdiction, primarily on the following grounds:

- • Demand notices and auction notices were never properly served upon the appellants.

- • The Recovery Certificate authorized only sale of movable assets but immovable property was also sold without consent.

- • Reserve prices were repeatedly reduced without notice or consent, resulting in sale of the property at a "throwaway" price.

- • The auction process was alleged in collusion between the Bank officials, Valuer, and Auction Purchaser.

- • The successful bidder (Monali Textile) allegedly failed to comply with auction conditions, and the auction involved family members of the purchaser, vitiating transparency.

- • Physical possession was handed over without any lawful authorization, and a Civil Court Commissioner later confirmed that possession remained with the Appellants.

- • An arrest warrant was issued against Appellant No. 2 without valid service of notice under Section 28(4A).

10. Per Contra, Ld. Counsel for the Respondent No: 1 in his written arguments has submitted that the present appeal, filed on or about 14.07.2014, is not maintainable either in law or on facts. It is contended that Appellant No.1, being a company, has failed to place on record any board resolution authorizing the filing of the appeal or empowering the signatory to act on its behalf, rendering the appeal qua Appellant No.1 invalid and without authority.

1. 11. He has further contended that the appeal is hopelessly barred by limitation since the Appellants have sought to challenge orders dated 28.08.2008, 02.09.2011 and 20.10.2011 relating to attachment and sale of secured assets, which ought to have been challenged within 30 days prescribed under Section 30 of the RDB Act, 1993. It is further submitted that the law does not permit condonation of delay in appeals against orders of the Recovery Officer, as held by the ***Hon'ble Supreme Court in International Asset Reconstruction Co. of India Ltd. Vs. Official Liquidator and Avneesh Chandan Gadgil V/s Oriental Bank of Commerce.***

2. 12. He has further placed the factual chronology on record and submitted that pursuant to the order dated 04.04.2007 passed in OA No.134 of 1998, a recovery certificate was issued for Rs.2,83,36,972.70/-. Recovery proceedings were initiated in RP No.56 of 2007, and demand notices were duly served upon the appellants. On failure of the appellants to discharge their liability, secured assets were attached on 28.08.2008 and subsequently put to auction. Movable assets were sold and the sale confirmed in November 2008, while the immovable property was eventually auctioned on 20.10.2011 and the sale confirmed on 22.12.2011. The appellants neither raised objections nor challenged these actions within the limitation period, nor did they avail remedies under Rules 60 and 61 of the ITCP Rules.

3. 13. It is further submitted by the Respondent No: 1 that the appellants have improperly challenged an alleged order dated 07.11.2008, which, according to Respondent No.1, does not exist.

4. 14. It is further submitted that the only order challenged within time is the order dated **27.06.2014**, whereby the Recovery Officer issued arrest warrants for non-compliance of notices under **Sections 28(4-A) and 25(b)** of the Act. However, Respondent No.1 submitted that this order has no connection with the earlier attachment and sale orders, and under the guise of challenging the arrest warrant, the Appellants are unnecessarily attempting to reopen concluded and time-barred proceedings.

5. 15. The Ld. Counsel for Respondent No: 2, Monali Textile (Auction Purchaser) has submitted that it is a bonafide purchaser of the said property having acquired the same through a public auction conducted by the Recovery Officer, DRT, Ahmedabad. The auction was conducted in accordance with

law, pursuant to which Respondent No: 2 deposited a sum of **Rs. 41.00 lakhs along with applicable poundage fees**. He has further submitted that after completion of all formalities, the Recovery Officer issued a **Sale Certificate dated 16.01.2012** in favour of Defendant No.2.

1. 16. He has further submitted that the Recovery Officer has followed due process and conducted the auction strictly in accordance with law and further stated that the appointment of the Court Receiver and handing over of possession to the purchaser were carried out in compliance with orders of the Recovery Officer.

2. 17. He has further submitted that the contention of the Appellants that they were in possession of the property at the time of alleged commission proceedings in April 2014 is specifically denied. He has further submitted that possession had already been handed over in **January 2012**, and no notice of any subsequent commission proceedings was ever served upon the purchaser.

3. 18. In conclusion, both the Respondents have submitted that the appeal is vague and suffers from suppression of material facts, as the Appellants themselves are uncertain about which orders are under challenge. Further, the auction purchaser of movable assets has not been impleaded, rendering the appeal defective for non-joinder of necessary parties.

4. 19. On these grounds, they have prayed that the present appeal be dismissed as not maintainable with cost.

5. 20. I have heard the Ld. Counsels for all the parties and perused the records of this Appeal and also the records of RP No: 56/2007 arising out of Original Application following points of determination appears to be necessary to be dealt with and decided for just and proper adjudication of this Appeal:

**(I) Whether this Appeal is seriously barred by provision of Limitation Act?**

**(II) Whether impugned order dated 27-06-2014 constitute as a continuing order of impugned orders dated 28-08- 2008, 02-09-2011 and 22-12-2011?**

**(III) Whether this Appeal is bad in law for non-joinder of proper and necessary parties?**

**(IV) Whether the Appellant is entitled to any relief in this case. If yes, what relief?**

21. Now the above point of determination will be hereby decided one by one.

**POINT OF DETERMINATION NOS: I & II**

**Whether this Appeal is seriously barred by provision of Limitation Act?**

**&**

**Whether impugned order dated 27-06-2014 constitute as a continuing order of impugned order dated 28-08-2008, 02-09-2011 and 22-12-2011?**

22. These two points of determination are corelated and for the sake of convenience these two are being decided jointly in this order.

23. Following facts are necessary to keep in mind while deciding these points of determination.

- a) The impugned order dated 28-08-2008 passed by Ld. Recovery Officer pertains to attachment of secured assets which included mortgaged immovable property and plant and machineries of Appellant No: 1 and it is an admitted fact that this order was not challenged by the Appellant within the limitation period provided in the act.

- b) It is also necessary to keep in mind that vide the order dated 24-11-2008, Ld. Recovery Officer has proceeded to put the charged Secured assets for sale, through public auction and it is most important to note that this order has not been challenged by the Appellant till date even through this Appeal.

- c) In compliance of order dated 24-11-2008 passed by Ld. Recovery

Officer, auction was held successfully and one Mr. Harul L. Patel has emerged as successful Auction Purchaser for the movable property which was put to auction in Lot No: 2. **However, the auction of the immovable property failed** and the sale of movable asset was confirmed in favour of the above mentioned Auction Purchaser on 25-11-2008 and the Appellant preferred not to challenge this order also, even till date.

- d) Vide impugned order dated 02-09-2011, Ld. Recovery Officer put the Immovable property to auction sale on 28-10-2011 for second time and the Appellant has not challenged this order within the limitation period provided under the Act. The sale of the secured assets qua immovable property was concluded vide impugned order dated 22-12-2011 and same has also not been challenged within limitation period provided under the law.

- e) Vide impugned order dated 27-06-2014, Ld. Recovery Officer has issued warrant of arrest against the CD's for noncompliance of notices issued under Section 28 (4-A)) of the Act i.e. for disclosure of personal assets and properties and for non compliance of notices issued under section 25(b) of the Act i.e. show cause against the Certificate Debtors. This order was challenged within the period of limitation by the Appellant through this Appeal.

- f) Ld. Counsel for the Appellant argued that since last order dated 27-6-2014 is continuing order of the previous impugned order dated 28-08-2008, 02-09-2011 and 22-12-2011, this Appeal is filed very much within the period of limitation.

- g) This Tribunal is not convinced with this logic of Ld. Counsel for the Appellant. Virtually, there is no reasonable nexus between the above

three previous orders and the last order dated 27-06-2014 and accordingly, it cannot be said that this last order was continuing proceeding of the previous two orders. The period of limitation is prescribed by the RDB Act in such case in 30 (Thirty) days and without any doubt, the challenge with regard to order dated 28-08-2008, 02-09-2011 and 22-12-2011 are filed in the year 2014 i.e. 2 to 6 years beyond limitation and that too without any explanation otherwise also this Tribunal has no power to exempt the limitation period in Appeal under Section 30 RDB Act.

This finding of this Tribunal is based on the observation of Hon'ble Apex Court in case of **International Asset Reconstruction Co. of India Ltd. vs. Official Liquidator** reported in (2017) 16 SCC 137 and also in the case of **Avneesh Chandan Gadgil vs Oriental Bank of Commerce** reported in (2022) 16 SCC Page No.721. In these cases Hon'ble Apex Court has held that **Section 5 of Limitation Act shall not be applicable to the Appellant against the order of Ld. Recovery Officers as provided under RDB Act 1993.**

h) **It is necessary to mention here that the citation of Peegee Exports Pvt. Ltd V/s Gargaya Research Instruments, DRT cases (PT-III)485 as cited by the Ld. Counsel for Appellant** pertains to case where during the pendency of the Appeal against confirmation of sale deposit the whole decretal amount of the auction sale was deposited by judgment debtor then the Hon'ble DRAT, Delhi hold that such sale could be set aside. Obviously, in this case there is no such averment by the Appellant that the judgement debtor has deposited the entire decretal amount or any part of it.

Accordingly, the judgement passed in this ruling relates to different factual matrix.

- i) The second ruling in this regard cited by Ld. Counsel for the Appellant is passed in **Writ Petition No: 3652 of 2012 by Hon'ble High Court of Mumbai on 29-08-2012** in which it was held that whether the question in issue demonstrate that the defect of jurisdiction whether pecuniary or territorial or in respect of subject matter of the action, strikes at the very authority of the Court to pass any decree and such a defect cannot be cured even by the consent of the parties. In this case, the Hon'ble Court has set aside the order of Hon'ble DRAT, Mumbai by which appeal against the judgement by Ld. DRT was not entertained on the ground of delay and Hon'ble Court held that whether the matter strikes at the very authority of the Court to pass any decree, hearing cannot be denied on ground of delay in filing the Appeal but in this case the issue raised by the Appellant does not question the authority of the Ld. Recovery Officer to pass that impugned order. Accordingly, this ruling also cannot be relied on in this case. While on the other hand the citation by Ld. Counsel for Respondent No: 1 directly relates to the merit of this case and issue in hand.

- j) Accordingly, it is held that impugned order dated 28-08-2008, 02-09-2011 and 22-12-2011 are seriously barred by the law of limitation and the Appellant have no right to challenge those orders. It is also held that the impugned order dated 27-06-2014 does not constitute as a continuing order of impugned orders dated 28-08-2008, 02-09-2011 and 22-12-2011.

- k) As far as order dated 27-06-2014 is concerned, this impugned

order is challenged within a period of limitation and its consequences will be decided in this Appeal at a later stage while deciding the point of determination No: 4.

**Point of Determination Nos: I & II are decided accordingly.**

**24. POINT OF DETERMINATION NO: III :**

**Whether this Appeal is bad in law for non-joinder of proper and necessary parties?**

- a) In this case the Appellant has challenged the impugned order dated 28-08-2008 by which Ld. Recovery Officer has attached the secured assets which included mortgaged movable properties and plant and machineries of Appellant No: 1 but Appellant had not joined as a party Respondent to the successful Auction Purchaser of the movable assets in this case. Drawing the attention of this Tribunal towards the fact that Ld. Counsel for Respondent No: 1 submitted that by not joining as successful Auction Purchaser for movable property as party Respondent, the Appellant has committed a legal error i.e. not joining necessary party in this case and non-joinder of party is a reasonable ground to reject the Appeal as any decision in favour of the Appellant in this case will certainly curtail the valuable right of the successful Auction Purchaser of movable properties in this case and that cannot be done without giving them even an opportunity to be heard.

- b) This Tribunal fully endorse the argument of the Ld. Counsel for the Respondent and it is held that this Appeal is bad for non-joinder of necessary parties also. **Point of Determination No: III is accordingly disposed of.**

**25. POINT OF DETERMINATION NO: IV :**

**Whether the Appellant is entitled to any relief in this case. If yes, what relief?**

- a) As it is held while deciding the Point of Determination Nos: 1 & 2 that the challenge of the Appellant qua impugned order dated 27-06-2014 is not barred by limitation. By this order the Ld. Recovery Officer has issued civil warrant of arrest against the Secured Debtor but as it is pointed out by Ld. Counsel for Respondent No: 1 that the order of Ld. Recovery Officer has now become infructuous as no arrest has been made in compliance of that order and if the Ld. Recovery Officer will find it necessary, the civil arrest of the Secured Debtor, it will be legally required to issue a fresh warrant of arrest in this regard.

- b) This contention of Ld. Counsel for Respondent No: 1 is totally justified and it is hereby held that order dated 27-06-2014 has now become infructuous.

- c) It gives the Appellant a fresh opportunity to appear before the Ld. Recovery Officer and satisfy him by giving cogent reason that why he should not be arrested as ordered by Ld. Recovery Officer.

- d) Accordingly, as the impugned order dated 27-06-2014 has now become infructuous and as challenge against the other three impugned orders dated 28-08-2008, 02-09-2011 and 22-12-2011 has now been hold as seriously time barred, there appears no reason to grant any relief in favour of the Appellant. **Point of Determination No: IV is accordingly decided.**

26. On the ground of above mentioned decision on Point of Determination Nos: I to IV, this Appeal deserves to be dismissed without any order as to cost.

**ORDER**

1. 1. The Appeal No: 12/2014 is hereby dismissed with no order as to cost.

2. 2. Let a copy of this order be sent to Ld. Recovery Officer with a direction to proceed further to decide and conclude RP No: 56/2007 related with OA No: 134/1998, in accordance with law.

3. 3. File be consigned to records.

Pronounced in the Open Tribunal on **7^th March, 2026.**

**(PANKAJ KUMAR UPADHYAY) PRESIDING OFFICER, DRT-II, AHMEDABAD.**

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