MS REAL SURFACE FINISH PVT LTD vs BANK OF BARODA on 3 August 2026

**JUDGMENT**

1. 1. This appeal has been preferred by the Appellant, a successful auction purchaser, challenging the order dated 07.04.2026 passed by the learned Recovery Officer-II,

DRT-II, Ahmedabad in Recovery Proceedings No. 488 of 2000 arising out of Original Application No. 367 of 1998.

1. 2. The Appellant has prayed that the impugned order be set aside and that appropriate directions be issued to the Recovery Officer to hand over physical possession of the secured asset to the Appellant and to execute the sale deed in its favour within 15 days. The Appellant has further prayed that the sale be made subject to the final outcome of any proceedings that may be pending or may be passed by the competent authority in proceedings initiated by the Directorate of Revenue Intelligence (DRI).

**Facts of the Case**

1. 3. The facts, in brief, are that pursuant to the recovery proceedings initiated by the Respondent Bank, the secured immovable property was brought to auction by the Recovery Officer by issuing auction notice dated 18.11.2024.

2. 4. The Appellant participated in the e-auction held on 31.12.2024 and emerged as the highest bidder with a bid of Rs. 66,20,000/-, which was above the reserve price of Rs.66,00,000/-.

3. 5. The Appellant deposited the entire sale consideration within time. It also complied with the requirement of deduction and deposit of TDS under Section 194-IA of the Income Tax Act, 1961, and deposited the poundage fees as required. The respondent Bank acknowledged receipt of the sale proceeds.

4. 6. Initially, by order dated 19.06.2025, the Recovery Officer set aside the auction on the ground that deduction of TDS amounted to short payment. The Appellant challenged the said order by preferring Appeal No. 03 of 2025.

5. 7. The learned Presiding Officer, by order dated 27.08.2025, allowed the said appeal, set aside the order dated

19.06.2025 and directed the Appellant to redeposit the sale consideration and the Recovery Officer to decide the application for confirmation of sale in accordance with law.

1. 8. The Appellant thereafter complied with the directions and redeposited the sale consideration. Upon such compliance, the Recovery Officer, by order dated 30.09.2025, confirmed the sale in favour of the Appellant and made the sale absolute. The Recovery Officer further directed delivery of possession and execution of sale deed.

2. 9. Since the property was stated to be under lock and seal and in the custody of DRI, the Bank filed I.A. No. 234 of 2025 under Section 25(aa) of the Recovery of Debts and Bankruptcy Act, 1993 seeking assistance for taking possession.

3. 10. The Recovery Officer, by order dated 09.12.2025, allowed the said application and appointed an Advocate as Court Receiver for taking possession of the property, including issuance of notice to DRI, taking possession with police assistance, and breaking open locks if necessary.

4. 11. The Court Receiver submitted a report dated 26/12/2025 indicating that notices were issued to DRI and possession was taken by doing videography and photography and inventory of the entire property was taken and Panchnama was also drawn. However, after taking possession of the property, the Court Receiver could not lock the property because the main door was broken and hence, she affixed notice on the wall of the subject property regarding taking physical possession. The possession of the property was also handed over by Court Receiver to the Ld. Recovery Officer. Thereafter, the Recovery Officer kept adjourning the matter and started seeking correspondence from DRI.

5. 12. DRI addressed a communication dated 18.03.2026 stating that the property was sealed in connection with an NDPS

case and that possession could not be handed over without orders from a competent court.

1. 13. Ultimately, by the impugned order dated 07.04.2026, the Recovery Officer withdrew his earlier order dated 09.12.2025 for taking physical possession and directed the Bank to furnish details of earlier proceedings.

2. 14. The Appellant has challenged the said order as being without jurisdiction, contrary to the binding earlier orders, and violative of the rights of a bona fide auction purchaser.

**Points for Determination**

The following points arise for determination:

1. (1) Whether the impugned order dated 07.04.2026 passed by the Recovery Officer is without jurisdiction and liable to be set aside?

2. (2) Whether the confirmed auction sale in favour of the Appellant can be stalled or nullified on the basis of a communication from DRI, which was not a party to the proceedings?

3. (3) Whether the Appellant is entitled to direction for delivery of possession and execution of sale deed?

4. (4) Whether the sale should be made subject to the final outcome of proceedings, if any, before the competent authority in DRI proceedings?

**Findings and Reasons**

**Point No. 1: Jurisdiction of the Recovery Officer**

1. 15. It is well settled that the Recovery Officer, while executing a Recovery Certificate, is required to act strictly within the framework of the Recovery of Debts and Bankruptcy Act, 1993 and the applicable procedure. He cannot assume powers of review or recall of his own concluded orders unless such power is expressly conferred by statute.

1. 16. In the present case, the Recovery Officer had already passed a detailed order dated 09.12.2025 appointing a Court Receiver for taking possession of the property. The said order had not been challenged by any party before any competent forum. There was no application by any party seeking withdrawal or recall of that order. In such circumstances, the Recovery Officer could not have *suo motu* withdrawn the said order by passing the impugned order dated 07.04.2026.

2. 17. The impugned order, therefore, suffers from jurisdictional error and is contrary to settled principles governing quasi-judicial authorities. Once a reasoned order had been passed and acted upon, it could not have been nullified in the manner adopted by the Recovery Officer.

3. 18. This Tribunal is therefore satisfied that the impugned order is unsustainable in law.

**Point No. 2: Effect of DRI communication**

1. 19. The communication dated 18.03.2026 issued by DRI was not by way of any formal application supported by affidavit before this Tribunal. DRI was not impleaded as a party in these proceedings. No adjudication was sought by DRI on the basis of any properly instituted claim before this Tribunal.

2. 20. A mere communication from a third party, however important it may be in its own sphere, cannot by itself operate to stall execution of a confirmed auction sale, unless there is a binding order passed by a competent court or authority restraining such execution.

3. 21. In the present case, there is no material on record to show any stay, restraint, or legal prohibition issued by any competent court preventing delivery of possession to the Appellant. The Recovery Officer could not have treated the DRI communication as sufficient ground to withdraw the

possession proceedings, especially when the sale had already been confirmed and made absolute.

1. 22. The execution proceedings under the Act are intended to ensure expeditious realization of recovery dues. Once the sale stood confirmed and the auction purchaser had complied with all conditions, his rights could not be defeated by administrative correspondence from a non-party.

2. 23. Therefore, the DRI communication could not have been the basis to interfere with the rights of the Appellant in the manner done by the Recovery Officer.

**Point No. 3: Rights of the auction purchaser**

1. 24. The Appellant is a bona fide auction purchaser. It participated in a public auction conducted after due publication. It deposited the sale consideration within time, complied with tax and procedural requirements, and the sale was ultimately confirmed in its favour by the Recovery Officer by order dated 30.09.2025.

2. 25. Once the sale was confirmed, the rights of the Appellant crystallized, subject only to such legal contingencies as may be provided by law or as may arise from any order of a competent authority. The Recovery Officer was duty bound to take consequential steps for delivery of possession and execution of the sale deed.

3. 26. The record shows that even after confirmation of sale, the Appellant has been deprived of possession on account of repeated adjournments and extraneous considerations. Such a course is contrary to the object of the recovery law and causes serious prejudice to a bona fide auction purchaser.

4. 27. The Tribunal finds that the Appellant is entitled to the relief of delivery of possession and execution of the sale deed.

7**Point No. 4: Sale subject to outcome of DRI proceedings**

1. 28. At the same time, this Tribunal also takes note of the fact that the property is stated to be under the custody/seal of DRI in connection with proceedings under a special statute. If any competent court or authority, in accordance with law, passes any order affecting the property, the same shall naturally operate according to its own force.

2. 29. Therefore, while the confirmed sale in favour of the Appellant cannot be denied on the basis of the present impugned order, it is appropriate to clarify that the sale and consequential possession/execution shall remain subject to any final order that may be passed by the competent forum in proceedings lawfully initiated by DRI, if such order is passed in accordance with law.

3. 30. Such a clarification balances the rights of the auction purchaser with the requirement that lawful orders of competent authorities, if any, shall prevail in accordance with legal hierarchy.

**Conclusion**

For the reasons stated above, this Tribunal holds that:

1. 31. The impugned order dated 07.04.2026 is illegal, without jurisdiction, and liable to be set aside.

2. 32. The Appellant, being a bona fide auction purchaser and the sale having been confirmed, is entitled to delivery of physical possession of the property.

3. 33. The Recovery Officer must take immediate steps for execution of the sale deed in favour of the Appellant.

4. 34. The sale shall remain subject to the final outcome or any order that may be passed by the competent authority in DRI proceedings, if any such order is passed in accordance with law.

8**ORDER**

- ➤ The appeal is **allowed**.

- ➤ The impugned order dated **07.04.2026** passed by the learned Recovery Officer-II in Recovery Proceedings No. 488 of 2000 is hereby **set aside**.

- ➤ The learned Recovery Officer-II is directed to:

- ➤ hand over physical possession of the subject property to the Appellant;

- ➤ ensure execution of the sale deed in favour of the Appellant; and

- ➤ complete the aforesaid exercise **within 15 days** from the date of receipt of this order.

- ➤ It is further declared that the sale in favour of the Appellant shall be **subject to the final outcome or any order that may be passed by the competent authority in DRI proceedings**.

- ➤ No order as to costs.

- ➤ File be consigned to record.

Pronounced in open Tribunal on this 3^rd day of August 2026 at Ahmedabad.

(Pankaj Kumar Upadhyay) Presiding Officer DRT-II, Ahmedabad