UNIVERSAL POLYPACK LLP vs MAXAN CORPORATION PVT LTD on 25 July 2023

**JUDGMENT**

1. 1. The present Appeal is directed against the order dated 14/06/2023 passed by Ld. Recovery Officer, DRT-II, Ahmedabad (hereinafter referred to as "Ld. Recovery Officer" for short) in R.P. No.492 of 2018 vide which Ld. R.O. set aside e-Auction held on 12/05/2023 qua the following properties:

***"IMMOVABLE PROPERTY***

*All that piece and parcel of Non Agriculture land along with leasehold rights bearing Revenue Survey No.103 (New Survey No.197), admeasuring about 20,538 Sq. Mtrs. together with industrial Shed. Situated at Village Bhalgamda, Taluka-Dhandhuka, District-Ahmedabad (Gujarat).*

***PLANT & MACHINERY***

*Plant and Machinery of Maxan Corporation Private limited laying at Revenue Survey No.103 (New Survey No.197) at village-Bhalgamda, Taluka-Dhandhuka, District-Ahmedabad."*

/

1. 2. It is the case of the Appellant that reserve price of the aforesaid property i.e. Land + Machinery was fixed at Rs.8,00,00,000/- (Rupees Eight Crores Only) by Ld. Recovery Officer in the e-Auction Sale Notice dated 30/03/2023. The e-Auction was scheduled to be conducted on 12/05/2023. The Appellant herein had submitted its bid on 09/05/2023 alongwith EMD amount i.e. Rs.80,00,000/- with requisite documents to the e-Auction Agency. The Appellant participated in the e-Auction and submitted its bid for Rs.8,01,00,000/- (Rupees Eight Crores One Lakhs Only) for the property in question.

2. 3. It is further the case of the Appellant that the Appellant was not informed about outcome of the e-Auction conducted by e-Auction Agency on 12/05/2023. Since 13^th and 14^th May, 2023 being Saturday and Sunday and holidays, the Appellant enquired about the same with Respondent No.2-Bank on 15/05/2023 and it was informed that the Appellant is declared as H1 bidder. Upon having come to know about confirmation of sale in its favour on 15/05/2023, the Appellant herein immediately paid 15% of the bid amount i.e. Rs.1,21,00,000/- on 15/05/2023. Thus, the Appellant paid total 25% of bid amount i.e. Rs.2,01,00,000/-.

3. 4. The Appellant was required to pay balance 75% of bid amount i.e. Rs.6,00,00,000/- together with poundage fees on or before 15^th day from the date of sale of the property. The Appellant was intimated about confirmation of sale on 15/05/2023 and therefore the last date for making payment of balance 75% amount was 30/05/2023. The Appellant made payment of balance 75% of bid amount i.e. Rs.6,00,00,000/- together with poundage fees of 1% on 29/05/2023. Respondent No.2-Bank also confirmed the same by filing a certificate regarding the entire amount of sale consideration deposited by the Appellant.

1. 5. It is further averred by the Appellant that though all payments were made on 29/05/2023, due to technical reasons, last two payments were received by Respondent No.-Bank on 30/05/2023 and the same were credited in the account of the Appellant on the same day for which the Appellant is not responsible.

2. 6. In spite of the aforesaid facts, Ld. R. O., vide his order dated 14/06/2023, was pleased to cancel the Auction held on 12/05/2023 on the ground that the Appellant/Auction Purchaser has failed to pay balance 75% amount of sale consideration within the stipulated time as per the terms of Sale Notice. Ld. R. O. has also directed the CH Bank to refund the sale consideration to the Appellant herein, except 10% EMD, and return the Demand Draft of 1% poundage fees to the Appellant herein. Ld. R. O. further passed a Sale Order for conducting re-Auction on 29/07/2023 fixing the same reserve price of Rs.800 Lakhs. Being aggrieved and dissatisfied by the said order of Ld. R. O., the Appellant has preferred the present Appeal on various grounds.

3. 7. Respondent No.2-Bank has not filed any reply in the present proceedings. However, at the time of hearing, Ld. Counsel for the Appellant produced a copy of letter dated 12/06/2023 issued by Respondent No.2-Bank to Ld. R. O. and stated that the Bank has no objection if Sale Certificate is issued in favour of the Auction Purchaser and the property is handed over to it.

4. 8. I have heard Ld. Counsel for the parties and perused the records and proceedings. Ld. Counsel for the Appellant cited following judgments in support of his submissions, which I shall refer at the appropriate place in the course of this judgment:

1. 1. Varimadugu Obi Reddy V/s. B. Sreenivasulu & Ors., (2023) 2 SCC

168.

2. Asset Reconstruction Co. India Ltd. & Ors. V/s. Esteem Estate Projects Pvt. Ltd. & Ors., MANU/KA/1296/2021.

3. M/s. K. K. Enterprises V/s. Union Bank of India, WP(L) No.1893 of 2018 decided by Hon'ble Bombay High Court on 12/06/2018.

9. From the aforesaid facts, submissions made on behalf of the parties and documents placed on record, it transpires that Ld. R. O. has observed in the impugned order dated 14/06/2023 that the H1 bidder has failed to pay 75% balance sale consideration within the stipulated time as per the terms of Sale Notice. Ld. R. O. has further observed that 15 days' time for payment of balance consideration commenced from 12/05/2023 and expired on 26/05/2023. The H1 bidder has deposited 75% balance sale consideration on 29/05/2023 and 30/05/2023 as per the statement produced on record. As such, Ld. R. O. has cancelled the Auction scheduled on 12/05/2023 vide the impugned order dated 14/06/2023 on the ground of delay in payment of the sale consideration.

10. Looking to the documents placed on record, it appears that the Appellant herein made all payments of sale consideration as per the following details:

<table border="1"> <thead> <tr> <th>Date</th> <th>Payment Rs.</th> </tr> </thead> <tbody> <tr> <td>09.05.2023</td> <td>80,00,000/-</td> </tr> <tr> <td>15.05.2023</td> <td>1,21,00,000/-</td> </tr> <tr> <td>29.05.2023</td> <td>2,00,00,000/-</td> </tr> <tr> <td>29.05.2023</td> <td>1,00,00,000/-</td> </tr> <tr> <td>29.05.2023</td> <td>90,00,000/-</td> </tr> <tr> <td>29.05.2023</td> <td>55,00,000/-</td> </tr> <tr> <td>29.05.2023</td> <td>35,00,000/-</td> </tr> <tr> <td>29.05.2023</td> <td>20,00,000/-</td> </tr> <tr> <td>29.05.2023</td> <td>1,00,00,000/-</td> </tr> <tr> <td><b>Total Payment</b></td> <td><b>8,01,00,000/-</b></td> </tr> </tbody> </table>

11. As per the case of the Appellant herein, last two payments made by the Appellant on 29/05/2023 were received by Respondent No.2-Bank on 30/05/2023 and the same were credited in the account of the Appellant on the same day. The last two payments made on 29/05/2023 were credited by the Bank on 30/05/2023 due to some technical problems. The said fact is also fortified by the letter dated 12/06/2023 issued by Respondent No.2-Bank to Ld. R. O., which reads as under:

*"Dear Sir,*

*We would like to inform you that M/s. Universal Polypack LLP is the successful bidder of e-auction held on 12.05.2023 for M/s. Maxman Corporation Pvt. Ltd. v/s. Union Bank of India. The successful bidder has made payment of Final Bid amount on 29.05.2023 but due to some technical problem, the amount was credited on 30.05.2023. So, we would like to inform you that Bank have no objection if you are going to issue Sale certificate to them and also handover the property to them."*

12. The aforesaid letter clearly shows that Respondent No.2-Bank expressed its no objection against issuance of Sale Certificate by Ld. R. O. in favour of the Auction Purchaser and against handing over possession of the property to it. In spite of the said position, Ld. R. O. has come to the conclusion in the impugned order that the Appellant herein failed to pay 75% balance sale consideration within the stipulated time as per terms of the Sale Notice.

13. In this context, it would be pertinent to refer to the "Terms and Conditions of Sale" attached to the e-Auction Sale Notice dated 30/03/2023. Para 6 of the said terms and conditions, reads as under:

*"The highest bidder shall have to deposit 25% of his final bid amount after adjustment of EMD already paid, IMMEDIATELY after being declared as highest bidder (H1). As regards, declaration as H1 is concerned, the concerned e-auction agency is directed to send an e-mail (if possible auto-generated) immediately after completion of bid process as per schedule to the H1 that he is the highest bidder advising him to deposit 25% of the bid money minus the amount paid as earnest money immediately. For the purpose of this provision, the meaning of word 'immediately' means same day but if bank timing is over, immediately means next bank working day by 4:00 P.M. through RTGS/NEFT in the account as mentioned in sale notice."*

1. 14. On perusal of the aforesaid condition of Sale Notice, it becomes clear that the concerned e-Auction Agency was required to advise H1 bidder immediately after completion of bid process by e-mail. However, in the instant case, Respondent No.2-Bank or the concerned e-Auction Agency has not intimated to the Appellant herein after it being declared as highest bidder (H1). The Appellant herein, therefore, enquired about the status of its bid with the Respondent-Bank on the next working day i.e. on 15/05/2023. Thereupon the Respondent-Bank informed that it was declared as H1 bidder. Accordingly, the fact about selection of the Appellant as H1 bidder came to its knowledge on 15/05/2023 and hence it was supposed to deposit balance 75% of sale consideration amount together with poundage fees on or before 15^th day from the date of sale i.e. from 15/05/2023. In the case on hand, as narrated hereinabove, the Appellant as paid the entire amount of remaining 75% on 29/05/2023 i.e. within the stipulated time limit. However, it is a different aspect that last two payments were credited in the account of the Appellant on 30/05/2023 due to technical reasons and the Bank has also admitted the said fact by means of its letter dated 12/06/2023 addressed to the Ld. R. O. of this Tribunal. Even if it is considered that the last two payments were made on 30/05/2023 by the Appellant, the same are still within the stipulated time limit i.e. on or before 30/05/2023.

15. Ld. R. O. has however, considered the date of sale as 12/05/2023 in the impugned order, though not conveyed to the Appellant by e-mail as required under Condition No.6 of the terms of sale. Even if we take the date of sale as 12/05/2023, the Appellant herein was required to make payment of balance 75% of amount on or before 29/05/2023 since 27^th and 28^th May, 2023 were holidays being Saturday and Sunday. As such, 29/05/2023 would be the immediate first Bank working day. At this stage, it would be pertinent to look at the provisions of Section 10 of the General Clauses Act, 1897, which read as under:

*"(1) Where, by any [Central Act] or Regulation made after the commencement of this Act, any act or proceeding is directed or allowed to be done or taken in any Court or office on a certain day or within a prescribed period, then, if the Court or office is closed on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the Court or office is open:*

*Provided that nothing in this section shall apply to any act or proceeding to which the Indian Limitation Act, 1877 (15 of 1877), applies.*

*(2) This section applies also to all [Central Acts] and Regulations made on or after the fourteenth day of January, 1887."*

16. In view of the aforesaid provisions, if clear 15 days, excluding the date of sale, are considered, the last date for making payment of balance 75% amount would be 30/05/2023. As stated hereinabove, the Appellant has admittedly made payment of balance 75% amount on or before 30/05/2023.

17. In view of the aforesaid discussion, this Tribunal is of the opinion that Ld. R. O. has erred in coming to the conclusion that the Appellant herein has not deposited 75% balance sale consideration amount within the stipulated period. It is pertinent to note that if the Auction/Sale pursuant to the public Auction is set aside on the basis of mere technicalities, the sanctity of a public Auction would be frustrated and the rights of a genuine bidder would be adversely affected. Reluctantly, the following order is passed:

ORDER

- • The present Appeal is allowed.

- • The Order dated 14/06/2023 passed by Ld. R. O., DRT-II, Ahmedabad is hereby quashed and set aside qua the Auction scheduled on 12/05/2023 in R.P. No.492 of 2018.

- • Ld. R. O., DRT-II, Ahmedabad is directed to confirm sale of the property in question in favour of the Appellant herein and to hand over physical possession thereof to the Appellant forthwith.

- • The present Appeal accordingly stands disposed of with no order as to cost.

- • File be consigned to records.

Pronounced in Open Court on 25^th of July, 2023.

**(Laxman Madnani)** **Presiding Officer** **DRT-II, Ahmedabad**

\*sruthi\*