Mahendra Dhirubhai Rakholia vs STATE BANK OF INDIA on 8 April 2025

**JUDGMENT**

1. 1. This appeal is preferred by the Appellant against the order dated 21/11/2024 passed by Ld. Recovery Officer-I, DRT-II, Ahmedabad ("Ld. RO" for short) in Recovery Proceedings No.81/2018.

2. 2. Brief facts of the present Appeal, as averred by the Appellant, are as under:

1. (a) The Appellant is the owner / purchaser of the immovable property being Office No.201, admeasuring about 2404 Sq.ft. i.e. 222.34 Sq.Mtrs. super built up area i.e. 1320 sq.ft. i.e. 122.63 Sq.Mtrs. built up area on 2^nd Floor, "Nilkanth Plaza" together with undivided proportionate land admeasuring about 21.45 Sq.Mtrs. underneath the said building constructed on the land bearing Plot No.4, 5, 6, 7, 8, 9, 10 & 11, total admeasuring about 590.72 Sq.Mtrs., Revenue Survey No.253 i.e. Block No.281, Final Plot No.80 of T.P.S. No.68 (Puna-Simada) of village Puna, Taluka City (Chorysi), Dist. Surat (hereinafter referred to as "the property in question"), which was purchased by him from the public auction conducted by Respondent No.4 - Central Bank of India ("CBI") under the provisions of SARFAESI Act for a consideration of Rs.56,35,000/- and Sale Certificate under Rule 9(6) came to be issued in favour of the

Appellant herein, following by execution of Registered Sale Deed No.17448 dated 19/12/2022.

- (b) Respondent No.1 – State Bank of India is the Certificate Holder Bank in RP No.81/2018 issued by this Tribunal in OA No.725/2016. Respondent Nos.2 & 3 are the Certificate Debtors of R.P. No.81/2018 and Respondent No.5 is the auction purchaser of the auction conducted by Ld. R.O. in R.P. No.81/2018.

- (c) Respondent No.1 – Bank had initiated Recovery Proceedings being R.P. No.81/2018 in pursuance to the judgment and order passed by this Tribunal in OA No.725 of 2016. In pursuance to the Recovery Certificate, Ld. R.O. has proceeded further in terms of the provisions of the Second Schedule and Third Schedule to the Income Tax Act and after passing various orders in R.P. No.81/2018, Ld. R.O. has passed an order dated 19/03/2024 and thereby put the property for auction on 03/05/2024, which was confirmed by Ld. R.O. vide order dated 01/07/2024 by issuing Sale Certificate in favour of Respondent No.5.

- (d) Upon knowing the aforesaid facts, the Appellant herein filed objection before Ld. R.O. and contended that the property in question cannot be attached and sold under RP, as the date on which, it has been attached and put for sale, the same was not belonging to CDs and the same was belonging to the present

Appellant, who had purchased the property from public auction conducted by Respondent No.4 – CBI under the provisions of SARFAESI Act and therefore, the said property no longer remains of Respondent Nos.2 & 3 – CDs.

- (e) Ld. R.O. vide order dated 23/07/2024 kept order dated 01/07/2024 in abeyance till further order by recording the reasons for granting the same.

- (f) Respondent No.1 Bank thereafter filed reply to the objection filed by the present Appellant. Respondent No.5 – Auction Purchaser of the auction conducted by Ld. R.O. had also filed an affidavit requesting to refund the amount paid by him. Respondent No.4 – CBI had also filed purshis declaring the fact of sale under SARFAESI Act.

- (g) After hearing the parties, Ld. R.O. passed impugned order dated 21/11/2024.

- (h) Being aggrieved by the said order the Appellant has filed the present Appeal before this Tribunal u/s 30 of RDB Act challenging the said order on various grounds.

3. Respondent No.1 – SBI has filed its affidavit-in-reply vide Exh.R/18 and resisted the Appeal by contending that the property in question was duly mortgaged by Respondent Nos.2 & 3 by way of Registered Mortgage Deed dated 24/04/2014 with

Respondent No.1 Bank and they have deposited the original Registered Sale Deed executed by M/s. Sahjanand Developers in favour of Respondent No.1 on 02/04/2014. Therefore, the mortgage alleged to have been created on the basis of subsequent Sale Deed dated 12/11/2014 executed in favour of the borrowers of Respondent No.4 – CBI, without earlier Sale Deed dated 02/04/2014, is not legal and valid.

1. 4. It is further contended by Respondent No.1 that the property in question was attached in the year 2021 and all the respective forms were affixed on the conspicuous part of the property. Neither the Appellant herein nor Respondent No.4 – CBI raised any objections before Ld. R.O. in the year 2021 and waived their rights.

2. 5. Respondent No.1 has also contended that thereafter the property in question was put to public auction and all the necessary forms were affixed on the conspicuous part of the property in the year 2024. The Appellant herein did not raise any objections before Ld. R.O. against Sale Notice affixed on the conspicuous part of the property. The Sale Notice was also published by Respondent No.1 in newspapers to inform public at large.

3. 6. Respondent No.1 has further contended that the property was closed since long. Even at the time of attachment as well as at the time of affixation of sale notice, the property was closed. Respondent No.4 – CBI as well as Appellant herein were aware about all the proceedings initiated by Respondent No.1 since long. At the time of providing physical possession of the property to Auction Purchaser i.e. Respondent No.5 herein also, the property was closed.

1. 7. It is further stated by Respondent No.1 Bank that the transfer made by Respondent No.4 in favour of the Appellant herein is the chain of fraudulent transfer. Hence, the Appellant could not be a bona fide purchaser / owner of the property in question.

2. 8. Respondent No.1 has also contended that the Appellant has not filed the objections in compliance of ITCP Rules 60 & 61. The Appellant has not filed objections within 30 days from the date of sale and hence, the objections filed by the Appellant are time-barred and were required to be rejected by Ld. R.O. on the ground of limitation.

3. 9. I have heard Ld. Counsel for the parties at length. The Appellant has filed written submissions vide Exh.11. Respondent No.1 – SBI has filed its written arguments at Exh.R/12.

4. 10. Respondent No.4 has filed its written arguments at Exh.R/13 and has supported the case of Appellant herein. It has further contended that Respondent No.1 – SBI had filed SA No.383/2019 before this Tribunal challenging the measures taken by Respondent No.4 – CBI under SARFAESI Act. The SA came to be disposed of vide order dated 04/05/2023 passed by this Tribunal inter-alia observing that in case any dispute between the Appellant and Respondent Bank, it needs to be resolved as per the provisions of Arbitration and Conciliation Act, 1996. The said order dated 04/05/2023 was neither challenged by Respondent No.1 before higher forum nor any arbitration proceedings came to be initiated for challenging the auction sale proceedings undertaken by Respondent No.4 Bank. Therefore, the auction proceedings conducted by Respondent No.4 attained finality.

Further, the Registered Sale Deed dated 19/12/2022 executed by Respondent No.4 in favour of the Appellant herein has also never been challenged before any forum and hence, the same has also attained finality.

1. 11. Respondent No.4 has further contended that unless and until the aforesaid Registered Sale Deed dated 19/12/2022 executed in favour of the Appellant is set aside by competent forum in an appropriate proceeding, the property could not and ought not to have been sold by Respondent No.1 Bank in the year 2024. Respondent No.1 Bank was not having any right, title or interest in the property in question as the same vested in favour of the Appellant herein since 2022.

2. 12. Respondent No.4 has also stated that Ld. R.O. has erred in appreciating the fact that once the auction purchaser of Respondent No.1 Bank viz. Shri Anil Baldha has filed affidavit dated 21/08/2024 seeking refund of the amount deposited by him, no question arises of confirming such sale and thereby, frustrating the sale proceedings initiated by Respondent No.4 Bank. In these circumstances, Respondent No.4 has prayed to quash and set aside the impugned orders passed by Ld. R.O.

3. 13. Respondent No.5 has filed his written submissions vide Exh.R/10 and stated that, while making a request to Ld. R.O. for auction sale on 19/03/2024, Respondent No.1 - SBI did not apprise Ld. R.O. about disposal of SA No.383/2019 and that the property in question had been auctioned by CBI in favour of the Appellant. At the time of sale confirmation on 01/07/2024 also, SBI did not disclose this fact and hence, the order is obtained by

committing fraud upon Ld. R.O. It is further contended that as the order dated 01/07/2024 was obtained by fraud, Ld. R.O. could have recalled order dated 01/07/2024 confirming sale.

1. 14. All the parties have relied on certain judgments in support of their respective case, which shall be referred at appropriate stage in this Judgment hereinafter.

2. 15. On the aforesaid pleadings and submissions of parties, following Points for determination arise:

**Points for Determination**

1. (1) Whether the objections raised by the Appellant before Ld. R.O. come within the purview of Rule 11 ITCP or that of Rule 60 & 61 of ITCP?

2. (2) Whether the property in question belonged to the Certificate Debtors i.e. Respondent Nos.2 & 3 herein, on the date of attachment?

3. (3) Whether Respondent No.1 – SBI has suppressed material facts from Ld. R.O., which tantamount to playing fraud?

4. (4) Whether Respondent No.1 – SBI has waived its rights for the property in question?

5. (5) Whether Ld. R.O. was authorized to re-examine her order of confirmation of sale by exercising power of review under Rule 87 of ITCP?

6. (6) What order?

**Point No.1**

1. 16. Before discussing this point, following provisions of Second Schedule to the Income Tax Act, 1961 (hereinafter referred to as "ITCP") are necessary to be quoted:

**"Investigation by Tax Recovery Officer.**

**11.** (1) Where any claim is preferred to, or any objection is made to the attachment or sale of, any property in execution of a certificate, on the ground that such property is not liable to such attachment or sale, the Tax Recovery Officer shall proceed to investigate the claim or objection :

**Provided** that no such investigation shall be made where the Tax Recovery Officer considers that the claim or objection was designedly or unnecessarily delayed.

(2) Where the property to which the claim or objection applies has been advertised for sale, the Tax Recovery Officer ordering the sale may postpone it pending the investigation of the claim or objection, upon such terms as to security or otherwise as the Tax Recovery Officer shall deem fit.

(3) The claimant or objector must adduce evidence to show that—

(a) (in the case of immovable property) at the date of the service of the notice issued under this Schedule to pay the arrears, or (b) (in the case of movable property) at the date of the attachment, he had some interest in, or was possessed of, the property in question.

(4) Where, upon the said investigation, the Tax Recovery Officer is satisfied that, for the reason stated in the claim or objection, such property was not, at the said date, in the possession of the defaulter or of some person in trust for him or in the occupancy of a tenant or other person paying rent to him, or that, being in the possession of the defaulter at the said date, it was so in his possession, not on his own account or as his own property, but on account of or in trust for some other person, or partly on his own account and partly on account of some other person, the Tax Recovery Officer shall make an order releasing the property, wholly or to such extent as he thinks fit, from attachment or sale.

(5) Where the Tax Recovery Officer is satisfied that the property was, at the said date, in the possession of the defaulter as his own property

and not on account of any other person, or was in the possession of some other person in trust for him, or in the occupancy of a tenant or other person paying rent to him, the Tax Recovery Officer shall disallow the claim.

(6) Where a claim or an objection is preferred, the party against whom an order is made may institute a suit in a civil court to establish the right which he claims to the property in dispute; but, subject to the result of such suit (if any), the order of the Tax Recovery Officer shall be conclusive."

**"Application to set aside sale of immovable property on deposit.**

60. (1) Where immovable property has been sold in execution of a certificate, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale, on his depositing—

(a) the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, with interest thereon at the rate of one and one-fourth per cent for every month or part of a month, calculated from the date of the proclamation of sale to the date when the deposit is made; and (b) for payment to the purchaser, as penalty, a sum equal to five per cent of the purchase money, but not less than one rupee.

(2) Where a person makes an application under rule 61 for setting aside the sale of his immovable property, he shall not, unless he withdraws that application, be entitled to make or prosecute an application under this rule.

**Application to set aside sale of immovable property on ground of non-service of notice or irregularity.**

61. Where immovable property has been sold in execution of a certificate, such Income-tax Officer as may be authorised by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in this behalf, the defaulter, or any person whose interests are affected by the sale, may, at any time within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by

*this Schedule or on the ground of a material irregularity in publishing or conducting the sale:*

*Provided that—*

*(a) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of the non-service or irregularity; and*

*(b) an application made by a defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in the execution of the certificate.*

17. A plain reading of Rule 11 makes it clear that this Rule has been framed to be applied at the stage of investigation by Recovery Officer and in this case, the objections by the Appellant have been preferred on 23/07/2024 while the impugned sale was concluded by Ld. R.O. on 01/07/2024. On perusal of records of R.P. No.81/2018, it is clear that before confirming sale, the procedure for investigation was fully complied by Ld. R.O. before issuing order of attachment and sale. At the stage when the sale was concluded and the objections were raised thereafter, Rule 11 cannot be said to be applicable. In these circumstances, ITCP provides Rules 60 & 61 under the heading of **"Application to set aside sale of immovable property on deposit"**. There are two preliminary conditions to move an application under these two Rules i.e.

- (i) the objection under these Rules must be filed within 30 days from the date of sale and

- (ii) the amount specified in proclamation of sale, as that for the recovery of which the sale was ordered, must be deposited by the person moving an application under Rule 60, with interest thereon at the rate of one and one-fourth per cent for every month or part of a

month, calculated from the date of the proclamation of sale to the date when the deposit is made and for payment to the purchaser as a penalty a sum equal to 5% of the purchase money but not less than one rupee.

1. 18. Similarly, under **Rule 61**, the defaulter or any person whose interests are affected by sale may, at any time within 30 days from the date of sale, apply to the Recovery Officer, to set aside sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Rule or on the ground of a material irregularity in publishing or conducting the sale.

2. 19. In this case, the Appellant has filed his objections before Ld. R.O. on 23/07/2024 while the sale in question was completed on 03/05/2024 when Respondent No.5 was declared as H1 bidder and the auction sale was confirmed in favour of Respondent No.5 on 01/07/2024. It is quite clear that the objections by the Appellant before Ld. R.O. were preferred beyond 30 days i.e. after 80 days to be very exact, and the objections were preferred without filing application for condonation of delay and without depositing the amount as referred in Rule 60(1)(a). It clearly shows that the objections raised by the Appellant were procedurally not sustainable on the ground of not fulfilling the two mandatory conditions as laid down in Rule 60 & 61.

3. 20. It is therefore clear that the objections raised by the Appellant before Ld. R.O. do not come within the purview of Rule 11 of the Second Schedule to the Income Tax Act. Actually, in the facts and circumstances of the case, Rules 60 & 61 of the said

Second Schedule to the Income Tax Act were applicable for filing objections against a confirmed sale, the provisions of which were not complied by the Appellant and the Appeal is liable to be dismissed on this ground alone.

21. **Point No.1 is decided accordingly.**

**Point No.2 – Ownership of property**

22. In order to understand the rights and interests of the parties in this case with respect to the property in question, following chronology of events is needed to be kept in mind:

<thead> <tr> <th>DATE</th> <th>PARTICULARS</th> </tr> </thead> <tbody> <tr> <td>02/04/2014</td> <td>'SAHAJANAND DEVELOPERS' executed the Registered Sale Deed [SRT/3/NVG/2014] in favour of the Vandanaben Vipulbhai Kevadiya - (Respondent No. 2 herein Orig. C. Debtor of Respondent No. 1 STATE BANK OF INDIA) in RP No. 80/2018 &amp; RP No. 81/2018</td> </tr> <tr> <td>24/04/2014</td> <td>By way of Registered Mortgage [SRT/3/NVG/2014] the Property was mortgaged with the Respondent No. 1- (STATE BANK OF INDIA) for security in both the accounts - NOW RP No. 80/2018 &amp; RP No. 81/2018</td> </tr> <tr> <td></td> <td>All the Original Documents of the Property in question are in the custody of the Respondent No. 1 (STATE BANK OF INDIA)</td> </tr> <tr> <td>12/11/2014</td> <td>'SAHAJANAND DEVELOPERS' fraudulently executed the subsequent Sale Deed in favour of the borrower of the Respondent No. 4 (CBI) without the earlier Registered Sale Deed dated 02/04/2014 (which is In favour of the Borrower of the Respondent No. 1- STATE BANK OF INDIA) was cancelled by due process of law and/ or by any Competent Civil Court.<br/><br/>- Further the Registered Mortgage of the Respondent No. 1 (State Bank of India) dated 24/04/2014 was also not cancelled by due process of law and/or by any Competent Civil Court.</td> </tr> </tbody> </table>

<tr> <td>11/12/2014</td> <td>By way of the fraudulent subsequent sale deed dated 12/11/2014 the borrower of the Respondent No. 4 (CBI) mortgage the property.</td> </tr> <tr> <td></td> <td>The said fraudulent Sale Deed dated 12/11/2014 and mortgage dated 11/12/2014 are subsequent to the Registered Mortgage of the Respondent No. 1 (STATE BANK OF INDIA)</td> </tr> <tr> <td>02/11/2016</td> <td>OA No. 724 of 2016 &amp; OA No. 725 of 2016 filed by the Respondent No. 1 (State Bank of India)</td> </tr> <tr> <td>06/02/2018</td> <td>Tribunal issued the Recovery Certificate in the Original Applications and proceed as RP No. 80 of 2018 &amp; RP No. 81 of 2018</td> </tr> <tr> <td>29/08/2019</td> <td>Respondent No. 1 (STATE BANK OF INDIA) filed the Securitisation Application while challenging the SARFAESI measures against the property</td> </tr> <tr> <td>14/09/2021</td> <td> <p>Property was attached in the Recovery Proceeding No. 80 of 2018 (Order was not challenged within 30 days neither by the Applicant nor by the Respondent No. 4 CBI) HENCE ORDER DATED 14/09/2021 ATTAINED FINALITY</p> <p>As the Order of Attachment of Immovable Property, Warrant of Attachment of Immovable Property &amp; Notice for Settling Terms of Proclamation of Sale was affixed on the Conspicuous Part of the Property on 22/09/2021</p> </td> </tr> <tr> <td>04/05/2023</td> <td>Securitisation Application filed by the Respondent No. 1 (STATE BANK OF INDIA) disposed of with a direction that in case there is a dispute between the Applicant Bank (Respondent No. 1 herein STATE BANK OF INDIA) &amp; Respondent No. 1 (Respondent No. 4 herein CBI), it needs to be resolved as per the provisions of the Arbitration and Conciliation Act, 1996, in view of Section 11 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.</td> </tr> <tr> <td></td> <td>The Respondent No. 4 (CBI) even at the time of disposal of the said Securitisation Application neither informed to the Tribunal about true facts of sale of the immovable property in question in the year 2022 nor to the</td> </tr> </table>

<tr> <td></td> <td>Respondent No. 1 (STATE BANK OF INDIA).</td> </tr> <tr> <td>19/03/2024</td> <td>The Property was put to the Public Auction and the respective forms were affixed on the conspicuous part of the property and the Public Auction Notice was published in the Two Leading News Papers, Further the Auction Notice was affixed on the notice board of the Tribunal - (Order was not challenged within 30 days neither by the Applicant nor by the Respondent No. 4- CBI) HENCE ORDER DATED 19/03/2024 ATTAINED FINALITY</td> </tr> <tr> <td>15/04/2024</td> <td>Date of Public Auction –<br/>The Respondent No. 5 &amp; other bidders have taken an interest in the property after inspection and deposited the amount of bids and the Respondent No. 5 declares the Highest Bidder and at the end the Sale was confirmed in favour of the Respondent No. 5</td> </tr> <tr> <td>01/07/2024</td> <td>The Public Auction is required to be confirmed within 30 days if no objections are received from any of the parties. That the Tribunal waited for more than 58 days and afterwards confirmed the Sale in favour of the Respondent No. 5</td> </tr> <tr> <td></td> <td>The Tribunal passed the order for providing the Physical Possession of the Property to the Successful Auction Purchaser (Respondent No. 5) and the Respondent No. 1 (STATE BANK OF INDIA) has tried to provide the Possession and on that time the Appellant filed the Objections before the Recovery Officer<br/><br/>Hence the Appellant has no rights and waived all the rights of challenge of Attachment &amp; Sale.</td> </tr> <tr> <td>19/07/2024</td> <td>Appellant filed the Objections against Public Auction / Sale 03/05/2024 which is beyond the LIMITATION PERIOD (30 DAYS).<br/><br/>- The Appellant has not raised any objections at the time of Attachment of the Property in the year 2021 and hence the order of attachment attained finality as the same was not challenged within 30 days before the Appellant Authority, Hence</td> </tr> </table>

<tr> <td data-bbox="221 103 391 478"></td> <td data-bbox="391 103 808 478"> <p>waived all the rights against the Attachment Order.</p> <ul style="list-style-type: none;"> <li>- The Appellant has not raised any objections at the time of Public Auction issued by the Tribunal vide order dated 19/03/2024 and hence the Public Auction dated 03/05/2024 attained finality as the same was not challenged within 30 days before the Appellant Authority, Hence waived all the rights against the Public Auction Order &amp; Public Auction.</li> <li>- The Appellant has raised only objections in confirmation of sale and the same was also beyond the time period (Not within 30 Days of Sale dated 03/05/2024) and hence the objections were not maintainable as the same was not preferred within the period of limitation.</li> </ul> </td> </tr> <tr> <td data-bbox="221 478 391 524">22/11/2024</td> <td data-bbox="391 478 808 524">Hence the Tribunal dismissed the Objections filed by the Appellant while deciding the on merit</td> </tr> </table>

23. It will not be out of place to mention here that all parties, including Respondent Nos.4 & 5, admitted these averments and chronology. So, this is an admitted fact that the property in question was sold by Sahjanand Developers by executing Registered Sale Deed in favour of Certificate Debtors i.e. Respondent Nos.2 and 3 herein. It is also an admitted fact that Respondent Nos.2 & 3 i.e. Certificate Debtors have mortgaged the property in question in favour of Respondent No.1 – SBI through Registered Mortgage Deed dated 24/04/2014.

24. It is also an admitted fact that the Registered Sale Deed dated 02/04/2014 has never been cancelled or declared null and void by any act of the seller or order of any competent Court. So, the Registered

Sale Deed dated 02/04/2014 is a valid Sale Deed till this date. It is also clear beyond any doubt that by executing Registered Sale Deed dated 02/04/2014, Sahjanand Developers i.e. previous owner has transferred its right and title with regard to the property in question in favour of Certificate Debtors i.e. Respondent Nos.2 and 3 herein.

1. 25. It is also an admitted fact that after about 9 months of previous sale, Sahjanand Developers has fraudulently executed a subsequent Sale Deed on 12/11/2014 in favour of the borrowers of Respondent No.4 – CBI, when earlier Registered Sale Deed dated 02/04/2014 was in very much existence and not cancelled by due process of law, even till this date.

2. 26. The question arises is whether by Registered Sale Deed dated 12/11/2014, Sahjanand Developers has transferred any title or saleable right in favour of the borrowers of Respondent No.4 – CBI with regard to the property in question? The law on this point is very clear, **No one can transfer a better title than he himself has.** On the date of Registered Sale Deed dated 12/11/2014, Sahjanand Developers has got no title or saleable rights with regard to the property in question that being transferred by them, already on 02/04/2014, in favour of Certificate Debtors i.e. Respondent Nos.2 & 3 herein. In fact, this is the actual fraud in this case and the borrowers of Respondent No.4 – CBI since have got no title with regard to the property in question, the Mortgage Deed which they have executed in favour of Respondent No.4 – CBI was not a legally enforceable instrument in the eyes of law. It automatically proves that any person who claims to

derive any right or title from the borrower of Respondent No.4 – BI has not derived any legally enforceable right and title with regard to the property in question. The irony is that CBI, which has not only started SARFAESI proceedings against its borrowers, but has stretched the proceedings upto the stage of auction and sale of the property in question to the Appellant, was fully aware that the said property was already sold by the original owner i.e. Sahjanand Developers to Respondent Nos.2 & 3 herein. The reason of this conclusion that Respondent No.4 was from the very beginning aware that the second Sale Deed with regard to the property in question executed by Sahjanand Developers was a nullity ab-initio is two-fold:

- (i) The law on the point is that execution of Sale Deed through a registered deed is a public notice in rem. This legal position has been confirmed recently by Hon'ble Supreme Court in **Cosmos Cooperative Bank Ltd. Vs. Central Bank of India & Ors. Decided on 04.02.2025 in Special Appeal No. 1565 of 2025.** Accordingly, it can legally be said that Respondent No.4 – CBI has got constructive notice of the fact that the property in question has been sold through registered sale deed already on 02/04/2014 and

- (ii) If, for a moment, it may be deemed that Respondent No.4 was not aware about this Sale Deed, then when Respondent No.1 – SBI filed SA No.383/2019 citing all these facts, from that date onwards, Respondent No.4 – CBI cannot deny that it has got full knowledge of previous sale of the property in question

which was well in existence on the date of second sale which, in opinion of this Tribunal, was a fraudulent deed.

1. 27. So, it goes to prove that Respondent No.4 was very much aware about the fact that the property for which it is proceeding for auction and sale has already been sold on 02/04/2014 to Respondent Nos.2 & 3.

2. 28. By the reason that this property was again sold by Sahjanand Developers to the borrowers of Respondent No.4 and it was again sold by Respondent No.4 through auction to the Appellant, it cannot be said to deprive the Certificate Debtors from their right and title with regard to the property in question. It was never snatched from Certificate Debtors by the original owner or by any Court of Law and on the strength of this Sale Deed and Registered Mortgage Deed, Respondent No.1 has not only filed its OAs Nos.724 & 725 of 2016 before this Tribunal, but also these two OAs were allowed by this Tribunal vide judgment dated 07/12/2016 and on the basis of RCs issued in these OAs, R.P. No.80/2018 was initiated. After the judgment in OA Nos.724 & 725 of 2016 passed on 07/12/2016, the SARFAESI action with regard to the borrowers of Respondent No.4 was initiated on 16/04/2018 i.e. much after the date when the secured asset i.e. the property in question has been mentioned in RC issued by this Tribunal for recovery of the loan of Respondent No.1 – SBI.

3. 29. In these circumstances, it cannot be said that on the basis of auction sale conducted by Respondent No.4 – CBI, the Certificate Debtors have lost their right, interest and title over the property in question. It is

legally confirmed fact that the property in question belonged to Certificate Debtors on the date of judgment.

30. **Therefore, Point No.2 is disposed in affirmative.**

**Point No.3 – Suppression of material fact**

31. The Appellant as well as Respondent Nos.4 & 5 have accused that Respondent No.1 – SBI has suppressed material fact from Ld. R.O. which tantamount to playing fraud, which Respondent No.1 has vehemently denied.

32. It is important to point out again that in this case, OA Nos.724 & 725 of 2016 against CDs i.e. Respondent Nos.2 & 3, were filed by Respondent No.1 – SBI on 02/11/2016, which were decided by this Tribunal on 07/12/2016 and RCs were issued on 06/12/2018 on the basis of which R.P. No.80/2018 and 81/2018 were initiated. All these events are at least two years early from the date of filing SA by Respondent No.1 against Respondent No.4 on 29/08/2019 in which all the facts relating to execution of Registered Sale Deed dated 02/04/2014 in favour of CDs and execution of Registered Mortgage Deed dated 24/04/2014 by CDs in favour of Respondent No.1 – SBI, were clearly mentioned and all concerned in relation to SA No.383/2019 were fully aware about the fact that SARFAESI action taken by Respondent No.4 – CBI relates to a secured asset in which title and interest never legally passed in favour of borrowers of Respondent No.4 – CBI. Since R.P. no.80/2018 & 81/2018 were initiated much before SARFAESI action initiated by Respondent No.4, there was no occasion or opportunity for Respondent No.1 – SBI

to inform Ld. R.O. about the fact of securitisation action and again SBI was not duty-bound to inform about a proceeding in which the right and title of CDs were not even discussed though CBI was fully aware about existence of Sale Deed dated 02/04/2014 at least from the date of filing of SA No.383/2019. In these circumstances, in the opinion of this Tribunal, the allegation against SBI for suppression of material fact is not pressed on real grounds.

33. Ld. Counsel for Respondent No.5 has argued with force that when Ld. R.O. has come to know about the fact that R.P. is based on fraud and misrepresentation, she has got every right to recall that. In support of his argument, he has cited **United India Insurance Co. Ltd. V/s. Rajendra Singh, (2000)3 SCC 581** in which it was held:

*"16. Therefore, we have no doubt that the remedy to move for recalling the order on the basis of the newly discovered facts amounting to fraud of high degree, cannot be foreclosed in such a situation. No court or tribunal can be regarded as powerless to recall its own order if it is convinced that the order was wangled through fraud or misrepresentation of such a dimension as would affect the very basis of the claim."*

34. He has also cited the case of **S.P. Chengalvaraya Naidu V/s. Jagannath, (1994)1 SCC 1** in which it is held:

*"Fraud avoids all judicial acts, ecclesiastical or temporal" observed Chief Justice Edward Coke of England about three centuries ago. It is the settled proposition of law 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."*

35. In another ruling cited by Ld. Counsel for Respondent No.5 in the case of **Ram Chandra Singh V/s. Savitri Devi, (2003)8 SCC 319**, it was held:

*"16. Fraud is a conduct either by letter or words, which induces the other person or authority to take a definite determinative stand as a response to the conduct of the former either by word or letter.*

*17. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud.*

*18. A fraudulent misrepresentation is called deceit and consists in leading a man into damage by willfully or recklessly causing him to believe and act on falsehood. It is a fraud in law if a party makes representations which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad."*

36. With all due respect for the observations made by Hon'ble Courts in those rulings, it is being made clear that in the eyes of this Tribunal, there appears no occasion where Ld. R.O. has ground to believe that the judgment of RC which she was executing,

was obtained by fraud and misrepresentation. On the contrary, there were every reasons to believe that the auction and sale, which were informed to Ld. R.O. after confirmation of sale in favour of Respondent No.5, were actually based on fraud and misrepresentation.

1. 37. It is very strongly argued by Ld. Counsel for Respondent No.4 that the SA filed by Respondent No.1 – SBI was disposed of with observation that any dispute between two banks can be resolved under Arbitration Act and SBI did not prefer to move for any arbitration proceedings. By saying that, Respondent No.4 has very cleverly brushed aside its own liability in this regard. Actually, Respondent No.4 was more under obligation to let this dispute resolved through arbitration because Respondent No.1 goes on one hand by stating that the claim of Respondent No.1 was based on legally enforceable document i.e. Sale Deed dated 02/04/2014 and Registered Mortgage Deed dated 24/04/2014. On the other hand, the claim of Respondent No.4 based on Sale Deed dated 11/11/2014 and Mortgage Deed dated 11/12/2014 was not with regard to a legally enforceable document. Further, reason that while executing the Sale Deed dated 11/11/2014, the seller i.e. Sahjanand Developers had got no title or interest with regard to the property in question. In this circumstance, the Respondent No.1 was not under any legal obligation to get its rights decided.

2. 38. In these facts and circumstances of the case, this Tribunal found no legally sustainable ground to accept the allegation of the Appellant that Respondent No.1 – SBI has suppressed material fact

from Ld. R.O., which tantamount to playing fraud.

**Point No.3 is disposed accordingly.**

**Point No.4 – Waiver of right by SBI**

39. Ld. Counsel for the Appellant and Ld. Counsel for Respondent Nos.4 & 5 had argued with force that by not initiating any arbitration proceedings in compliance of order passed by this Tribunal in SA No.383/2019, or by not filing any Appeal against the judgment passed in the SA, Respondent No.1 – SBI has actually waived its right qua the property in question. This argument has no legal force. Respondent No.1 – SBI, which has filed OA Nos.724 & 725 of 2016 on the basis of Registered Sale Deed dated 02/04/2014 and Registered Mortgage Deed dated 24/07/2014 and after judgment was passed in its favour, has initiated proceedings of RP No.80/2018 & 81/2018, cannot be said to have waived its right qua the property in question. This ground being totally lacking legal force, is not acceptable.

40. **Point No.4 is disposed accordingly.**

**Point No.5 – Power of Ld. R.O. for review**

41. Ld. Counsel for the Appellant and Ld. Counsel for Respondent No.5 have invited attention of this Tribunal to the finding of Ld. R.O. in her order dated 21/12/2024, in para 15, in which it was observed by Ld. R.O. as under:

*"15. As far as objections against recovery proceedings and sale confirmation order are concerned, it is clarified that all the orders of recovery proceedings including orders in proceedings of this RC, are appealable before the higher forums / Courts. Moreover, there*

*being no provision of review of order, the Recovery Officer has become functus Officio with respect to the order of confirmation of sale."*

1. 42. Ld. Counsel for the Appellant has submitted that it shows lack of knowledge on the part of Ld. R.O. when she says that she has got no power of review, which is very much under Rule 87 of Second Schedule to the Income Tax Act. True it is that the power to review was vested with Ld. R.O. and she was legally wrong when she has observed that she has got no power to review, even then, the question arises whether after confirmation of sale, Ld. R.O. has got the power to reopen the case and hold her own finding as right or wrong? The answer to this question is in negative. The right to review has very limited scope. It gives power to the authority passing the order himself to correct any error apparent on the record. In this case, while going through the impugned order, it cannot be said that there was any error apparent on the record, which Ld. R.O. has overlooked.

2. 43. Hence, though Ld. R.O. was wrong to hold that she has no power to review, but she was very much right when she observed that after order of confirmation of sale passed by her, she was not authorized to hear on her own order as if sitting in Revision or Appeal over her own order.

3. 44. **Point No.5 is disposed accordingly.**

4. 45. **Point No.6 – Conclusion**

5. 46. Before putting this judgment on rest, one important aspect is necessary to be discussed.

6. 47. Ld. Counsel for the Appellant has argued that it is a settled legal position that the property purchased by

auction purchaser cannot be attached in any proceedings. In support of his argument, he has cited judgment of Hon'ble Apex Court in Ashwin S. Mehta and others V/s. Custodian & Others, AIR 2006 SC 795 and also in Sadashiv Prasad Singh V/s. Harendar Singh & Others, AIR 2014 SC 1078. With due respect to the observations of Hon'ble Apex Court in those rulings, it is very humbly submitted that the facts of those cases were quite different from the facts of the present case. In the present case, the auction purchase to which Ld. Counsel for the Appellant is referring is, with regard to the property in which right and title had never passed in favour of borrowers of Respondent No.4 – CBI from whom the auction purchaser i.e. Appellant claims his right and title. Accordingly, those rulings are not applicable in this case.

48. In the facts and circumstances of this case and in light of aforesaid discussion, the Appeal does not appear to have any merits and it deserves to be dismissed.

**ORDER**

Appeal No.12 of 2024 against R.P. No.81/2018 is hereby dismissed with no order as to cost.

Let file of R.P. no.81/2018 be sent back to the office of Ld. R.O., with a copy of this Judgment.

Pronounced in open Tribunal on 8^th day of April 2025.

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

\*ykb\*