Shakuntalam Landcraft Pvt Ltd vs Asset Reconstrution Company India on 24 April 2024

J U D G M E N T

Justice is rooted in God's principles, and humans have distorted this concept over time (Frank Walters). The idea of righteousness and justice forms the foundation of the judicial process to decide the case's merits on facts impartially free from restrictions and external influences to uphold the law's rules, fairness, and integrity.

The Appellant is a bonafide auction purchaser in the e-auction dated 28th August 2023. By the 2nd successive appeal under Section of the Recovery of the Debts and Bankruptcy Act, 1993 (for short, "the 1993 Act"), the Appellant assails the Recovery Officer's order dated 17th January 2024 (for short, the impugned order").

Respondents 1 & 2 are the certificate holders. The 3rd Respondent is the Official Liquidator of the principal borrower. Respondent 4 is the third party that sought to intervene and participate after the e-auction completion. Respondent 5, the lessor of the mortgaged property, also sought to intervene and participate in the completed e- auction or offered to buy back the property. The factual matrix of the case:

O.A. No.162 of 2002: ICICI Bank Ltd. (the original lender) advanced credit facilities to Daewoo Motors Ltd. (the principal borrower). On 26th April

2002, the original lender applied under Section 19(1) of the 1993 Act by presenting before DRT-3 Mumbai, O.A. No.162 of 2002, to recover its claim of Rs.511 crores and enforce the mortgage securities, i.e. all that piece and parcel of leasehold land bearing Plot A-1, admeasuring 204 acres, Surjapur Industrial Area, Noida, Dadri Road, Greater Noida, Gautam Budh Nagar, Uttar Pradesh, (for short, "the mortgaged property"). The original lender applied for the court receiver's appointment and sale of the mortgaged property. On 9th May 2002, DRT-3 appointed the receiver of the mortgaged property. On 8th August 2002, the Hon'ble DRAT passed an order allowing the receiver to sell the mortgaged property.

The receiver took actual control of the mortgaged property on 31st March 2003. After that, on 6th May 2003, DRT-3 Mumbai passed an order issuing an interim recovery certificate for Rs.504,80,72,000/- under Rule 12(5) of the Debts Recovery Tribunal Procedure Rules, 1993 (for short, "the DRT Rules").

On 24th November 2003, the Hon'ble Delhi High Court passed an order in Company Petition No.66 of 2003, appointing the provisional liquidator of the principal borrower. On 4th March 2004, the 1st Respondent moved the Hon'ble Delhi High Court and sought to intervene by restraining the Official Liquidator from taking possession of the mortgaged property and ordered accordingly.

On 18th March 2004, DRT-1 Mumbai pronounced judgment in the 2nd Respondent's O.A. No.135 of 2002. It ordered and directed the principal borrower to pay Rs.439,92,81,000/-. DRT-1 Mumbai further declared that the adjudicated amount is secured by the immovable property's valid and subsisting mortgage.

After that, on 31st August 2004, DRT-3 rendered judgment on O.A. No.162 of 2002, declaring the validity and subsistence of the mortgaged property. DRT-3 Mumbai ordered issuance of the recovery certificate for Rs.511,02,84,697/- which includes the amount of Rs.504,80,72,000/- vide order dated 6th May 2003.

On 28th July 2004, the Hon'ble Delhi High Court ordered the principal borrower company to wound up.

Recovery Proceedings: In O.A. No.162 of 2002, DRT-3 Mumbai issued a recovery certificate on 11th October 2004 for Rs.511,02,84,697/- to enforce the mortgaged and hypothecated properties. Thus, the Recovery Officer commenced the execution proceedings in 2004.

On 23rd December 2004, DRT-1 Mumbai issued a

Recovery Certificate in O.A. No.135 of 2002.

On 29th March 2005, the original lender entered into an assignment agreement under the provisions contained in the 1993 Act and the SARFAESI Act, 2002, with the 1st Respondent.

The 1st Respondent amended the Recovery Certificate in O.A. No.1620f on 29th September and 2nd December 2005, respectively. The 1st Respondent added the 2nd Respondent as a party by amending the recovery certificate. Respondents 1 and 2 are the secured creditors having 1st pari passu charge with the sharing pattern of 59.656 and 40.344, respectively, over the mortgaged property being the subject matter of the impugned order.

In execution proceedings, the DRT receiver attempted to sell the mortgaged property at a public auction. Between 2002 and 2006, the DRT receiver sensed and realised that no buyers or purchasers were interested in purchasing or acquiring the mortgaged property in the auction market. It prompted the 1st Respondent to request the Recovery Officer to modify the sale proclamation announcing a private sale of the mortgaged property. So, on 10th November 2006, the Recovery Officer modified the sale proclamation submitted by the DRT receiver and invited private offers in two lots, i.e. Lot-1 for fixed assets and Lot-2 for current assets.

On 16th October 2007, the Recovery Officer accepted the Lot-1 offer from PAN India Motors (erstwhile auction purchaser). The 5th Respondent accepted part-payment to transfer the lease from the principal borrower in liquidation, favouring the erstwhile auction purchaser. Many stakeholders filed legal proceedings, which resulted in the Tribunal's order on 7th November 2007 confirming the Recovery Officer's order dated 12th October 2007.

Intervener's application: On 19th November 2007, Anil Bahl, son of Virendra Bahl (Intervener), filed an application Exhibit 62 under Rule 11 of the Second Schedule of the Income Tax Act. He prayed to raise attachment on the property at Khasra No.260K, area 0.560 Hectare, Khasra No.260 Kha, area 0.5060 Hectare, situated at village Habibpur, Pargana and Tehsil Dadri, District Gautam Budh Nagar, Uttar Pradesh. The intervener concedes that he is not concerned about the certificate holder's claim. The competent authority renumbered old Khasara No.384 to (i) Khasara No.260K,

(ii) Khasara No.260 Kha, and

(iii) Khasara No.260 G under the consolidation holding scheme.

On 31st July 2008, Yogendra Kumar Awasthi, the 5th Respondent's officer, filed a reply affidavit Exhibit 78 to the intervener's application Exhibit 62 opposing it. The 5th Respondent said (i) it acquired only Khasara 260 G area 4.89 Hectare, and (ii) P.W.D. acquired Khasara 260 K and 260 Kha for the road.

On 11th September 2008, the Recovery Officer conducted a detailed investigation, which revealed that he neither attached nor sold the intervener's property. The Recovery Officer passed an order stating that (i) the relief in terms of prayer clauses 17(a) to 17(c) and 17(e) are baseless, (ii) the intervener has no interest in the property which the DRT-3 neither attached nor sold, and

(iii) the intervener may sue the vendor or P.W.D. for acquiring possession of Khasara No.260K and Khasara 260 Kha to secure access. Thus, there is no encroachment on the mortgaged property, and the infringed property falls outside the mortgaged property. In short, the Recovery Officer did not attach the encroached property outside the mortgaged property.

Erstwhile auction purchaser's default: After five years, the purchaser defaulted in performing his part of the contract. On 24th November 2012, the Recovery Officer cancelled the private sale.

The erstwhile auction purchaser challenged the sale cancellation before DRT, the Hon'ble (i) DRAT and (ii) Bombay High Court. On 22nd April 2016, the Hon'ble Bombay High Court put a quietus on the legal battle by dismissing PAN India's Writ Petition with costs.

Ten failed auctions: Respondents and

(certificate holders) attempted to sell the mortgaged property by ten e-auctions, which failed for want of a bid, on (i) 25th November 2016, reserve price Rs.860 crores, (ii) 29th September 2017, reserve price Rs.594.31 crores, (iii) 26th March 2018, reserve price Rs.565.50 crores, (iv) 31st October 2018, reserve price Rs.557 crores, (v) 18th January 2019, reserve price Rs.557 crores,

(vi) 11th April 2019, reserve price Rs.445.60 crores, (vii) 7th September 2020, reserve price Rs.380 crores, (viii) 10th December 2020, reserve price Rs.350 crores, (ix) 25th February 2021, reserve price Rs.350 crores, and (x) 6th January 2022, reserve price Rs.350 crores.

Respondents and 2, earnestly waiting to monetise the mortgaged property, requested the Recovery Officer to proceed with the announcement of the e-auction of the mortgaged property. Upon failure of the private sale under the Court's supervision and the ten failed e-

auctions, the Recovery Officer scheduled the e- auction on 18th April 2023 with a reserve price of Rs.310 crores.

On 22nd February 2023, the Recovery Officer took the valuation report Exhibit 765 made by M/s. Perfect Valuer on record. On that day, the Recovery Officer fixed the e-auction on 18th April

Asteroid's Private Treaty request: On 27th February 2023, Asteroid Shelter Homes Private Limited (Asteroid) approached the 1st Respondent, offering Rs.350 crores to purchase the property by a private treaty. On 10th March 2023, Asteroid approached the Recovery Officer and moved an interlocutory application to accept its offer for Rs.350 crores by private treaty. Respondents 1 and 2 requested the Recovery Officer to defer the e-auction scheduled on 18th April 2023 and allow them to sell the secured assets under the SARFAESI Act. The Recovery Officer noted the request of Respondents 1 and 2 to defer the e- auction and stated that 60 days of the demand notice has not lapsed. The Recovery Officer already finalised the e-auction. Nevertheless, the Recovery Officer directed the prospective purchaser to deposit 10% of the reserve price towards EMD. The Recovery Officer noted the failure of the three e-auctions for the reserve price of Rs.350 crores. He considered the revalued report of Rs.412.81 crores, the realizable value of Rs.309.60 crores and the distress value of Rs.230.60 crores. Taking the realizable value, the Recovery Officer fixed the reserve price at Rs.310 crores, EMD of Rs.31 crores and an incremental bid of Rs.3 crores and adjourned the case to 6th March 2023.

On 28th February 2023, the Recovery Officer issued a sale proclamation Exhibit 768.

On 8th March 2023, Respondents 1 and 2 filed compliance affidavits, Exhibits 771 and 772, and requested a fresh sale proclamation. Accordingly, the Recovery Officer issued a sale proclamation Exhibit 773.

On 13th March 2023, the Recovery Officer did not hear the Asteroid's application to conduct the private sale and directed the certificate holders to publish the sale proclamation. The Recovery Officer adjourned the case for compliance. Later, the Asteroid sought relief under Exhibit 776 for private sale.

On 15th March 2023, Asteroid presented its case. It offered the 1st Respondent, requesting it to grant an opportunity to purchase the mortgaged property through a private treaty and pay the entire sale consideration within days. Asteroid sought time to deposit 10% EMD and the balance amount within 180 days. The Recovery Officer records the finding that (i) there is no provision under the Second Schedule of the Income Tax Act to grant 180 days to the bidders,

(ii) he referred to the ruling in C.N. Paramsivan and another versus Sunrise Plaza, SLP (C) No.21765 of on the proposition of applicability of section 29, (iii) the terms and conditions of the sale proclamation are holy and shall not alter after issuing it, (iv) granted liberty to Asteroid to participate in the e-auction, and (v) suo motto discharged Mr Ashish Shahi DRT Receiver the 1st Respondent's nominee and appointed Ms Rupa Patel Advocate as the DRT receiver.

On 16th March 2023, the DRT Receiver filed an indemnity bond. The Recovery Officer issued a Writ favouring the DRT Receiver and a letter to (i) the Editor, Economic Times, Loksatta, Daily Hindustan, Hindi Delhi edition to publish the sale proclamation.

The 1st Respondent filed Appeal No.7 of 2023 challenging the Recovery Officer's Order dated 13th March 2023 and 15th March 2023 for inappropriate and malicious remarks against it.

On 20th April 2023, the Tribunal disposed of Appeal No.7 of 2023 based on the minutes of the order.

On 17th April 2023, the Recovery Officer passed an order disposing of as infructuous the interlocutory application (Exhibits 791 and 792) filed by the prospective purchaser M3M India Infrastructure Pvt. Ltd., who failed to submit a bid. However, the Recovery Officer accepted the bid for the EMD of Rs.31 crores from IHDP Globals Pvt. Ltd.

On 28th April 2023, the Recovery Officer passed an order recording, among other facts, that (i) IHDP Globals offered Rs.355 crores under the sale proclamation dated 8th March 2023 set aside by this Tribunal, (ii) M3M India Infrastructure Pvt. Ltd. also offered Rs.355 crores and (iii) Nirala Group stated to offer better than the reserve price. The Recovery Officer scheduled the e- auction on 9th June 2023 with a reserve price of Rs.355 crores.

Asteroid filed M.A. No.20 of 2023 and Appeal No.13 of 2023 to quash and set aside the Recovery Officer's order dated 28th April 2023 announcing the e-auction of the mortgaged property. On 28th June 2023, the Tribunal dismissed Asteroid's M.A. No.13 of 2023 and Appeal No.13 of 2023. Asteroid assailed this Tribunal's order before the Hon'ble DRAT in Appeal (D) No.1195 of 2023.

Announcement of e-auction: On 30th June 2023, Respondents 1 and 2 requested the Recovery Officer to settle a fresh sale proclamation and announce the e-auction. On 6th July 2023, the Recovery Officer issued the sale proclamation and scheduled the e-auction of the mortgaged property with a reserve price of Rs.355 crores. The Recovery Officer planned the fresh sale program as follows: (i) e-auction scheduled on 17th August 2023, (ii) inspection on 9th August 2023, (iii) bid submission on 11th August 2023, (iv) Reserve price Rs.355 crores, (v) EMD of Rs.35.50 crores and (vi) incremental bid amount Rs.4 crores. On 6th July 2023, the Recovery Officer settled and issued a sale proclamation. On 14th August 2023, the Recovery Officer, after recording the compliance by the certificate holder, posted for passing appropriate orders or directions on 16th August 2023 based on the bid report.

On 7th July 2023, the 1st Respondent's officer emailed (i) Respondent 3 on ol.delhi@mca.gov.in and (ii) Respondent 5 on rmsurajpur@upsida. co.in. The 1st Respondent recorded that on 10th July 2023, the publication of the sale proclamation in (i) Times of India (Delhi edition),

(ii) Business Standard (Delhi edition),

(iii) Business Standard (Hindi-Delhi edition),

(iv) Times of India (Mumbai edition), (v) Business Standard (Mumbai edition),

(vi) Navshakti (Marathi-Mumbai edition) and

(vii) Navbharat Times (Hindi-Mumbai edition). On 14th August 2023, Respondents 1 and 2 or the certificate holders, filed (i) a compliance affidavit Exhibit 812 asserting the sale proclamation's service upon Respondents 3 and 5, (ii) a compliance affidavit Exhibit proving publication of sale proclamation in the seven newspapers, (iii) a compliance affidavit Exhibit 814 to prove pasting of sale proclamation on the conspicuous part of the mortgaged property, (iv) a compliance affidavit Exhibit 815 stating that on 9th August 2023, it offered inspection to the prospective bidders and placed on record the inspection sheet duly signed by the representatives of the bidders and (v) affidavit Exhibit 816 placing on record the orders dated 9th August 2023 and 11th August 2023 passed by the Hon'ble (a) DRAT Mumbai in Appeal Diary No.1195 of 2023 and (b) Bombay High Court in Writ Petition (L) No.22102 of 2023.

On 9th August 2023, the Hon'ble DRAT rejected the Asteroid's request to defer or postpone the planned e-auction, observing that it had not lost opportunity and could participate in the e-auction on 17th August 2023, which shall be subject to the outcome of the appeal and posted it for orders on 29th August 2023.

Feeling aggrieved by the order dated 9th August 2023, Asteroid filed Writ Petition (L) No.22102 of 2023 before the Hon'ble Bombay High Court. On 11th August 2023, the Hon'ble Bombay High Court disposed of the Writ Petition.

Asteroid did not participate in the bidding process. It consciously and under commercial wisdom decided to step out of the e-auction dated 17th August 2023, expressing by gestures the unwillingness to compete with others. Thus, the Asteroid's journey ended.

On 14th August 2023, the Recovery Officer, in his order sheet, acknowledged by notifying the e- auction participants that their bids shall be subject to the outcome of Appeal Diary No.1195 of 2023. He adjourns the case to 16th August 2023 for a bid report and appropriate directions.

The Recovery Officer announced the e-auction on 17th August 2023 between 2.00 pm and 3.00 pm. However, the Recovery Officer recorded the receipt of three bids in the order sheet, viz. (i) the Appellant and (ii) M/s. Trivesh Real Estate Private Limited (from now on referred to as "Trivesh") and

(iii) M/s. Chandra Laxmi Enterprises Private Limited (for short, "Chandra Laxmi"). The Recovery Officer opened the physical bids and ordered the issuance of a corrigendum to postpone the original e-auction from 17th August 2023 to 28th August 2023.

On the same day, i.e. 17th August 2023, the Recovery Officer wrote an order sheet in handwriting signed by him to state that in the computer-printed order, through inadvertence, the date 17th August 2023 was typed and printed instead of 16th August 2023.

On 16th August 2023, the Recovery Officer issued a corrigendum Exhibit 820 by rescheduling or postponing the e-auction from 17th August 2023 to 28th August 2023.

On 17th August 2023, the 2nd Respondent filed affidavit Exhibit 821 to state that (i) it received a telephonic call from the Registry notifying the order dated 16th August 2023 passed by the Recovery Officer,

(ii) expressing shock and surprise concerning the three bids' opening and rejection, (iii) failed to notify only to the bidders about the order dated 11th August 2023 passed by the Hon'ble Bombay High Court but breached the confidentiality by disclosing the names of the three original bidders, (iv) the Recovery Officer openly defied the order dated 11th August 2023,

(v) the Recovery Officer's tactics to look into the physical bids would frustrate the e-auction leading to uncertainty, (vi) emphasised on 11th August 2023 being the cut of date of the bid submission, (vii) the Recovery Officer's desperate attempt to cause injustice, uncertainty and confusion amongst the bidders who shall lose faith in the sanctity of the court sale, and (viii) the Recovery Officer ought to have informed the order dated 11th August 2023 to the three original bidders without disrupting the e-auction dated 17th August 2023. Respondents 1 and 2 requested the Recovery Officer to recall the order of corrigendum.

The 4th Respondent's 1st intervention: Within seven days of Asteroid's decision not to participate in the e-auction, on 25th August 2023, the 4th Respondent stepped in the execution proceedings and filed a praecipe Exhibit 822 to say that it deposited Rs.35.50 crores on 24th August 2023 and pleaded that it could not upload online due to technical error. The 4th Respondent annexed (i) auction bid form, (ii) Manager's cheque no.497187 dated 24th August 2023, (iii) Company master data, (iv) photocopy of the certified true copy of the extract of the 4th Respondent's resolution of

the board of directors in the meeting held on 26th July 2023, and (v) Pan card and Aadhar card. The 4th Respondent approached the Recovery Officer as it failed to get the matter listed before this Tribunal because of the order dated 24th August 2023 in Appeal (D) No.1855 of 2023. The 4th Respondent sought to intervene and requested the Recovery Officer to list the matter for an urgent hearing on 28th August 2023. The Recovery Officer posted the case for evaluation of bid/e-auction on 28th August 2023.

On 28th August 2023, Respondents 1 and 2 filed compliance affidavits Exhibits 823 to 827. The 4th Respondent moved I.A. No.16 of 2023 (Exhibit 830), requesting the Recovery Officer to allow it to participate in the e-auction dated 28th August 2023. The Recovery Officer passed an order stating that he would not evaluate its bid. Before conducting the e-auction, the Recovery Officer heard the 4th Respondent, rejected I.A. No.16 of 2023 (Exhibit 830), and passed a reasoned order refusing its participation in the e-auction, based on this Tribunal's order dated 24th August 2023.

After that, the e-auction commenced on 28th August 2023 (2:00 pm onwards). Three original bidders, viz. (i) the Appellant, (ii) Trivesh, and (iii) Chandra Laxmi, participated.

At about 4:30 pm on 28th August 2023, C1 India Private Limited, the service provider, filed an e- auction report of the mortgaged property's bid history and highest bid report (Exhibit 835).

The Recovery Officer then directed (i) the Registry to deposit the Appellant's demand draft no.501885 dated 9th August 2023 for Rs.35.50 crores in its account and transfer it to the 1st Respondent as per order dated 24th August 2023,

(ii) the Registry to return the demand drafts of the unsuccessful bidders immediately by verifying their identity and following the due procedure, (iii) the 1st Respondent to file affidavit of status of receipt of sale proceeds from the Appellant and

(iv) the 1st Respondent to promptly invest in the interest bearing fixed deposit the entire sale proceeds received from the Appellant. He then adjourned the case for compliance or monitoring the payment.

On 30th August 2023, Respondents 1 and 2 filed affidavit Exhibit 835A, placing 15% of the sale consideration paid by the Appellant on record.

On 13th September 2023, the Recovery Officer records the receipt of the entire sale consideration of Rs.359,05,00,000/- and poundage fees of Rs.3,59,06,000/- from the Appellant.

On 15th September 2023 and 18th September

2023, the service provider placed on record the email and compliance affidavit that complied with the Recovery Officer's order dated 13th September 2023. The compliance relates to Trivesh's explanation of the bid enhancement by Rs.5 lakhs instead of Rs.4 crores.

The 4th Respondent's 2nd intervention: On 21st September 2023, the 4th Respondent filed application Exhibit 841 under Rule 11 of the Second Schedule of the Income Tax Act and prayed for the following orders and reliefs: (i) to stay all further steps until the outcome of its Appeal (D) No.2054 of 2023 presented on 18th September 2023, (ii) to participate in a fresh sale after the cancellation of the auction favouring the Appellant, (iii) the Recovery Officer must not accept further payment towards the sale price and poundage fees from the Appellant, and (iv) The Recovery Officer must not issue a sale certificate on or after 29th September 2023, and (v) the DRT Receiver be restrained from handing over the physical possession of the mortgaged property sold by the Recovery Officer.

On 21st September 2023, the 4th Respondent informed the Recovery Officer that it appealed against his order dated 28th August 2023. The Hon'ble DRAT permitted the 4th Respondent to withdraw the appeal and approach this Tribunal. On that day, the 5th Respondent's counsel orally presented its intent to purchase the mortgaged property for Rs.390 crores, cancel the e-auction dated 28th August 2023 or conduct a fresh e- auction.

On 26th September 2023, the 4th Respondent filed application Exhibit 844 seeking leave to amend the application as per Schedule A to mean and read the earlier application under Rules 11 and 61 of the Second Schedule of the Income Tax Act read with Section 29 of the 1993 Act.

The 5th Respondent's intervention: On 21st September 2023, the 5th Respondent applied under Rule 61 of the Second Schedule of the Income Tax Act for the following reliefs: (i) cancel the sale dated 28th August 2023, (ii) allow it to take back the mortgaged property by paying the amount offered by the Appellant, or in the alternate, (iii) allow it to intervene to pay the amount upto 10% value more than the Reserve Price fixed by the Recovery Officer to buy back the mortgaged property, or in the further alternate (iv) to conduct the fresh e-auction of the mortgaged property.

Chandra Laxmi's intervention: On 3rd October 2023, Chandra Laxmi filed application Exhibit 848

for the following orders and reliefs: (i) to implead it as a party and allow it to make submissions, (ii) to quash and set aside the order dated 16th August 2023 and 28th August 2023 passed by the Recovery Officer, (iii) to set aside the e-auction dated 28th August 2023, (iv) conduct a fair and transparent e-auction without disclosing bidders name, (v) direct the certificate holders to provide proceedings to intervene and (vi) interim relief to stay the confirmation of sale and issuance of a sale certificate favouring the Appellant,

On 4th October 2023, the Recovery Officer reserved Chandra Laxmi's application Exhibit 848 for order on 5th October 2023. The Recovery Officer did not pass an order on 5th October 2023 and 9th October 2023. On 17th October 2023, the Recovery Officer partly dismissed Chandra Laxmi's application, upholding the legality and validity of the auction process and procedure and adjourning it for the remainder issue.

On 19th October 2023, the Appellant responded to the allegation of Chandra Laxmi about the threat and police complaint. On 19th October 2023, the Recovery Officer directed the 4th Respondent to deposit 10% of its offer amount by 21st October 2023. On 20th October 2023, the 4th Respondent tendered a demand draft no.497474 of Rs.39.60

crores.

Trivesh's Appeal: Trivesh challenged the Recovery Officer's impugned order dated 16th August 2023 by suo-motto rescheduling the e-auction from 17th August 2023 to 28th August 2023. On 24th August 2023, the Tribunal passed an order in Trivesh's Appeal No.19 of 2023 directing the Recovery Officer not to implement the corrigendum to the extent of inviting new bidders and to proceed with the e-auction on 28th August 2023.

Chandra Laxmi's Appeal: On 15th September 2023, Chandra Laxmi filed Appeal (D) No.2041 of 2023 before this Tribunal for the following orders and reliefs: (i) to quash and set aside the order dated 16th August 2023 and 28th August 2023 passed by the Recovery Officer, (ii) to set aside the sale programme and to conduct a fair and transparent e-auction without disclosing the parties' name, or in the alternate (iii) to permit the inter se bidding with the highest bidder.

The 4th Respondent's Appeals and Writ Petitions: On 31st August 2023, the 4th Respondent presented Appeal (D) No.1582 of 2023 before the Hon'ble DRAT challenging this Tribunal's order dated 24th August 2023 in Trivesh's Appeal No.19 of 2023. On 20th September 2023, the 4th Respondent withdrew Appeal (D) No.1582 of 2023

with the liberty to approach this Tribunal under Section 30 of the 1993 Act. Thus, the Hon'ble DRAT disposed of the appeal as withdrawn.

On 31st August 2023, the 4th Respondent filed Writ Petition (L) No.24441 of 2023. On 2nd January 2024, the 4th Respondent stated that the Writ Petition became infructuous due to the subsequent events. Therefore, the Hon'ble Bombay High Court dismissed the Writ Petition as withdrawn.

The 4th Respondent filed another Writ Petition (L) No.33129 of 2023 challenging this Tribunal's order dated 24th November in Appeal (D) No.2208 of 2023 directing the Recovery Officer to confirm the sale. On 30th November 2023, the Hon'ble Bombay High Court passed an order clarifying that if the Recovery Officer confirmed the sale as per this Tribunal's direction, it should be subject to the outcome of the Appeal pending before the Hon'ble DRAT.

The 4th Respondent filed Appeal (D) No.2054 of 2023 before this Tribunal for the following orders and reliefs: (i) to review, recall and set aside the order dated 24th August 2023 in Appeal No.19 of 2023, (ii) to quash and set aside the order dated 28th August 2023 passed by the Recovery Officer in RP No.1 of 2012, and (iii) to order fresh reauction of the mortgaged property. On 19th March 2024, at the request of the 4th Respondent's counsel, the Tribunal disposed of the Appeal as infructuous.

The 4th Respondent filed Appeal No.71 of 2023 before the Hon'ble DRAT, challenging this Tribunal's order dated 24th November 2023. On 6th December 2023, the Hon'ble DRAT declined to grant any interim order to stall the issuance of the sale certificate favouring the Appellant.

The 5th Respondent's Writ Petition and Appeal: On 30th November 2023, the 5th Respondent filed Writ Petition No.14937 of 2023 to quash and set aside the judgment and order dated 24th November 2023 passed by this Tribunal to confirm the sale favouring the Appellant. On 1st December 2023, the 5th Respondent withdrew the Writ Petition. The Hon'ble Bombay High Court clarified that it did not opine on the case's merit.

On 30th November 2023, the 5th Respondent also presented Appeal No.72 in Appeal (D) No.2208 of before the Hon'ble DRAT Mumbai, challenging this Tribunal's order dated 24th November 2023. On 6th December 2023, the Hon'ble DRAT Mumbai declined to grant interim relief to the 5th Respondent.

On 17th January 2024, Mr Sandeep Sharma passed the impugned order, which the Appellant challenged. On 30th January 2024, the Tribunal passed an interim order on a prima facie view that the order setting aside the sale only on the ground of cartelization was beyond the Recovery Officer's jurisdiction. The Tribunal directed the Recovery Officer to maintain the status quo till the Appeal's disposal.

Respondents 1 and 2 filed reply affidavit Exhibit 8, rejoinder affidavit Exhibit

11. The 3rd Respondent did not file its report or reply affidavit. The 4th Respondent filed a reply affidavit Exhibit 7. The 5th Respondent filed its reply affidavit Exhibit 15. The Appellant's submissions:

In the impugned order, the Recovery Officer framed various issues while refusing to confirm the sale, favouring the Appellant. He set aside the auction held on 28th August 2023, allowed the 4th and 5th Respondents' applications and directed them to deposit Rs.396 crores. The Recovery Officer fixed a fresh auction with a reserve price of Rs.396 crores. The impugned order is ex facie illegal, arbitrary and passed without any application of mind.

The Appellant felt aggrieved by the Recovery Officer passing the impugned order based on

conjectures or surmises failing to interpret and apply the correct laws. The impugned order resulted in a disastrous outcome by unsettling the Appellant's legally accrued rights to confirm the sale, issue a sale certificate and hand over the possession of the property.

The Appellant called into question the Recovery Officers' arbitrary and unethical approach and requested the Tribunal to look into the biased decision, favouritism, and unfair treatment.

The Recovery Officer passed the impugned order by openly defying the higher courts' orders, nullifying them, and favouring the non-participant third party (the 4th Respondent) and the lessor of the mortgaged property (the 5th Respondent). The impugned order is directly contrary to those orders. The Recovery Officer referred to and reproduced various orders in the impugned order. But willfully disobeyed the orders and set aside the sale on frivolous grounds. The Recovery Officer is subordinate to this Hon'ble Tribunal and, therefore, bound to follow the orders of the higher forum. The Recovery Officer rendered the hierarchy in the 1993 Act and SARFAESI Act 2002 nugatory by the impugned order.

The Recovery Officer failed to decide the preliminary issue of maintainability of the 4th and

5th Respondents applications. The Recovery Officer erred in entertaining the 4th Respondent's application under Rules 11 and 61. Regarding Rule 11, Respondents 4 and 5 have no 'interest' in the subject property. They are third parties who failed to participate in the auction. The application's maintainability under Rules 11 and 61 has no bearing on appeals filed by the 4th Respondent before this Tribunal.

Rules 60 and 61 apply to a case where the Recovery Officer sold the attached property, and the interest of any person is affected by such sale. In the present case, The 4th and 5th Respondents say that the Recovery Officer has not confirmed the sale. Therefore, no interest accrued in their favour. The Recovery Officer misinterpreted these rules and came to an incredible conclusion.

Regarding Rule 11, the Recovery Officer grossly erred in holding that third parties can challenge the sale under Rule 11. The Recovery Officer passed the impugned order contrary to the settled position of law.

Regarding Rule 61, the Recovery Officer observed that he refrains from deciding the application under Rule 61 because of the pendency of the appeal against its order dated 28th August 2023 before this Hon'ble Tribunal. The sum and substance is that the Recovery Officer rendered no finding under Rule 61 of Schedule II to the Income Tax Act, 1961. The Recovery Officer refrained from deciding the 4th and 5th Respondents' applications under Rules 11 and 61. The 4th Respondent subsequently sought to amend and insert Rule 61 in its Rule application. Neither the 4th Respondent pressed for the amendment application nor the Recovery Officer allowed it.

The Recovery Officer sat in an appeal or suo-motto review of the predecessor's order dated 28th August 2023. The predecessor in office observed the legality and validity of the auction dated 28th August 2023. The successor in office observes irregularity in the sale based on the 4th Respondent's arguments without pleadings. The 4th Respondent failed to disclose its source of information and knowledge because these are confidential documents in the custody of the Recovery Officer. The 4th Respondent tampered with the court records, and the Recovery Officer failed to maintain confidentiality. The EMD deposited by Mr. Ashish Gupta is not a material irregularity. The Appellant is a family-owned company. On 9th August 2023, the Appellant submitted its bid online. On 17th August 2023, the Recovery Officer evaluated the bids and issued suo motto corrigendum. The Recovery Officer found the EMD to be correct. The conduct of the successor in office shows an afterthought to trample the e-auction process.

The predecessor did not object (to the issue the successor raised) either when opening the bids, declaring the Appellant as a successful purchaser, or accepting the entire sale consideration. It seems that the successor in office got swayed at the behest of third parties and allowed them to participate in the auction by any means available.

Cartelization and collusion are severe allegations and cannot established in a summary manner. The Recovery Officer exceeded his jurisdiction and transcended beyond the ambit of his powers. The Recovery Officer set aside the sale on ex-facie for illegal, perverse, and frivolous reasons. Respondents 4 and 5 have not raised the issue of cartelization. However, the successor in office suo- motto claims that since other bidders failed to increase the bids by one increment of Rs.4 crores, there is an element of cartelization. The predecessor in office or the service provider found no cartelization.

The successor in office failed to consider that the other bidders consciously chose not to increase their bids, and therefore, the Appellant cannot be held liable for it. If the Recovery Officers interpret the bidding in the auction process this way, it will lead to chaos. The certificate holders shall never see any successful auction.

The Recovery Officer suo-motto cannot claim cartelization just because the final result of the auction does not meet his expectations. The authorities relied upon by the Recovery Officer do not apply to the facts and circumstances of the present case. The successor adopted dilatory tactics by the impugned order that prejudiced the Appellant and benefitted other 'prospective' bidders. A settled principle of law is that a court cannot set aside an auction merely because a higher bid is available. The impugned order undermines the sanctity of a public auction.

The 4th Respondent passed a Board Resolution in July 2023 to participate in the auction. The Recovery Officer fixed the e-auction on 17th August 2023 and postponed it to 28th August 2023. It had ample opportunity to participate but did not do so.

The 5th Respondent, in its reply affidavit, states about the procedural delay in depositing Rs. 396 crores. It refers to the resolution passed in November 2020. Even after four years, it is unable to deposit. The 5th Respondent never had any bona fides to participate. The 5th Respondent filed an affidavit of dues during each e-auction. It never showed its inclination to participate in the e- auction proceedings. The 5th Respondent consciously relinquished its right to participate and cannot now assert the same. Principles of estoppel apply.

The Recovery Officer gave preferential treatment to the 5th Respondent. The mere passing of a Board Resolution dated 23rd November and addressing a letter is insufficient. The Recovery Officer grossly erred, acknowledging the financial and administrative sovereignty of the State Government without an intent to act. The Hon'ble DRAT, by its order of 5th December 2023, observed that the 5th Respondent had several opportunities to participate and declined to grant interim protection to stay the sale confirmation.

The 5th Respondent laid its claim of Rs.67.57 crores in 2018, and now it is Rs.777,84,86,346/-. In Appeal No. 12 of 2021, before this Tribunal, the 1st Respondent challenged the 5th Respondent's claim. It's a subjudice case before this Tribunal. The Recovery Officer exceeded his jurisdiction by indirectly deciding Appeal No. 12 of 2021 pending before this Tribunal by observing the 5th Respondent's entitlement to the amount.

The Recovery Officer failed to understand and appreciate the facts before the Hon'ble Allahabad High Court and the Recovery Proceedings. By the impugned order, the Recovery Officer attempted to prejudice as if the 1st Respondent committed contempt.

The Recovery Officer grossly erred in observing that the sale proclamation dated 6th July 2023 was faulty. Newspaper reports are hearsay and inadmissible evidence but ignore the 4th Respondent's criminal activity. The Recovery Officer exceeded his jurisdiction, relying on it.

The Recovery Officer devised a new process to conduct the e-auction. The Recovery Officer arbitrarily set aside the auction and fixed a new auction with a reserve price of Rs. 396 crores. He directed Respondents 4 and 5 to deposit Rs.396 crores. Out of this amount, the Recovery Officer shall treat Rs. 39.60 crores as EMD. The Recovery Officer retained the Appellant's Rs.362.02 crores deposited toward the entire sale consideration and poundage fees. It shows that the Recovery Officer passed the impugned order intending to prejudice the Appellant's right. The impugned order is not in conformity and does not find a place in the Second Schedule of the Income Tax Act 1961. The Recovery Officer seems to have devised a new process and procedure for the third parties' benefit.

The Recovery Officer failed to appreciate the law laid down in the following cases: (i) Celir LLP v. Bafna Motors [Civil Appeal No. 5542 of 2023, (ii) Valji Khimji v. OL of Hindustan Nitro Products (Gujarat) Limited [(2008) 9 SCC 299], (iii) Eva Agro Feeds Pvt. Ltd v. Punjab National Bank [Civil Appeal No. 7906 of 2021] and (iv) Vedica Procon Pvt. Ltd. v. Balleshwar Greens Pvt. Ltd [(2015) 10 SCC 94].

The Appellant requests this Tribunal to set aside the impugned order and direct the Recovery Officer to confirm the sale in favour of the Appellant. 1st and 2nd Respondents' submissions:

Respondents 1 and 2 state that (i) there is no irregularity or illegality in issuing the sale proclamation dated 6th July 2023, (ii) fixing the date for receiving bids by 4:30 p.m. on 11th August 2023, and (iii) conducting the e-auction on 17th August 2023. The Recovery Officer suo motto issued a corrigendum compelling Respondents 1 and 2 to publish it to announce the postponement of the e-auction from 17th August 2023 to 28th August

Respondents and filed compliance affidavits. The predecessor ruled that there was no irregularity or illegality in the process or procedure of the validly held auction on 28th August 2023.

On 30th January 2024, the Tribunal passed the status-quo order. Respondents 1 and 2 endeavour to realise the maximum value of the mortgaged securities. Respondents 1 and 2 do not support the impugned order except for receiving the higher amount. Mr Palav submitted that Respondents 1 and 2 support the confirmation of the sale and issuance of the sale certificate. The setting aside of the sale by the Recovery Officer is absolutely unlawful. The e-auction conducted on 28th August 2023 is valid and does not suffer from any ground of non-service or irregularity, illegality, or under valuation. There is no challenge to the valuation or reserve price. The Recovery Officer conducted an e-auction on 28th August 2023 based on the order dated 24th August 2023. Respondents 4 and 5 abandoned their rights challenging order dated 24th August 2023. Therefore, they are estopped from raising grievance in this regard. Additional affidavit (exhibit-845) and further affidavit (exhibit-849) are contrary to (exhibit-841). The 5th Respondent did not participate in the bidding process or the e-auction validly conducted on 28th August 2023. The 1st Respondent filed its letter

dated 22nd September 2023 in reply to the 5th Respondent's letter dated 19th September 2023 to show its higher offer of Rs.390.50 crores, which relied upon the 5th defendant's board resolution dated 23rd November 2020. Exhibit 841, 845, and affidavits contradict the Record and Proceedings in the present Recovery proceedings. Exhibits 845 and 849 are contrary pleadings, and to expose the 5th Respondent's falsehood, Respondents 1 and 2 relied upon a compilation of documents Exhibit 850.

Respondents 1 and 2 were shocked and surprised by the 5th Respondent's challenge to (i) the mortgage validity, (ii) denying lease hold right to Respondent 3 (in liquidation), (iii) it's claim of Rs.777,84,86,346/- as of 31st March 2023, (iv) to browbeat by terminating the lease and question of the encumbrances mentioned in the sale proclamation. These are not only irrational but untenable on facts as well as on law. The 5th Respondent is estopped in raising such objections as they have waived their rights. The Recovery Officer cannot travel beyond the scope of the recovery certificate and cannot entertain the 5th application and arguments challenging the mortgage after more than two decades. In all the e-auctions conducted in the past decade, Respondents 1 and 2 served prior notice for sale proclamation/sale notices e- auction notices upon Respondent 5. It regularly lodged its claim with the Recovery Officer to incorporate as an encumbrance of its claim in the sale notice. The 5th Respondent's claim of dues is the subject matter of the pending Appeal No.12 of 2021 (Transfer Appeal No.2 of 2023) filed by the 1st Respondent before this Tribunal. By further affidavit Exhibit-849, paragraphs 8 and 9, the 5th Respondent made incorrect statements. The Recovery Officer conducted the sale on "as is where is basis" and "as is what is basis". The 5th Respondent is, therefore, not entitled to re-agitate the issue concerning encumbrance or claim specified in the sale proclamation at this stage. It attempts to delay or frustrate a successful sale that is not only deplorable but condemnable and amounts to interference with the judicial sale process.

In the last twenty years of the judicial proceedings, this Tribunal noticed the DRT receiver took physical possession without any opposition or objections by the 5th Respondent. The 5th Respondent never objected to the sale, nor did the judicial proceedings before the Hon'ble Delhi High Court concerning the liquidation of

Daewoo assets, including leasehold rights granted by it. The 5th Respondent did not object to the initiation and continuing of the recovery proceedings by Respondents 1 and 2 as the assignee of the original lenders passing of various orders in the present proceedings by multiple forums, including the Hon'ble Supreme Court.

The mortgaged property was sold on 16th October 2007 by a private treaty under the Court's supervision for Rs.765 crores favouring Pan India, the erstwhile auction purchaser. The lease of the Daewoo property was transferred by 5th Respondent favouring the erstwhile auction purchaser. The 5th Respondent approbated and reprobated at the same time. Such conduct on the part of statutory board is highly deplorable. On 11th September 2008, the Recovery Officer conducted a detailed investigation and found that the encroached property falls outside the Daewoo property. The 5th Respondent attempted to prejudice the Recovery Officer as if Respondents 1 and 2 committed contempt of the statement made before the Hon'ble Allahabad High Court. The 5th Respondent is aware of the facts and the law in this regard. On 22nd November 2012, the erstwhile auction purchaser failed to comply with the terms and conditions of the sale and, therefore, on this ground, cancelled the sale. The erstwhile auction purchaser challenged the order before this DRT, Hon'ble DRAT, Mumbai and the Hon'ble Bombay High Court, resulting in dismissal.

The sale notice dated 4th November 2020 noted the 5th Respondent's dues. On 2nd December 2020, the 5th Respondent notified the Recovery Officer, increasing its claim to Rs.434,05,37,211/-

On 25th March 2021, the Hon'ble Bombay High Court observed the order dated 25th February 2021 passed by the Recovery Officer Mr Sujit Kumar as an "unusual order" of forfeiting Rs.765 crores, directing Respondent 1 to forward it to PM Cares Fund. On 20th April 2021, this Tribunal stayed the order dated 25th February 2021.

On 22nd February 2023, the Recovery Officer fixed the sale proclamation announced the e-auction on 18th April 2023 with the reserve price of Rs.310 crores. On 27th February 2023, Asteroid approached Respondent 1 with the offer of Rs.350 crores. The 5th Respondent, through its advocate, represented before the Recovery Officer. On 6th March 2023, the Recovery Officer recorded the 5th Respondent's letter dated 3rd March 2023 (exhibit- 769), noting its purported dues of Rs.777,84,86,346/- as of 31st March 2023. On 8th March 2023, Respondent 1 filed the compliance affidavit of dues and e-auction. After that, Asteroid litigated before various forums without any order in its favour.

(100) On 6th July 2023, the Recovery Officer issued a sale proclamation (exhibit-811) for the reserve price of Rs.355 crores and announced the e- auction on 17th August 2023. On 16th August 2023, the Recovery Officer suo motto issued a corrigendum postponing the e-auction from 17th August 2023 to 28th August 2023. On 24th August 2023, this Tribunal passed an order in Appeal modifying the corrigendum disallowing the participation of new bidders who did not bid by 11th August 2023. On 28th August 2023, the Recovery Officer refused to entertain the 4th application and proceeded to conduct the e-auction. The 5th Respondent's advocate was present. On 21st September 2023, the 5th Respondent applied to set aside the sale. The 5th Respondent's contrary pleadings are liable to be rejected as they are (i) barred by estoppel principles, acquiescence and waiver,

(ii) the process is abuse, illusory cause of action filed as a dilatory tactic, etc.

(101) Respondents 1 and 2 question the successor’s jurisdiction to modify and set aside the predecessor’s order. The successor exceeded the jurisdiction to suo-motto assume the appellate or review jurisdiction without application by any parties. The Recovery Officer adopted processes and procedures not found under the Second Schedule of the Income Tax Act. The Recovery Officer did not pass any order under Rule 61. Rule 11 will not apply to the 4th Respondent’s case. The Recovery Officer passed the impugned order, setting aside the sale on the cartel’s ground. There is no pleading about the cartel in the application filed by Respondents 4 and 5. There is no evidence of a cartel. Respondents 1 and 2 request the Tribunal to set aside the impugned order and direct the Recovery Officer to conclude the sale. The 3rd Respondent's submissions:

(102) Ms Barsha Parulekar, representing the Official Liquidator, expressed her displeasure at the Recovery Officer's refusal to listen to her arguments. She narrated her short but precise arguments to support the valid e-auction dated 28th August 2023. Through the counsel, the liquidator requests to set aside the impugned order and to order the sale completion. The 4th Respondent's submissions:

(103) Respondent No.4 is the prospective auction purchaser of the mortgaged property. The

Appellant filed the present Appeal challenging the Recovery Officer's order dated 17th January 2024. According to the 4th Respondent, the Appeal is not maintainable either on facts or in law. The Appellant has not approached the Tribunal with clean hands and presented distorted facts or incorrect versions. It is an attempt to misguide this Tribunal. The allegations made against the Recovery Officer are all baseless and speculative in nature. The issues raised in the Appeal are beyond the scope of the order dated 17th January 2024. On 21st September the 4th Respondent applied under Rule 11 and 61 of the Second Schedule of Income Tax Act, 1961 read with Section of the

Act. The 4th Respondent requested that the sale not be confirmed and that it be allowed to participate in a fresh sale after cancelling the sale declared in favour of the Appellant. The Recovery Officer rejected the Appellant's application to confirm the sale and allowed its application to the extent of its higher bid of Rs.396 crores to participate in the open e-auction of the mortgaged property. The Recovery Officer granted similar relief to the 5th Respondent. While passing the order dated 17th January 2024, the Recovery Officer directed (i) conduct open public e-auction concerning the mortgaged property with reserve price of Rs.396 crores, (ii) Respondents are directed Rs.396 crores within fifteen days of uploading of the impugned order on the DRT's website, (iii) the amount of Rs.396 crores is directed to be kept in the EMD for the proposed public e-auction, (iv) the decision about the balance amount shall be taken after receiving Rs.396 crores (v) out of the total Rs.355 crores deposited by the Appellant as the successful bidder excluding Rs.35.50 crores deposited by Mr Gupta as EMD of Rs.39.60 crores be kept as EMD on behalf of the Appellant for the proposed e-auction.

(104) There is no factual and no legal infirmity in the impugned order. The Appellant is indulged in collusion and cartelization between it and Trivesh. Trivesh's conduct becomes very clear as it did not increase the bid by Rs.4 crores. Trivesh only increased the bid by Rs.5 crores. The Recovery Officer is the only authority who can conclude what is cartelization in a bidding process. The Appellant has no vested right in the mortgaged property as the Recovery Officer did not issue the sale certificate. Even if the sale certificate is issued, it would be a nullity in view of the bidding due to cartelization. The Appellant is not entitled to lay its claim where it is indulged in collusion and cartelization vitiating the auction process. The Recovery Officer rightly refused to confirm the sale and issue the sale certificate. The Recovery Officer gave a definite finding that the auction process was tainted by gross and material irregularity and recorded the breach of condition 4 of the sale proclamation. The Hon'ble Bombay High Court by its order dated 4th October 2023 directed to issue sale certificate to the Appellant in accordance with law. This Tribunal by its order dated 24th November 2023, directed the Recovery Officer to conclude the sale as per relevant Rules. Therefore, the Recovery Officer's conclusion cannot be doubted. Significantly lower bid defeats the purpose of conducting auction through a transparent price discovery. It is in the best interest of the process of inviting the competitive bidding in the public interest to fetch the best possible price. It will ensure further fairness, transparency, and a level playing field for the 4th Respondent and other bidders. The order of the Recovery Officer is based on the established principle of bidding and fair play. The Recovery Officer considered the settled law of the Hon'ble Supreme Court in that technicalities cannot stand in the way of the sale. The judgments relied upon by the Appellant were discussed and

distinguished by the Recovery Officer. The 4th Respondent refers to the e-auction report filed by C-1 India on 28th August 2023 with its affidavit in compliance with the directions dated 13th September 2023. According to the 4th Respondent, reliance on Vedika Procon (supra) is misplaced. The 4th Respondent requests the Tribunal to dismiss the Appeal. Respondent 5:

(105) Respondent no.5, though represented through Mr Rohit Gupta and advocate on record on various dates, did not appear on the crucial day of their arguments on 19th March 2024. The 5th Respondent's counsel, present in the Court on 19th March 2024, did not argue. The Tribunal noted that the conduct of the 5th Respondent's advocate on record, and the counsel remained away on the crucial date of the argument. The 1st time the 5th Respondent's advocate on record did not argue in Appeal (Diary) No.2208 of 2023. The Tribunal had no option but to close the argument and reserve it to pronounce the judgment. Nevertheless, the Tribunal shall discuss the 5th Respondent's case and its objections to the e- auction successfully conducted on 28th August

Analysis and Findings:

(106) The Tribunal perused the parties' pleadings and the material placed on record and shall consider them as per law.

(107) The above-noted facts reveal that on 6th July 2023, the Recovery Officer issued a sale proclamation and announced to conduct an e- auction on 17th August 2023. One day before the e-auction, the Recovery Officer suo-motto issued a corrigendum and postponed the e-auction from 17th August 2023 to 28th August 2023. The Tribunal shall consider the e-auction conducted by the predecessor and the setting aside of the completed sale by the successor-in-office.

(108) The Recovery Officer issued the sale proclamation Exhibit 811. For the sake of convenience, the settled terms and conditions (1) to (11) of the sale proclamation are reproduced below:

1. The reserve price below which the property shall not be sold is Rs.355,00,00,000/- (Rupees Three Hundred Fifty Crores Only).

2. The amount by which the bid is to be increased shall be Rs.4,00,00,000/- (Rupees Four Crores only). In the event of any dispute arising as to the amount of bid, or as to the bidder, the Lot shall at once be again put up to auction.

3. The highest bidder shall be declared to be the purchaser of any lot. It shall be in the discretion of the undersigned to decline/accept the highest bid when the price offered appears so clearly inadequate as to make it inadvisable to do so. The particulars specified in the annexed schedule have been stated to the best of the information of the undersigned, but the undersigned shall not be answerable for any error, misstatement or omission in this proclamation.

4. The public at large is hereby invited to bid in the said open public E-Auction. The offers in a sealed envelope (addressed to the Recovery Officer, DRT-II, Mumbai, superscribing R.P. No. only) containing duly filled-in and blue ink signed prescribed bid form giving complete details of the bidder(s) including e-mail id, mobile number, etc., along with self-attested copies of PAN/TAN Card, address proof, photo and original demand draft/pay order of any identity proof of the bidder(s) and original demand draft/pay order of any Nationalized Bank/Scheduled Bank towards EMD Amont of Rs.35,50,00,000/- (Rupees Thirty-Five Crores Fifty Lakhs only) should be deposited with the undersigned not later than by 4:30 pm on 11.08.2023. The demand draft/pay order should be drawn in favour of the “Recovery Officer, DRT-II, Mumbai, in R.P. No.1 of 2012 (T.R.P No.2 of 2023). The bidder(s) shall also sign declaration if they are bidding on their own behalf of their principals. In the latter case, they shall be required to deposit with the bid documents their original authority duly ink signed by their principal together with complete KYC of the said principal duly attested by the said principal. In case of the company, authenticated copy of resolution passed by the board members of the company or any other authenticated document confirming representation/attorney of the company together with complete KYC of the said principal company shall also be submitted along with bid documents. In case of failure, bid shall not be considered.

5. The bidder(s) shall also upload online on the website of the aforesaid e-auction agency, after registering themselves on the website of the aforesaid e-auction agency, copy of the duly filled- in prescribed bid form along with photocopies of the documents as stated in para 4 here in above. The last date for submission of online bid is 11.08.2023 by 4:30 pm. The Physical inspection of the properties may be taken between 10:00 am and 5:00 pm on 09.08.2023 at the property site.

6. The successful highest bidder shall have to deposit 25% of his final bid amount after adjustment of EMD by next bank working day i.e. by 4:30 pm in the form of demand/draft pay order in favour of the “Recovery Officer, DRT-II, Mumbai in R.P. No. 1 of 2012 (T.R.P. No.2 of 2023) or directly by way of RTGS/NEFT in the Account No.30043253890 with State Bank of India, Fort Market Branch, Mumbai, IFSC Code No.DBIN0005347 of Recovery Officer, DRT-II, at Mumbai.

7. Once the bid is submitted it is mandatory for the bidder(s) to participate in the bidding process of the e-auction by logging in on the e-auction agency portal, failing which the EMD shall be forfeited to the Government, if the undersigned thinks fit.

8. The successful highest bidder shall also deposit the balance 75% of final bid amount on or before 15th day from the of sale of the property. If the 15th day is Sunday or other Holiday, then on the first bank working day after the 15th day by prescribed mode as stated in para 6 above. In addition to the above, the successful highest bidder shall also deposit poundage fee with The Recovery Officer, DRT-II, Mumbai @ 2% upto Rs.1,000/- and @ 1% of the excess of said amount of Rs.1,000/- through DD in favour of the Registrar, DRT-II, Mumbai.

9. In case of default of payment within the prescribed period, the deposit, after defraying the expenses of the sale, may, if the undersigned thinks, fit, be forfeited to the Government and the defaulting purchaser shall forfeit all claims to the property or the amount deposited. The property shall be resold, after the issue of fresh proclamation of sale. Further the purchaser shall be also liable to make good of any shortfall or difference between his final bid amount and the price for which it is subsequently sold.

10. The property is being sold as “AS IS WHERE IS BASIS AND “AS IS WHAT IS BASIS”.

11. The undersigned reserves the right to accept or reject any or all bids if found unreasonable or postpone the auction at any time without assigning any reason.

(109) The Recovery Officer planned the prospective bidder’s site inspection on 9th August 2023. He fixed 11th August 2023 as the date of receiving a bid by 4.30 pm from the prospective bidder (the cutoff time). Three bidders (the original bidders) submitted the bids online before the cutoff time to participate in the e-auction on 17th August 2023 (the scheduled e-auction). In defiance of the Hon’ble Bombay High Court’s order dated 11th August 2023, the Recovery Officer postponed the e-auction dated 17th August 2023. On 16th August 2023, the Recovery Officer issued suo motto corrigendum, postponing the e-auction from 17th August 2023 to 28th August 2023 (the deferred or postponed auction).

(110) Condition 1 of the sale proclamation shows that the Recovery Officer shall not sell the mortgaged property below the reserve price of Rs.355 crores. On 23rd January 2023, the Recovery Officer passed an order and directed M/s. Perfect Valuers to revalue the mortgaged property. On 22nd February 2023, M/s. Perfect Valuers filed the valuation report Exhibit 765. On 27th February 2023, the Recovery Officer passed an order observing the three failed e-auctions at the reserve price of Rs.350 crores. He referred to the valuation report for the market value of Rs.412.81 crores, realization value of Rs.309.60 crores and distress value of Rs.230.60 crores. Respondents 4 and 5 did not set up any case challenging the undervaluation or the valuer’s report. The Recovery Officer, therefore, proceeded to conduct an e-auction on the latest valuation report. C1 India, the service provider, in its affidavit dated 15th September 2023, recorded that Chandra Laxmi enhanced the amount by Rs.5 lakhs during the pre-bid process. Therefore, the auction start price became Rs.355.05 crores. According to the service provider, Trivesh accepted the price of Rs.355.05 crores. As per condition 2, the Appellant increased the bid by Rs.4 crores; thus, the final sale consideration became 359.05 crores. The Tribunal finds no legal infirmity or undervaluation of the mortgaged property.

(111) Thus, after understanding conditions 1 and 2, the predecessor declared the Appellant as the highest bidder vide condition no.3. The Recovery Officer did not say the amount of Rs.359.05 crores is inadequate. On 28th August 2023, the Recovery Officer directed the Appellant to deposit 25% of its final bid amount after adjustment of EMD. On 30th August 2023, the 1st Respondent filed a compliance affidavit stating that the Appellant deposited 15% of the sale consideration on 29th August 2023. Thus, the Appellant complied with condition no.6 or Rule 57. On 13th September 2023, the 1st Respondent filed a compliance affidavit placing on record the details of 75% of the final bid amount paid by the Appellant. The Recovery Officer recorded the receipt of the poundage fees of Rs.3,59,06,000/- on 8th September 2023. Thus, the Appellant made good the payment of the entire sale consideration and poundage fees. The Appellant complied with condition no.8. Upon payment of the total sale consideration, condition no.9 or Rule 59 became redundant.

(112) The Recovery Officer knew that the Appellant made good the payment well and complied with the conditions discussed above. As of 13th September 2023, Chandra Laxmi, Respondents 4

and 5, did not apply to set aside the completed sale. The Recovery Officer was duty-bound to confirm the completed sale under Rule 63 and issue the sale certificate under Rule 65.

(113) The Recovery Officers avoided confirming the sale and issuing a sale certificate despite the higher forums’ orders. By the impugned order, the Recovery Officer set aside the completed sale. Except for making the bald allegation of conspiracy, Respondents and failed to substantiate the allegations with convincing evidence. The Tribunal does not find any justifiable reasons to accept the untenable collusion plea of Respondents 4 and 5. The Recovery Officer erred in setting aside the completed sale for no mistake of the Appellant.

(114) In paragraph 5.52 of the impugned order, the Recovery Officer observed as follows: “Therefore, keeping in view the above facts in the present matter and provisions of Rule 61 read with proviso (a) thereof and also in order to maintain judicial discipline, I prefer to refrain at this stage, from deciding whether Rule 61 is applicable or not in the I.A.s filed by UPSIDA and M/s. Authum.”

(115) The Recovery Officer sat in Appeal, suo motto reviewed or revised the predecessor’s order dated 28th August without any application. Notably, the Recovery Officer set aside the completed sale on the grounds of cartel and price

inadequacy. In paragraph 5.59 of the impugned order, the Recovery Officer set aside the e-auction conducted on 28th August 2023, which was only on the grounds of cartelization. In paragraph 11.39, the Recovery Officer discussed the 4th Respondent’s application under Rule 11.

(116) He sat in an appeal or review against the following orders: (i) the order dated 9th August 2023 passed by the Hon'ble DRAT, Mumbai, (ii) the order dated 11th August 2023 passed by the Hon'ble Bombay High Court, (iii) the order dated 24th August 2023, passed by this Tribunal setting aside the corrigendum to the extent of inviting new bids, (iv) the order dated 28th August 2023 passed by his predecessor conducting the e- auction on that day based on the Tribunal's order dated 24th August 2023, (v) this Tribunal's order dated 24th November 2023, (vi) the order dated 30th November passed by the Hon'ble Bombay High Court in the 4th Respondent's Writ Petition (L) No.33129 of 2023, and (vii) the order dated 6th December 2023 passed by the Hon'ble DRAT Mumbai rejecting the 4th and 5th Respondent's request to stop the sale confirmation and issuance of the sale certificate.

(117) The Recovery Officer routinely sat in appeal or review. The Recovery Officer does not have the inherent power to review. The 1993 Act does not confer any power to the Recovery Officer to review. Respondents 4, 5, or Chandra Laxmi did not point out (i) the discovery of new facts or evidence, (ii) mistake or error apparent on the fact of the record, and (iii) justifiable reasons. There is no change in the circumstances or the facts as of 13th September 2023. Mr Sharma overturned the case and departed from the final orders dated 28th August 2023 and 13th September 2023, passed by the predecessor.

(118) Rule 87 of the Second Schedule of the Income Tax Act grants limited power of correction or mistake, nothing more. Without statutory power, the Recovery Officer exceeded his jurisdiction by suo motto reviewing or revising the predecessor's order dated 28th August 2023 under the guise of clarification. The Recovery Officer modified and overturned the predecessor's order dated 28th August

The Recovery Officer has no inherent powers to suo motto review the predecessor's order because of the ruling in Standard Chartered Bank versus Dharminder Bhohi (2013) 15 SCC 341.

(119) In the Tribunal's view, the Recovery Officer acted arbitrarily and irrationally at his sweet will, like a private individual, and dealt with the stakeholder he pleases. The Recovery Officer's action is discriminatory and far from the standard norms. While passing the impugned order, the Recovery Officer departed from the valid principles.

(120) The Recovery Officer disposed of Respondents 4 and 5’s applications by the impugned order. The cardinal point raised by Respondents in their applications remained undecided. The Recovery Officer left it to be determined ordinarily. The issues raised by Respondents 4 and 5 go to the case’s root and the jurisdiction of the Recovery Officer to entertain it. There is no finality concerning the application filed by Respondents 4 and 5. There is no finality in the impugned order that determines the rights of Respondents 4 and 5 as per their respective applications. The mere discussion on the issues raised by Respondents 4 and 5 is insufficient. There is no adjudication on Respondents 4 and 5 rights, which was a pre- requisite to determine before setting aside the completed sale.

(121) Respondent 4: On 24th August 2023, the 4th Respondent claims that it tendered to the Recovery Officer, through counsel, a demand draft no.497187, drawn on HDFC Bank favouring the Recovery Officer, DRT-II, Mumbai, in R.P. No.1 of 2012 (T.R.P. No.2 of 2023) for Rs.35.50 crores. On

25th August 2023, the 4th Respondent, through its advocate, filed a praecipe Exhibit 822 requesting the Recovery Officer to list the matter for urgent hearing on 28th August 2023 and allow it to (i) intervene in the auction proceedings and (ii) consider the bid and protect its rights as the prospective purchaser.

(122) To appreciate the 4th Respondent's fact, the Tribunal finds it necessary to reproduce paragraphs 1 to 4 of the praecipe as follows: "(1) I am concerned for the proposed purchaser in the above matter." "(2) Reasons for urgency: That proposed purchaser has deposited a sum of Rs.35,50,00,000/- on dated 24.08.2023 in view E-auction dated scheduled in the recovery proceeding pending before DRT-II, Mumbai. The intervener successfully entered in the said auction by physically deposited Rs.35,50,00,000/- vide Demand Draft No.497187 to the Recovery Officer DRT-II, however due to technical error was not able to uploaded online." "(3) Intervener says that he has mentioned the preceipe to intervene in the Appeal D. No.1855 of 2023 today i.e. on 25.08.2023 before Hon'ble Presiding Officer DRT-II, Mumbai, however Ld. Presiding Officer rejected the preceipe, submitting that he has passed the order on 24.08.2023 in the said appeal." "(4) Intervener therefore prays that the matter be pleased to circulate on 28th August, 2023 for urgent hearing of Intervener to allow the Intervener to intervene in the present auction to consider bid of the proposed purchaser to protect the rights of the proposed purchaser."

(123) The 4th Respondent annexed with the praecipe the photocopies of (i) the auction bid form, (ii) the manager's cheque no.497187,

(iii) the 4th Respondent's master data, (iv) the extract of the resolution passed by the board of director of the 4th Respondent at its meeting held on 26th July 2023, (v) the aadhar card and pan card of Abhishek Tejawat and (vi) unreadable document of the 4th Respondent.

(124) Having understood the 4th Respondent's plea to list the matter for urgent hearing on 28th August 2023, the Tribunal shall now test its case and analyse it. In the praecipe, the 4th Respondent does not choose to discuss the original e-auction scheduled for 17th August

The 4th Respondent annexed a photocopy of the extract of the certified true copy of its board of directors' resolution at its meeting held on 26th July 2023, which means that the 4th Respondent responded to the wide publicity of the sale proclamation dated 6th July 2023. So why did the 4th Respondent not submit its bid by the cutoff date of 11th August 2023 by 4.30 pm?

(125) Before that, Respondents 1 and 2 turned down Asteroid's request to sell the mortgaged property by a private sale. On 20th April 2023, this Tribunal passed an order in the Asteroid's Appeal

No.7 of 2023 to hear the parties and pass a balancing order. Respondents 1 and 2 objected to the Asteroid's Appeal and Misc. stating that it simply bought time for the meagre or no amount as opposed to Rs.31 crores deposited by IHDP with the Recovery Officer. The Recovery Officer noticed the possibility of competitive bidding when IHDP Globals Pvt. Ltd. and M3M Infrastructure Pvt. Ltd. disclosed their intentions to buy the mortgaged property. On 10th May 2023, IHDP Global, i.e. the Appellant's sister concern, filed its Intervening Application No.1095 of 2023, objected to the private treaty, and insisted on e- auction with the Reserve Price of Rs.355 crores. On 28th June 2023, this Tribunal dismissed the Asteroid's M.A. No.20 of 2023 and Appeal No.7 of

(126) Feeling aggrieved by the Tribunal's order dated 28th June 2023, the Asteroid preferred Appeal (D) No.1195 of before the Hon'ble DRAT Mumbai. On 9th August 2023, the Hon'ble DRAT held that the Asteroid did not lose opportunity and had time to submit its bid by 11th August 2023. The Hon'ble DRAT reserved for order and posted it on 29th August 2023, stating that the e- auction dated 17th August 2023 shall be subject to the outcome of the Appeal.

(127) The Asteroid challenged the order dated 9th August 2023 before the Hon'ble Bombay High Court in Writ Petition (L) No.22102 of 2023. On 11th August 2023, the Hon'ble Bombay High Court passed an order disposing of the Asteroid's Writ Petition. The Tribunal finds paragraphs 5 to 7 of the order relevant hence, reproduced below: "(5) We are informed that the last date for submitting the bids is 4.30 pm today.

(6) We are not inclined to grant any stay to the auction or even extend the time for submitting the bids. The schedule has already been fixed. This schedule has to be adhered to by everyone. We make it clear that, whoever takes part in the said bid, is put to notice that its bid will be subject to the outcome of the Appeal filed before the DRAT by the Petitioner herein. We also make it clear that the Petitioner, without prejudice to its rights and contentions, will be entitled to bid in the auction, provided it submits its bid by 4.30 pm today." "(7) Once this clarification is given by us, we do not find any reason to stay or even postpone the auction sale programme. Further we do not see any need to keep the above Petition pending because whichever party is aggrieved by the order of the DRAT would be entitled to challenge the same in accordance with law."

(128) The Hon'ble Bombay High Court concluded that it would not stay or postpone the e-auction dated 17th August 2023. Then, what was the duty of the Recovery Officer? The Hon'ble Bombay High Court declined (i) to protect the Asteroid's interest by granting interim injunctive relief or (ii) to extend the bid submission's time. The order clearly states that the e-auction fixed on 17th August 2023 cannot be changed, and everyone must adhere to this schedule. It applied to everyone, including the Recovery Officer, with an unambiguous order to conduct the e-auction on 17th August 2023. In paragraph 7, the Hon'ble Bombay High Court clarified that it would neither grant any injunctive relief nor postpone the e-auction dated 17th August 2023.

(129) As per the settled sale proclamation's terms and conditions, after the bidder inspected or visited the site on 9th August 2023 and submitted the bids online by 4:30 pm on 11th August 2023, the Recovery Officer had nothing to do until e-auction dated 17th August 2023. Did the Recovery Officer interfere with the smooth and transparent e- auction process? Whether the Recovery Officer openly flouted the Hon'ble Bombay High Court's order dated 11th August 2023. The Recovery Officer interfered in the e-auction process and committed contempt of the order dated 11th August 2023 passed by the Hon'ble Bombay High Court. The Recovery Officer failed to examine the order dated 9th August 2023 and 11th August 2023 passed by the Hon'ble (i) DRAT Mumbai and (ii) the Bombay High Court, respectively, and

therefore, its flouting is a continuing contempt.

(130) On 3rd July 2023, the 1st Respondent requested the Recovery Officer to fix the sale programme, which he accepted. By order dated 3rd July 2023, the Recovery Officer (i) scheduled to conduct the e-auction on 17th August 2023, (ii) to inspect the mortgaged property on 9th August 2023, (iii) to submit a bid on 11th August 2023, (iv) fixed reserve price of Rs.355 crores, (v) EMD amount of Rs.35.50 crores and (vi) incremental bid by Rs.4 crores. He posted the matter to 6th July 2023 to file an affidavit of e-auction/dues.

(131) After settling the terms and conditions of the sale proclamation, the Recovery Officer adjourned the case to (i) 14th August 2023 and (ii) 17th August 2023. But in the handwritten order dated 14th August 2023 (there is an overwriting on 14), the Recovery Officer, the Recovery Officer noted the order dated 9th August 2023 and 11th August 2023 passed by the Hon’ble (i) DRAT Mumbai and (ii) Bombay High Court, respectively. The Recovery Officer posted the matter for bid report and appropriate directions on 16th August 2023, i.e. one day before the scheduled e-auction.

(132) On 16th August the Recovery Officer exceeded his jurisdiction by opening and evaluating the physical bids without informing the original three bidders. The Recovery Officer knew that the service provider C1 India performed its duty and did not notify of any illegality or irregularity in the three original bids evaluated by it. The Recovery Officer exceeded the law’s mandate to assess the physical bid forms. The Recovery Officer acted arbitrarily and highly improperly.

(133) Does the Recovery Officer’s act reveal his intention to control the e-auction in the mode and manner he wants by inserting the condition in the sale proclamation compelling the prospective purchaser to submit the physical bid and documents?

(134) Does it indicate that the Recovery Officer purposely and intentionally succeeded in exceeding his jurisdiction by reassessing, re- evaluating, or re-examining the bids submitted physically?

(135) In an e-auction, the service provider facilitates the entire auction process. The e-auction process entails stringent Know Your Customer (KYC) requirements to ensure the authenticity of participants and mitigate unknown risks. Typically, bidders must submit identification and proof of address for identity verification. This verification process is vital for maintaining the integrity and security of the auction process, as it ensures that participants are legitimate and trustworthy. If the prospective purchaser or bidder fails to complete the KYC, the service provider will not allow the prospective bidder to enter the auction platform. Or maybe the (AI) artificial intelligence-based software will not allow such a person to proceed until KYC is complete. These are the fundamental principles of an e- auction process. Condition of the sale proclamation shows the bidder’s obligation to (i) register with the service provider and (ii) to upload documents mentioned in condition (4), (iii) inspect the property on 9th August 2023 between 9 am and 5 pm and (iv) submission of online bid by 4:30 pm on 11th August 2023.

(136) Now let’s look at condition (4), which reveals (i) an invitation to a bid in an open e-auction, (ii) the bidder’s email address and mobile number, (iii) PAN/TAN Card, (iv) address proof, (v) photo identity, (v) demand draft, (vi) bid form and a declaration disclosing the bidder’s intent bidding personally or on behalf of the principal.

(137) It is pertinent to note that on 11th August 2023, the three original bidders submitted their bids. It indicates that the service provider performed its duty and completed the KYC, and therefore, after verifying their credentials, the bidders created their login ID and password. To the Tribunal’s understanding, this stage would occur before 11th August 2023. The Recovery Officer announced the e-auction on 17th August 2023 by the sale proclamation. Then, who provoked it, and why and under what circumstances did the Recovery Officer open the physical bid? Respondents 1 and 2 objected to the Recovery Officer’s opening the bids of the original three bidders. The Appellant also objected to the Recovery Officer re-evaluating the bids would be exceeding the jurisdiction. The Appellant compared the e-auctions conducted by various courts and tribunals under the SARFAESI Act on the e-Bikray auction portal, which does not require the submission of the physical bid form. Compelling the bidders to submit the physical bid forms, demand drafts, etc., shows that the Recovery Officer was not interested in transparency or fairness with an intent to retain the control of a favourable bidder. On 24th August 2023, the Tribunal set aside the corrigendum to the extent of inviting the new bidder and considered the issues between the parties.

(138) In paragraph 11(xxvii) of the 4th Respondent’s reply affidavit Exhibit 7, in this Appeal reveals its knowledge that C1 India, the service provider, filed its auction report on 28th August 2023 showing the three original bidders, viz. (i) the Appellant, (ii) Trivesh and (iii) Chandra Laxmi. On 11th August 2023, the three original bidders submitted their bids. It does not show any adverse remarks against the three original bidders.

(139) Upon making the online account by the three original bidders through the auction platform of C1 India to participate in the online bidding process, the Recovery Officer’s re-evaluating their bids on 16th August 2023 was highly improper, unwarranted and unlawful.

(140) Paragraph 3 of the 1st Respondent’s affidavit Exhibit 821, in the execution proceedings, reveals that upon instructions of the Recovery Officer, his subordinate made a telephonic call to the 1st Respondent and informed the 1st Respondent’s officer to collect the Roznama dated 16th August

Respondents and 2, through their counsel, expressed shock and surprise. They appeared to understand the bid status report. By their affidavit Exhibit 821, Respondents 1 and 2 prayed to modify the order dated 16th August 2023 and recall the corrigendum. Why the 3rd Respondent (Official Liquidator), the original three bidders, viz. (i) the Appellant, (ii) Trivesh and (iii) Chandra Laxmi were not informed about the listing of the case on 16th August 2023? The Recovery Officer’s activity of conducting cases behind the backs of interested parties is highly suspicious.

(141) As discussed on 24th August 2023, the Tribunal passed an order in Appeal no.19 of 2023 setting aside the corrigendum to the extent of inviting new bids. The Tribunal directed the Recovery Officer to conduct the e-auction fairly and transparently.

(142) The Tribunal shall revert to the praecipe (Exhibit

822) dated 25th August 2023 filed by the 4th Respondent. Paragraph no.2 shows that the 4th Respondent did not even attempt to discuss why it did not submit a bid by 4:30 pm on 11th August 2023. On 24th November 2023, the Tribunal passed an order in Appeal (D) No.2208 of 2023 filed by the Appellant. The Tribunal gave its findings against the 4th Respondents in paragraphs 34 to 54 of the order dated 24th November 2023. The 4th Respondent filed Writ Petition (L) No.33129 of 2023, challenging the Tribunal’s order dated 24th November directing the Recovery Officer to confirm the sale of Plot No.A-1 situated at Surajpur Industrial Area, Noida, Dadri Road, Greater Noida, Dist. Gautamnagar, Uttar Pradesh-203 207, favouring the Appellant. On 30th November 2023, the Hon’ble Bombay High Court disposed of the 4th Respondent’s Writ Petition (L) No.33129 of 2023, clarifying that if the Recovery Officer confirms the sale as per this Tribunal’s direction, the same shall be subject to the outcome of the 4th Respondent’s Appeal. On 6th December 2023, the Hon’ble DRAT rejected the 4th Respondent’s I.A. No.787 of 2023 and declined to interfere with the sale conclusion and issuance of the sale certificate as per this Tribunal’s order dated 24th November

Notably, the Hon’ble DRAT recorded that the sale would be subject to the decision of this Tribunal in the 4th Respondent’s Appeal before it. After the impugned order dated 17th January 2024, the 4th Respondent withdrew its Appeal No.71 of 2023 before the Hon’ble DRAT Mumbai. On 19th March 2024, when the Tribunal heard the present appeal, the 4th Respondent, through counsel, requested to take its Appeal No.21 of 2023 and dispose of it as infructuous. Based on the submission made by the 4th Respondent’s counsel, the Tribunal disposed of Appeal No.21 of 2023 as infructuous. Thus, the Tribunal’s order dated 24th August 2023 and 24th November 2023 attained finality.

(143) Paragraph 2 of the praecipe Exhibit 822 reveals that on 24th August 2023, the 4th Respondent deposited the financial instrument bearing 497187 for Rs.35.50 crores with the Recovery Officer. Upon instructions, the 4th Respondent’s counsel stated that “it could not upload online due to technical error”. In paragraph 2, the 4th Respondent’s counsel does not refer to the bid but references the failure to upload the financial instrument's details. The 4th Respondent, through counsel, pleaded “technical error for uploading online”. The 4th Respondent failed to provide the details of the technical error.

(144) On 28th August 2023, the 4th Respondent filed the application styled as I.A.No.16 of 2023 (Exhibit 830), again submitting the physical auction form and other documents seeking intervention and participation in e-auction. The Recovery Officer approbated and reprobated at the same time. The order sheet reveals and records that the higher judicial forum’s order binds him. However, the order reveals his intentions to evaluate the 4th Respondent’s bid on the day of the e-auction to start from 2:00 but at a later stage.

(145) At about 4:30 pm on 28th August 2023, C1 India Private Limited, the service provider, filed an e- auction report of the mortgaged property's bid history and highest bid report (Exhibit 835). The service provider’s report (Exhibit 835) disclosed that M/s. Chandra Laxmi quoted the bid amount of Rs.355.05 crores against the reserve price of Rs.355 crores. Trivesh enhanced the bid amount by Rs.5 lakhs against the settled terms and conditions to enhance the bid by Rs.4 crores. The Appellant enhanced the bid by Rs.4 crores, quoting the highest sale consideration of Rs.359.05 crores. The Recovery Officer declared the Appellant the highest bidder at Rs.359.05 crores. After that, the Recovery Officer, in compliance with the Tribunal’s order dated 24th August 2023, proceeded to direct the Appellant to deposit 25% minus the EMD amount of the sale consideration and 75% of the balance sale consideration by way of RTGS within the time limit prescribed under condition of sale proclamation’s terms and conditions failing which the amount stands forfeited under condition 9. The Recovery Officer also directed the Appellant to deposit a poundage fee as per the sale proclamation dated 6th July 2023.

(146) By the order dated 13th September 2023, the Recovery Officer directed C1 India Private Limited

(i) to clarify on affidavit how the enhancement of Rs.5 lakhs occurred during the bidding process contrary to Rs.4 crores enhancement as set out in

condition 2 of the sale proclamation dated 6th July 2023 and (ii) to appear in person or through a representative on the next date.

(147) On 18th September 2023, C1 India filed affidavit Exhibit 838, in compliance with the order dated 28th August 2023, which states as under:

(148) On 19th September 2023, C1 India sent an email Exhibit 838 to ensure that it complied with the Recovery Officer's Order dated 28th August 2023.

(149) Application under Rule 11: The Tribunal examined and analysed the facts and evaluated the evidence on record to note no change in circumstances from the cutoff date, i.e. 11th August 2023, till the date preceding the filing of another I.A. by the 4th Respondent on 21st September 2023, under Rule 11 of the Second Schedule to the Income Tax Act and moved another application seeking leave to amend by inserting Rule 61 by filing I.A.s (Exhibits 841 and 844).

(150) In paragraph 5.2 of the I.A. Exhibit 841, the 4th Respondent admits that it is a prospective purchaser who intended to participate in the bidding process. In paragraph 5.15 of I.A. Exhibit 851, the 4th Respondent states that it applied under Rule 11 of the Second Schedule of the Income Tax Act read with Section 29 of the 1993 Act. In I.A. Exhibit 841, the 4th Respondent did not assert that it laid claim or objected to the attachment or sale of the mortgaged property not liable to attachment or sale and requested the Recovery Officer to investigate the claim.

(151) Under Rule 11 of the Second Schedule of the Income Tax Act, the Recovery Officer must determine the objector’s possession of the property or his authority to occupy it. Admittedly, the 4th Respondent is not an interested party claiming ownership, possessory right of it or under the trust, partly on its account, partly on account of some other person, or any right under the registered instrument. The 4th Respondent is a prospective bidder or purchaser and not a party with interest in the mortgaged property under reference. The 4th Respondent adduced no evidence as contemplated under Rule 11(3).

(152) Notably, the 4th Respondent preferred Appeal (D) No.2054 of 2023, challenging the Tribunal’s order dated 24th August 2023. The 4th Respondent took no steps to get Appeal (D) No.2054 of 2023 listed and heard by this Tribunal. Regarding prayer clause 6(a) of application Exhibit 841, based on the Tribunal’s order dated 24th August 2023, the Recovery Officer passed the order dated 28th August rejecting the 4th Respondent’s request to participate in the e-auction successfully conducted on that day. On 28th August 2023, the Recovery Officer passed a detailed order and declared the Appellant the successful highest bidder. The 4th Respondent did not prefer to appeal against the order dated 28th August 2023. The 4th Respondent did not apply to review the order dated 28th August 2023 passed by the predecessor-in-office.

(153) Regarding prayer clause 6(b) of application Exhibit 841, the 4th Respondent prayed (i) to participate in the fresh sale after the cancellation of the sale favouring the Appellant and (ii) that the Recovery Officer should not accept funds towards the sale price and poundage fees from the Appellant. The first part of the prayer refers to the accrual of the future cause of action, if any. What is relevant is the 4th Respondent’s insistence on participating in the fresh sale after cancelling the sale. In the second part of the prayer, the 4th Respondent said that the Recovery Officer should not accept further funds for the sale price and poundage fees. By order dated 28th August 2023, the Recovery Officer directed the Appellant (i) to deposit 25% minus EMD of the sale consideration,

(ii) to deposit 75% of the balance sale consideration by way of RTGS, etc., into the 1st Respondent’s account within the time prescribed in condition 4 of the sale proclamation, (iii) to pay poundage fees as per the sale proclamation dated 6th July 2023, favouring the Registrar, DRT-II Mumbai within time and (iv) the consequences of non-payment would lead to forfeiture of the amount as per condition of the sale proclamation. The Recovery Officer directed the 1st Respondent to keep the amount of the sale proceeds in an interest-bearing fixed deposit. On 30th August 2023, Respondents 1 and 2 filed compliance affidavit Exhibit 835A stating that the Appellant paid 15% of the sale consideration. On 13th September 2023, Respondents 1 and 2 filed a compliance affidavit Exhibit 836 stating that the Appellant paid the balance sale consideration. By order dated 13th September 2023, the Recovery Officer recorded (i) the receipt of the entire sale consideration of Rs.359,05,00,000/- from the Appellant, and (ii) letter dated 6th September 2023 Exhibit 837 received by him on 8th September 2023 with the Demand Draft No.501928 dated 6th September 2023 for Rs.3,59,06,000/- favouring the Registrar, DRT-II Mumbai, towards the poundage fees. Admittedly, the 4th Respondent presented application Exhibit on 21st September 2023, i.e. after the Appellant’s legal tender of the entire sale consideration of

Rs.359,05,00,000/- and the poundage fees of Rs.3,59,06,000/-.

(154) On 24th August 2023, this Tribunal passed an order quashed and set aside the Recovery Officer's order dated 16th August 2023 to the extent of the corrigendum inviting new bids. But still, the 4th Respondent, a non-responsive bidder, intended to do something differently. The 4th Respondent set up its case based on Asteroid's case. On 28th August 2023, the Recovery Officer rejected the 4th Respondent's I.A. 16 of 2023 (Exhibit 830) to intervene and participate in the e-auction dated 28th August 2023. By order dated 28th August the Recovery Officer rejected the 4th Respondent's application.

(155) It freely walked on the "red carpet" and substituted Asteroids, the facts and circumstances of the case, the blanket, contradictory, contemptuous orders, and the impugned order appeared in that direction. In other words, the things that the 4th Respondent could not do directly attempted to achieve through the unique opportunity provided by various orders of the Recovery Officer. The 4th Respondent ensured procuring a favourable blanket order, which involves carefully re-evaluating the physical bids of the three original bidders and their bid to qualify for the bidding process. The Appellant and Chandra Laxmi objected to the unregulated practice adopted by the Recovery Officers. The 4th Respondent's counsel also conceded that the Recovery Officers cannot call for the physical bids in an e-auction.

(156) In the above context, the Tribunal feels the importance of the observations in Appeal (D) No.2208 of 2023 on paragraphs 34 to 54 against the 4th Respondent as to why it did not submit a bid by 11th August 2023.

(157) After taking the affidavit of C1 India on record, counsel representing Respondents and informed the Recovery Officer that the Hon'ble Bombay High Court and DRAT Mumbai scheduled the hearing on 20th September 2023. The Recovery Officer adjourned the case for the Hon'ble Bombay High Court and DRAT Mumbai orders.

(158) On 21st September 2023, the 4th Respondent moved I.A. Exhibit 841, under Rule 11, read with section 29 of the 1993 Act. The 4th Respondent prayed for the following reliefs:

(a) that the Ld Recovery Officer be pleased to stay all further steps until the outcome of Appeal (D) 2054 of 2023 filed by the Applicant on September 18, 2023; (b) that the Ld. Recovery officer may permit the Applicant to participate in a fresh sale after cancellation of the sale declared in favour of Shakuntalam Landkraft Private Ltd and that no further funds towards the sale price and/or the poundage fees be accepted from Shakuntalam Landkraft Private Ltd;

(c) that no sale certificate be issued on 29th September, 2023 or at any other time thereafter and the Receiver/Bank Officer be restrained from handing over possession of the subject property which was sold by the Ld Recovery Officer;

(159) On 21st September 2023, the 4th Respondent informed the Recovery Officer that the Hon’ble DRAT permitted it to withdraw the Appeal with the liberty to approach this DRT. Thus, the 4th Respondent avoided testing this Tribunal’s order dated 24th August 2023 and failed to determine its rights before the higher forum. The 4th Respondent filed a praecipe and sought listing of its appeal for urgent hearing on 25th September 2023 before the i/c Presiding Officer, DRT-2 Mumbai. The 5th counsel informed the Recovery Officer of his client’s intent to move an I.A. to show its readiness and willingness to purchase the mortgaged property at Rs.390 crores or to cancel the e-auction held on 28th August 2023 and conduct a fresh e-auction. Respondents 1 and 2, through counsel, informed the Recovery Officer that Chandra Laxmi preferred an appeal before the Hon’ble DRAT listed on 25th September 2023. The 5th Respondent filed its intervening application, Exhibit 842, offering 10% higher than the reserve price and cancelling the e-auction held on 28th

August 2023. The Recovery Officer adjourned the case to 26th September 2023 for compliance and a reply affidavit by the parties.

(160) On 26th September 2023, the 4th Respondent filed I.A. Exhibit 844 seeking leave to amend the prayer clause as per schedule. The 4th Respondent did not insist on passing an order in application Exhibit 844.

(161) On 3rd October 2023, i.e. more than thirty days after the Recovery Officer successfully conducted the e-auction held on 28th August 2023, Chandra Laxmi presented I.A. Exhibit 848. The Appellant filed I.A. Exhibit 847 to confirm the sale. In his order, the Recovery Officer said the 4th Respondent filed I.A. under Rule 11, read with Rule 61 of the Second Schedule of the Income Tax Act, which is pending. Therefore, he shall not confirm the sale till the disposal of the application under Rule 61. The Recovery Officer granted Respondents 4 and 5 a last chance to argue and adjourned to 4th October 2023.

(162) On 4th October 2023, the 5th Respondent filed a supporting affidavit Exhibit 849 to its I.A. The 5th Respondent concluded its arguments. Chandra Laxmi’s counsel sought an adjournment to argue on the following date but reserved its I.A. Exhibit 848 for order on 5th October 2023.

(163) On 5th October 2023, the Appellant filed (i) written submissions Exhibit 851 and (ii) compilation of judgments Exhibit 852. All the parties concluded their arguments. The Recovery Officer adjourned the case for pronouncement of orders on 9th October 2023 in I.A. Exhibits 841 and 842.

(164) On 9th October 2023, the Recovery Officer expressed his inability, stating that the I.A. Exhibit 841 and 842’s orders are not ready and, therefore, adjourned to 17th October 2023.

(165) On 17th October 2023, the Recovery Officer dismissed I.A. Exhibit 848 to the extent of issues raised regarding the process and procedure followed during the e-auction held on 28th August 2023 and kept other points raised in I.A. Exhibit 848 open for hearing at an appropriate stage. The Recovery Officer adjourned the matter for pronouncement of orders in I.A. Exhibits 841 and 842 and compliance to 19th October 2023.

(166) On 19th October 2023, Advocate Rupa Patel, Private Receiver, suo motto appointed by Recovery Officer, requested the release of expenses based on the sale proclamation dated 8th March 2023 and her appointment order dated 15th March 2023. The Recovery Officer does not pass the I.A. Exhibits 841 and 842 order but chooses to record the long debate. Despite the Appellant’s request, the Recovery Officer did not pronounce the order in I.A. Exhibits 841 and 842. The Recovery Officer directed the 4th Respondent to deposit 10% of its offer on or before 21st October 2023 by a demand draft favouring the Recovery Officer, DRT-II Mumbai. He adjourned the case for orders in I.A. No.841, 842, and compliance on 23rd October 2023.

(167) On 20th October 2023, the 4th Respondent tendered DD No.497424 dated 20th October 2023 for Rs.39.60 crores in compliance with the order dated 19th October 2023.

(168) The Recovery Officer based the impugned order on conjecture or surmise. The suspicion, however grave, cannot substitute the place of legal proof. The Recovery Officer did not attempt to discuss the discharge of the onus of the 4th Respondent while allowing the inapplicable Rule 11. The Recovery Officer allowed the 4th Respondent's application under Rule 11 on the non-existing or untrue facts or false narratives that cannot substitute evidence. The Recovery Officer failed to evaluate the evidence and got swayed by the false narratives of the 4th Respondent. The circumstance under which the Recovery Officer drew inference was neither cogently nor firmly established by Respondents 4 and 5. The Recovery

Officer grossly failed to exercise the jurisdiction by applying the correct law and analysing evidence-based reasoning, resulting in the travesty of justice. Rule 11 does not allow the Recovery Officer to grant a blanket order to a non- meritorious case without evidence. Instead of dismissing the application Exhibit 841 under Rule 11, the Recovery Officer allowed it, without adjudicating the rights.

(169) The Recovery Officer knew ten e-auctions failed, i.e. e-auction dated (i) 25th November 2016 for a reserve price of Rs.806 crores, (ii) 29th September 2017 for a reserve price of Rs.594.31 crores, (iii) 26th March 2018 for a reserve price of Rs.565.50 crores, (iv) 31st October 2018 reserve price 557 crores, (v) 18th January 2021, reserve price 557 crores, (vi) 11th April 2019 reserve price 445.60 crores, (vii) 7th September 2020 reserve price Rs.380 crores, (viii) 10th December 2020 reserve price 350 crores, (ix) 25th February 2021 reserve price 350 crores and (x) 6th January 2022 reserve price 350 crores.

(170) After that, Respondents 1 and 2 requested to sell the mortgaged property for Rs.310 crores by private treaty. On 18th April 2023, the recovery officer conducted an e-auction. IHDP Globals Pvt. Ltd. offered Rs.355 crores.

(171) The doctrine of hierarchical precedent dictates that inferior courts must obey the decisions and orders of superior courts. This principle is deeply ingrained in judicial practice and consciousness, emphasizing the importance of following the legal hierarchy.

(172) The Recovery Officer failed to confirm the sale as per orders dated 24th November 2023, 30th November and 6th December 2023. In defiance of the higher forum's orders the Recovery Officer failed to conclude the sale and issue a sale certificate to the Appellant upon deposit of full sale consideration of Rs.359.05 crores and poundage fees of Rs.3,59,06,000/-. The 4th Respondent, a non-responsive bidder, applied under Rule 11 of the Second Schedule of the Income Tax Act, of the Income Tax Act, 1961 read with Section of the

Act. The 5th Respondent also applied under Rule 60 or 61 of the said Rules to cancel the successful e-auction conducted on 28th August 2023 to allow it (i) to buy back the mortgaged property or (ii) to participate in the e-auction (iii) retaining the total sale consideration of Rs.359.05 crores and failure to encash the poundage fees, (iv) by travelling beyond the scope of the recovery certificate, allowing the 5th defendant to object to the mortgage, debating and making observation on it,

(v) in framing and discussing the issues relating to the 5th defendant's claim of Rs.777.85 crores during the pendency of Appeal 11 of 2021, (vi), and allowing it to participate in the completed e- auction dated 28th August 2023 and under the unannounced auction,

(vii) entertaining and allowing the 5th Respondent's (owner and lessor of the subject mortgage property) the application to participate in the e-auction, (viii) setting aside the sale on the only ground of cartelization neither pleaded nor established any case, no evidence led by the bidder M/s. Chandra Laxmi, who did not pursue or abandon by relinquishing the legal right to present the case in I.A. (Exhibit 848) or demonstrated any circumstantial evidence in the e- auction held on 28th August 2023 (ix) by exceeding the jurisdiction and arbitrarily exercising "Review or suo motto Review" contrary to the law's provision and judicial precedents, (x) the Recovery Officers' biased approach against the Appellant,

(xi) the Recovery Officers' order favouring the 4th Respondent or the impugned order passed out of fear of the 5th Respondent and with ill-will.

(173) Thus, the 4th Respondent failed to establish its case under Rule 11. The Recovery Officer did not determine the issue under Rule 61. The 4th

Respondent withdrew its Appeals from the Hon’ble DRAT Mumbai and Writ Petitions from the Hon’ble Bombay High Court. On 19th March 2023, this Tribunal disposed of its Appeal (L) No.2054 of 2023 as infructuous. In other words, the 4th Respondent unconditionally and voluntarily abandoned, relinquished or waived its right and put a quietus to the so-called issues raised. The Tribunal’s order dated 24th August 2023 and 24th November 2023 attained finality. Respondent No.5:

(174) The 5th Respondent’s counsel advanced no arguments in the second successive appeal. The Tribunal failed to understand who advised the 5th Respondent to challenge the mortgage and threatened to terminate the lease after over two decades. The reading of the impugned order reveals the Recovery Officer allowed the 5th Respondent’s counsel to present the case contradicting the settled law. The Recovery Officer can go beyond the recovery certificate. Rule 61 does not recognise the 5th Respondent’s right to buy back the mortgaged property. Is it an arm- twisting method to terminate the lease? Well, the 5th Respondent must follow due process of law. The Recovery Officer noted the 5th Respondent’s claim in the sale proclamation. The 1st

Respondent challenged the 5th Respondent’s claim in Appeal No.11 of 2021. The matter is subjudice before this Tribunal. In the above context, the Tribunal feels the importance of the observations in paragraphs 58 to 63 in Appeal (D) No.2208 of 2023 against the 5th Respondent.

(175) The 5th Respondent raised the issue that the 3rd respondent (in liquidation) did not pay the transfer charges as per their letter dated 13th January 1999. The 5th Respondent’s advocate on record appears to have poorly understood the facts without checking them. In paragraph 4 (vii), Respondents 1 and 2 recorded that the 5th Respondent transferred the lis favouring the erstwhile auction purchaser upon accepting the part payments. Be that as it may, the 5th Respondent has the remedy available under the law to recover its legitimate dues as per law. Regarding the buyback of the leasehold right, the 5th Respondent has to follow the due process. The 5th claim to recover Rs.777.84 crores as of 31st March 2023 is subjudice before this Tribunal in Appeal No.2 of 2023 (Appeal No.12 of 2021).

(176) In paragraph 21 of further affidavit (exhibit-849), the 5th Respondent attempted to mislead the Recovery Officer as regards Khasara 260 Ka and

260 Kha. The predecessor-in-office of the Recovery Officer passed an order on 19th November 2007 in this regard. The Tribunal fails to understand as to how the successor-in-office without looking into the order dated 11th September 2008 jumped to a conclusion based on the 5th Respondent’s statement. By order dated 11th September 2008, the Recovery Officer disposed of the application filed by one Anil Behl being application (exhibit-

62) under Rule 11 of the Second Schedule of the Income Tax Act. Ankul Mittal and 6 Ors. are the petitioners in Writ Petition No.1438 of 2023. The petitioners in the present Writ Petitions and the Intervenor in Application Exhibit differ. However, the reference to the subject property finds place in paragraphs 4 to 6 of the order dated 16th August 2023 passed by the Hon’ble Allahabad High Court. The 1st Respondent filed its affidavit, which aligns with the order passed by the Recovery Officer relating to Khasara 260 Ka and 260 Kha.

(177) Admittedly, the 5th Respondent did not approach the Tribunal to participate in the e-auction initially scheduled on 17th August 2023, offering a higher price without depositing the entire amount, which is meaningless.

(178) The Tribunal is shocked and surprised how the 5th

Respondent could have raised the issue regarding the mortgaged creation after two decades. Be that as it may, the Recovery Officer’s duty is to execute the Recovery Certificate and cannot travel beyond it.

(179) The 5th Respondent neither challenged the judgment nor the Recovery Certificate favouring Respondents 1 and 2. It is a settled law that the Execution Court cannot go beyond the decree. It is not the 5th Respondent’s case that there is any ambiguity in the judgment passed by DRT-3, Mumbai and DRT-1, Mumbai, respectively, favouring Respondents and

2. The 5th Respondent knew the judgments and recovery certificates issued in the present case. The 5th Respondent’s silence as acquiescence cannot be grounds for re-opening the case. The 5th Respondent’s silence manifests an adverse fronts against it. Neither the 5th Respondent nor the Recovery Officer attempted to say that the judgment favouring Respondents 1 and 2 was insufficient to guide them. After two decades, the 5th Respondent’s objection constitutes disruption in the execution of the recovery certificate to the detriment of Respondents 1 and 2. The Recovery Officer selectively perused the 5th Respondent’s case, ignoring the settled law. If the Recovery

Officer understood the law that the settled principle does not allow him to go beyond the decree, then he grossly erred in entertaining and recording the arguments in the impugned order.

(180) The Recovery Officer did not determine the 5th Respondent's right under Rule

61. The 5th Respondent unconditionally and voluntarily abandoned, relinquished or waived its right and put a quietus to the so-called issues raised. The Tribunal’s order dated 24th August 2023 and 24th November 2023 attained finality.

(181) The Recovery Officer set aside the e-auction dated 28th August 2024 only on the grounds of the cartel. The law requires the Recovery Officer to hold the standard while writing the impugned order. So when the Recovery Officer penned the impugned order whether he invalidated (i) the Hon'ble DRAT's order dated 9th August 2023, (ii) the Hon'ble Bombay High Court's order dated 11th August 2023, (iii) this Tribunal's order dated 24th August 2023, (iv) order dated 28th August 2023, passed by the predecessor Recovery Officer who conducted the e-auction, and (v) e-auction dated 28th August 2023.

(182) The Recovery Officer opened the physical bids and recorded them in his order dated 17th August 2023. On 16th August 2023, the Reovery Officer passed and signed a handwritten order. The Appellant, Respondents 1 to 3, challenged the Recovery Officer’s jurisdiction to examine the bids one day before the e-auction. The Appellant, Respondents 1 and 2, questioned the Recovery Officer's powers and authority to open the physical bids in an ex-auction. On 16th August 2023, The Recovery Officer knew the bidders' names, details, information and bids. The Recovery Officer suo motto issues corrigendum and compels the Certificate Holders, i.e. Respondents 1 and 2, to publish it notifying the postponement of e-auction from 17th August 2023 to 28th August 2023.

(183) On 24th August 2023, this Tribunal passed an order in Appeal No.19 of 2023 filed by Trivesh. The Tribunal set aside the corrigendum issued by the Recovery Officer to the extent of inviting new bids and directed the Recovery Officer to conduct the e-auction. On 25th August 2023, the 4th Respondent moved a praecipe Exhibit 822 before the Recovery Officer and placed the photocopy of the bid forms, etc., seeking participation in the bidding process on 28th August 2023.

(184) On 28th August 2023, the Recovery Officer passed an order before conducting the e-auction. He records that (i) the higher forum's order binds him as a Recovery Officer, (ii) the 4th Respondent submitted a bid to reschedule the timeline based on the corrigendum dated 16th August 2023, and

(iii) the Tribunal's direction judiciously binds him vide order dated 24th August 2023. Based on the Tribunal's order dated 24th August 2023, the Recovery Officer did not allow the 4th Respondent to participate in the e-auction.

(185) E-auction is a faceless transaction but needs authentication and KYC by the bidders. The service provider performs all steps in this regard. Bidding in the e-auction portal requires that the bidders register with the service provider by submitting a registration form duly filled with copies of their PAN card, etc. After successful registration, the prospective bidders go through the registration process and verify the payment of EMD. The service provider would then allow the bidder to enter the online portal to participate in the bidding process of e-auction. On the e-auction day, the bidder must log into the service provider's portal with a user I.D. and password at the time specified in the sale proclamation. Security and confidentiality are the core issues that are essential for the bidder's confidence in an e-auction.

(186) After passing the order, the Recovery Officer conducted the e-auction between 2 pm and 3 pm and waited for the service provider's report at 4.30 pm.

(187) At 4.30 pm, C1 India, the service provider, submitted report Exhibit containing a summary of the e-auction's outcome. The e- auction report also provided the following details:

(i) the bidder's participation in the e-auction, (ii) the ranking of the bidders, i.e. H1 and H2, (iii) bid value, date, and time, (iv) start bid price, and (v) bidding trail and details. The e-auction report stated that (i) M/s. Chandra Laxmi Enterprises Pvt. Ltd. quoted a bid amount of Rs.355,05,00,000/- and (ii) the Appellant and Trivesh Real Estate Private Limited quoted the bid at the reserve price of Rs.355 crores. According to the Recovery Officer, Trivesh increased its bid by Rs.5 lakhs, contrary to the 2nd condition of the sale proclamation, which was to increase the bid by Rs.4 crores. The Recovery Officer found no fault with the Appellant's bid increment by Rs.4 crores.

(188) The Recovery Officer examined the service provider's report and judicially exercised his discretion by considering (i) the previously failed auctions, (ii) it is an e-auction, (iii) the wide publicity of the e-auction in Times of India (Delhi edition), Business Standard (Delhi edition), Business Standard (Hindi-Delhi edition), Times of India (Mumbai edition), Business Standard (Mumbai edition), Navshakti (Marathi-Mumbai edition) and Navbharat Times (Hindi-Mumbai edition), (iv) Reserve price as per the valuation report, (v) there are only three bidders, (vi) the price offered by the Appellant is more than the reserve price,

(vii) there is no illegality or irregularity in the e-auction, and (viii) there is no fraud or collusion. The Recovery Officer declared the Appellant the highest bidder for Rs.359,05,00,000/-. He then directed the Appellant to pay (i) 25% minus EMD, (ii) 75% of the balance sale consideration, (iii) poundage fees, and (iv) drew its attention to the forfeiture clause 9 in the case of default. The Recovery Officer further directed the release or return of the unsuccessful bidders' demand drafts. The Recovery Officer directed the 1st Respondent to invest the amount of the sale proceeds. He then adjourned the case to 30th August 2023 for compliance or to monitor the payment.

(189) On 29th August 2023, the Appellant addressed a letter to the Recovery Officer recording that (i) in the e-auction held on 28th August 2023, the Recovery Officer declared it a successful bidder for the sale consideration of Rs.359,05,00,000/-,

(ii) it deposited Rs.35.50 crores as EMD, (iii) on 29th August 2023, the Appellant deposited Rs.55 crores, 45 crores and Rs.10 crores and therefore, it complied with the condition of depositing 25% of the final bid amount.

(190) On 30th August 2023, Respondents 1 and 2 filed a compliance affidavit recording the balance of 15% of the sale consideration paid by the Appellant. The order sheet dated 28th August 2023 reveals that the Recovery Officer directed the Appellant to pay 25% minus EMD, which is 10% of the sale consideration.

(191) On 13th September 2023, Respondents 1 and 2 filed a compliance affidavit Exhibit 836, recording the receipt of the entire sale consideration of Rs.359,05,00,000/- from the Appellant. In Annexure of the affidavit Exhibit 836, Respondents 1 and 2 set out (i) the date of creating ten the fixed deposit, (ii) the bank's name, (iii) the fixed deposit amount, (iv) the interest rate, (v) number of days and (vi) the maturity date. Accordingly, the Recovery Officer, in his order, records that (i) the 1st Respondent filed a compliance affidavit Exhibit acknowledging the receipt of the entire sale consideration of Rs.359,05,00,000/- from the

Appellant and (ii) the Appellant's letter dated 6th September 2023 received on 8th September 2023 addressed to the Recovery Officer forwarding Demand Draft of Rs.3,59,05,000/- towards poundage fees. After receiving the entire amount and poundage fees, the Recovery Officer attempted to inquire or investigate how C1 India, the service provider, allowed Trivesh to enhance the bid by Rs.5 lakhs in place of Rs.4 crores as per the 2nd condition of the sale proclamation. When the Recovery Officer conducted the e-auction, he did not raise any requisition with the service provider as regards the enhancement by Rs.5 lakhs. Did the Recovery Officer take the step to impact the auction upon passing the order? He directed the service provider to explain. He adjourned the case to 18th September 2023.

(192) On 15th September 2023, C1 India, the service provider, made an affidavit that the Recovery Officer received on 16th September 2023. The service provider records that (i) it received the sale notice from the Recovery Officer for the reserve price of Rs.355 crores, (ii) Chandra Laxmi enhanced the FRQ (appears first round quote) the amount by Rs.5 lakhs during the pre-bid process and not during the bidding process, (iii) upon enhanced FRQ amount during the pre-bid process the start price or the reserve price became Rs.355,05,00,000/-, (iv) Chandra Laxmi did the activity before the bidding process, and it's valid as per the terms and conditions, (v) Trivesh did not enhance the bid by Rs.5 lakhs but first bidder to acknowledge the enhanced reserve price of Rs.355,05,00,000/- and after that,

(vi) the Appellant made the incremental by Rs.4 crores and the final bid became Rs.359,05,00,000/-, which was declared H1 and won the bid.

(193) The service provider's affidavit Exhibit 838 does not suggest or indicate (i) collusion or conspiracy,

(ii) bid rigging, or (iii) cartel. The Recovery Officer found no collusion or conspiracy, bid rigging or cartel.

(194) As of 13th September the Appellant deposited full sale consideration and poundage fees; respondents 4, 5, and Chandra Laxmi did not apply under Rules 11 or 61 of the Second Schedule of the Income Tax Act. As of 13th September 2023, upon receipt of the entire consideration of Rs.359.05 crores and total poundage fees, the Recovery Officer was duty- bound to confirm the sale under Rule 63 and issue a sale certificate under Rule 65. On 28th August 2023, the Recovery Officer exercised his jurisdiction, directing the return of the demand drafts to the unsuccessful bidders. In his order dated 28th August 2023, 13th September 2023, 19th September 2023, 21st September 2023, 26th September 2023, 3rd October 2023, 4th October 2023, 5th October 2023, 9th October 2023, and the most crucial order of 17th October 2023 there is no whisper of any suspicious activity or "CARTEL".

(195) Thus, in the Tribunal's view, the Recovery Officer was duty-bound to confirm the sale favouring the Appellant on 13th September 2023. The Recovery Officer purposely or intentionally did not confirm and make the sale absolute by issuing a sale certificate favouring the bonafide auction purchaser, the Appellant. However, the order sheet shows that the Recovery Officer avoided confirming the sale and issuing a sale certificate to the Appellant on one pretext or another. The Recovery Officers grossly erred in adjourning the sale confirmation and sale certificate. The Tribunal would take the assistance of the law laid down by the Hon'ble Supreme Court in Kayjay Industries Pvt. Ltd. versus Asnew Drums Private Limited (1974) 2 SCC 314, relevant paragraphs 6, 7 and 10. "6. We now come closer to the finale. On August 28, 1969 a sale was held and the highest bids for land and buildings went up to Rs

5.70 lakhs and for machinery to Rs 5.40 lakhs. It must be noted that at this time the Judge, who was then holding the sale, was not the presiding officer but another judge, since the former was on leave. It was felt by the latter that it would be better to have some valuation report to serve as a basis and to guide the Court in concluding whether a grossly unjust offer was being fobbed off on it. The Receiver who was in charge requested both the judgment debtor and the Corporation to get valuation reports from competent valuers and the sale itself stood adjourned. The judgment debtor did not bother to have the properties valued but the Corporation secured the services of a competent valuer, Corona Electricals of Bombay, who estimated the land and buildings to be worth Rs 10,46,096 and the machinery Rs 7,02,000. The total value thus arrived at was Rs 17,48,096. In the light of various facts, including the absence of an alternative evaluation report from the judgment debtor's side, these Corona figures were rightly treated by both Courts as tentatively sound. The auction held on September 3, 1969, however, fetched the highest offer for the two lots of only Rs 5,65,000 and Rs 5,00,000 respectively, in the latter case Rs 40,000 less than on the previous occasion. After considerable persuasion by the Judge, the Appellant agreed to raise the offer for both lots together to a gross sum of Rs 11,50,000, and making an intelligent guess on the given circumstances the Court approved the sale, which is now being challenged in these proceedings as an insensible and injurious sanctioning of the sale, ignoring the hopeful prospects of higher prices had the auction been adjourned and better and fuller publicity given.

7. Certain salient facts may be highlighted in this context. A court sale is a forced sale and, notwithstanding the competitive element of a public auction, the best price is not often forthcoming. The judge must make a certain margin for this factor. A valuer's report, good as a basis, is not as good as an actual offer and variations within limits between such an estimate, however careful, and real bids by seasoned businessmen before the auctioneer are quite on the cards. More so, when the subject-matter is a specialized industrial plant, which has been out of commission for a few years, as in this case, and buyers for cash are bound to be limited. The brooding fear of something out of the imported machinery going out of gear, the vague apprehensions of possible claims by the Dena Bank which had a huge claim and was not a party, and the litigious sequel at the judgment-debtor's instance, have "scare" value in inhibiting intending buyers from coming forward with the best offers. Businessmen make uncanny calculations before striking a bargain and that circumstance must enter the judicial verdict before deciding whether a better price could be had by a postponement of the sale. Indeed, in the present case, the executing Court had admittedly declined to affirm the highest bids made on May 16, 1969, June 5, 1969 and August 28, 1969, its anxiety to secure a better price being the main reason. If Court sales are too frequently adjourned with a view to obtaining a still higher price it may prove a self-defeating exercise, for industrialists will lose faith in the actual sale taking place and may not care to travel up to the place of auction being uncertain that the sale would at all go through. The judgment-debtor's plea for postponement in the expectation of a higher price in the future may strain the credibility of the Court sale itself and may yield diminishing returns as was proved in this very case.

10. So viewed, we are satisfied that the district Court had exercised a conscientious and lively discretion in concluding the sale at Rs 11.5 lakhs. If the market value was over 17 lakhs, it is unfortunate that a lesser price was fetched. Mere inadequacy of price cannot demolish every court sale. Here, the Court tried its best, time after time, to raise the price. Well-known industrialists in the public and private sectors knew about it and turned up. Offers reached a stationary level. Nor could the Corporation be put off indefinitely in recovering its dues on baseless expectations and distant prospects. The judgment debtor himself, by his litigious exercises, would have contributed to the possible buyers being afraid of hurdles ahead. After all, producing around Rs 11.5 lakhs openly to buy an industry is not easy even for apparently affluent businessmen. The sale proceedings had been pending too long and the first Respondent could not, even when given the opportunity, produce buyers by private negotiation. Not even a valuer's report was produced by him. We are satisfied that the District Judge had committed no material irregularity in the conduct of the sale in accepting the highest offer of the Appellant on September 3, 1969.

(196) In paragraph 6 of the ruling in Navlakha and Sons versus Sri Ramanya Das and others (1969) 3 SCC 537, reproduced below, the Hon'ble Supreme Court held that once the Court concludes that the price offered is adequate, no subsequent higher offer can constitute a valid ground refusing confirmation of sale already received.

6. The principles which should govern confirmation of sales are well-established. Where the acceptance of the offer by the Commissioners is subject to confirmation of the Court the offerer does not by mere acceptance get any vested right in the property so that he may demand automatic confirmation of his offer. The condition of confirmation by the Court operates as a safeguard against the property being sold at inadequate price whether or not it is a consequence of any irregularity or fraud in the conduct of the sale. In every case it is the duty of the Court to satisfy itself that having regard to the market value of the property the price offered is reasonable. Unless the Court is satisfied about the adequacy of the price the act of confirmation of the sale would not be a proper exercise of judicial discretion. In Gordhan Das Chuni Lal v. S. Sriman Kanthimathinatha Pillai [AIR 1921 Mad 286] it was observed that where the property is authorized to be sold by private contract or otherwise it is the duty of the Court to satisfy itself that the price fixed is the best that could be expected to be offered. That is because the Court is the custodian of the interests of the Company and its creditors and the sanction of the Court required under the Companies Act has to be exercised with judicial discretion regard being had to the interests of the Company and its creditors as well. This principle was followed in Rathnaswami Pillai v. Sadapathi Pillai [(1925) Mad 318] and S. Soundarajan v. Roshan & Co. [AIR 1940 Mad 42] In A. Subbaraya Mudaliar v. K. Sundarajan [AIR 1951 Mad 986] it was pointed out that the condition of confirmation by the Court being a safeguard against the property being said at an inadequate price, it will be not only proper but necessary that the Court in exercising the discretion which it undoubtedly has of accepting or refusing the highest bid at the auction held in pursuance of its orders, should see that the price fetched at the auction is an adequate price even though there is no suggestion of irregularity or fraud. It is well to bear in mind the other principle which is equally well-settled namely that once the Court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already received. (See the decision of the Madras High Court in Roshan & Co. case).

(197) In paragraph 18 of Janatha Textile and others versus Tax Recovery Officer, (2008) 12 SCC 582 reproduced below, the Hon'ble Supreme Court held that it is an established principle of law that unless a Court protects a third-party auction purchaser's interest, the Court sale will not fetch market or fair price.

18. It is an established principle of law, that a third party auction- purchaser's interest, in the auctioned property continues to be protected, notwithstanding that the underlying decree is subsequently set aside or otherwise. This principle has been stated and reaffirmed in a number of judicial pronouncements by the Privy Council and this Court. Reliance has been placed on the following decisions:

(i) The Privy Council in Nawab Zain-Ul-Abdin Khan v. Mohd. Asghar Ali Khan [(1887-88) 15 IA 12] for the first time crystallized the law on this point, wherein a three-Judge Bench held as follows: (IA p. 16) "A great distinction has been made between the case of bona fide purchasers who are not parties to a decree at a sale under execution and the decree-holders themselves. In Bacon's Abridgment, tit. 'Error' it is laid down, citing old authorities, that 'if a man recovers damages, and hath execution by fieri facias, and upon the fieri facias the sheriff sells to a stranger a term for years, and after the judgment is reversed, the party shall be restored only to the money for which the term was sold, and not to the term itself, because the sheriff had sold it by the command of the writ of fieri facias'. … So in this case, those bona fide purchasers who were no parties to the decree which was then valid and in force, had nothing to do further than to look to the decree and to the order of sale."

(ii) In Janak Raj v. Gurdial Singh [AIR 1967 SC 608 : (1967) 2 SCR 77] the Division Bench comprising Wanchoo, J. and Mitter, J. held that in the facts of the said case the appellant auction- purchaser was entitled to a confirmation of the sale notwithstanding the fact that after the holding of the sale, the decree was set aside. It was observed : (AIR p. 613, para 24) "24. … The policy of the legislature seems to be that unless a stranger auction-purchaser is protected against the vicissitudes of the fortunes of the suit, sales in execution would not attract customers and it would be to the detriment of the interest of the borrower and the creditor alike if sales were allowed to be impugned merely because the decree was ultimately set aside or modified."

(iii) In Gurjoginder Singh v. Jaswant Kaur [(1994) 2 SCC 368] this Court relying on the judgment rendered by the Privy Council held that the status of a bona fide purchaser in an auction-sale in execution of a decree to which he was not a party stood on a distinct and different footing from that of a person who was inducted as a tenant by a decree-holder landlord. It was held as follows : (SCC p. 370, para 3) "3. … A stranger auction-purchaser does not derive his title from either the decree-holder or the judgment-debtor and therefore restitution may not be granted against him but a tenant who obtains possession from the decree-holder landlord cannot avail of the same right as his possession as a tenant is derived from the landlord."

(iv) In Padanathil Ruqmini Amma v. P.K. Abdulla [(1996) 7 SCC 668] this Court in para 11 observed as under : (SCC p. 672) "11. In the present case, as the ex parte decree was set

aside, the judgment-debtor was entitled to seek restitution of the property which had been sold in court auction in execution of the ex parte decree. There is no doubt that when the decree- holder himself is the auction-purchaser in a court auction-sale held in execution of a decree which is subsequently set aside, restitution of the property can be ordered in favour of the judgment-debtor. The decree-holder auction-purchaser is bound to return the property. It is equally well settled that if at a court auction-sale in execution of a decree, the properties are purchased by a bona fide purchaser who is a stranger to the court proceedings, the sale in his favour is protected and he cannot be asked to restitute the property to the judgment-debtor if the decree is set aside. The ratio behind this distinction between a sale to a decree-holder and a sale to a stranger is that the court, as a matter of policy, will protect honest outsider purchasers at sales held in the execution of its decrees, although the sales may be subsequently set aside, when such purchasers are not parties to the suit. But for such protection, the properties which are sold in court auctions would not fetch a proper price and the decree-holder himself would suffer. The same consideration does not apply when the decree-holder is himself the purchaser and the decree in his favour is set aside. He is a party to the litigation and is very much aware of the vicissitudes of litigation and needs no protection."

(198) In para 16, the Hon’ble Supreme Court elaborated on the distinction between the decree-holder auction-purchaser and a stranger who is a bona fide purchaser, as well as the protection and finality of the auction. Para 16 reads as under : (P.K. Abdulla case [(1996) 7 SCC 668] , p. 674)

"16. The distinction between a stranger who purchases at an auction-sale and an assignee from a decree-holder purchaser at an auction-sale is quite clear. Persons who purchase at a court auction who are strangers to the decree are afforded protection by the court because they are not in any way connected with the decree. Unless they are assured of title; the court auction would not fetch a good price and would be detrimental to the decree-holder. The policy, therefore, is to protect such purchasers. This policy cannot extend to those outsiders who do not purchase at a court auction. When outsiders purchase from a decree-holder who is an auction- purchaser clearly their title is dependent upon the title of decree- holder auction-purchaser. It is a defeasible title liable to be defeated if the decree is set aside. A person who takes an assignment of the property from such a purchaser is expected to be aware of the defeasibility of the title of his assignor. He has not purchased the property through the court at all. There is, therefore, no question of the court extending any protection to him. The doctrine of a bona fide purchaser for value also cannot extend to such an outsider who derives his title through a decree-holder auction-purchaser. He is aware or is expected to be aware of the nature of the title derived by his seller who is a decree-holder auction-purchaser."

(v) In Ashwin S. Mehta v. Custodian [(2006) 2 SCC 385] this Court whilst relying upon the aforementioned two judgments stated the principle in the following words : (SCC p. 407, para

"70. … In any event, ordinarily, a bona fide purchaser for value in an auction-sale is treated differently than a decree- holder purchasing such properties. In the former event, even if such a decree is set aside, the interest of the bona fide purchaser in an auction-sale is saved."

(199) In paragraphs 17 to 19 of the decision in Sadashiv Prasad Singh versus Harendar Singh (2015) 5 SCC 574, the Hon’ble Supreme Court protected the bonafide auction purchaser.

17. The learned counsel for the auction-purchaser Sadashiv Prasad Singh, in the first instance vehemently contended, that in terms of the law declared by this Court, property purchased by a third party auction-purchaser, in compliance with a court order, cannot be interfered with on the basis of the success or failure of parties to a proceeding, if the auction-purchaser had bona fide purchased the property. In order to substantiate his aforesaid contention, the learned counsel representing Sadashiv Prasad Singh placed emphatic reliance, firstly, on a judgment rendered by this Court in Ashwin S. Mehta v. Custodian [Ashwin S. Mehta v. Custodian, (2006) 2 SCC 385] . Our attention was drawn to the following observations recorded therein: (SCC p. 407, para 70) "70. In that view of the matter, evidently, creation of any third- party interest is no longer in dispute nor the same is subject to any order of this Court. In any event, ordinarily, a bona fide purchaser for value in an auction-sale is treated differently than a decree- holder purchasing such properties. In the former event, even if such a decree is set aside, the interest of the bona fide purchaser in an auction-sale is saved. (See Nawab Zain-ul-Abdin Khan v. Mohd. Asghar Ali Khan [(1887-88) 15 IA 12] .) The said decision has been affirmed by this Court in Gurjoginder Singh v. Jaswant Kaur [(1994) 2 SCC 368]”.

18. On the same subject, and to the same end, the learned counsel placed reliance on another judgment rendered by this Court in Janatha Textiles v. Tax Recovery Officer [Janatha Textiles v. Tax

Recovery Officer, (2008) 12 SCC 582], wherein the conclusions drawn in Ashwin S. Mehta case [Ashwin S. Mehta v. Custodian, (2006) 2 SCC 385] came to be reiterated. In the above judgment, this Court relied upon the decisions of the Privy Council and of this Court in Nawab Zain-ul-Abdin Khan v. Mohd. Asghar Ali Khan [(1887-88) 15 IA 12], Janak Raj v. Gurdial Singh [AIR 1967 SC 608], Gurjoginder Singh v. Jaswant Kaur [(1994)

SCC 368], Padanathil Ruqmini Amma v. P.K. Abdulla [(1996) 7 SCC 668] , as also, on Ashwin S. Mehta [Ashwin S. Mehta v. Custodian, (2006)

SCC

in order to conclude, that: (Janatha Textiles case [Janatha Textiles v. Tax Recovery Officer, (2008) 12 SCC 582] , SCC p. 586, para 18) "18. It is an established principle of law that in a third party auction-purchaser's interest in the auctioned property continues to be protected notwithstanding that the underlying decree is subsequently set aside or otherwise." It is, therefore, that this Court in its ultimate analysis observed as under: (Janatha Textiles case [Janatha Textiles v. Tax Recovery Officer, (2008) 12 SCC 582] , SCC pp. 588-89, para 20) "20. Law makes a clear distinction between a stranger who is a bona fide purchaser of the property at an auction-sale and a decree-holder purchaser at a court auction. The strangers to the decree are afforded protection by the court because they are not connected with the decree. Unless the protection is extended to them the court sales would not fetch market value or fair price of the property." (emphasis supplied) On the issue as has been dealt with in the foregoing paragraph, this Court has carved out one exception. The aforesaid exception came to be recorded in Valji Khimji and Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. [(2008) 9 SCC 299], wherein it was held as under: (SCC p. 305, paras 30-31) "30. In the first case mentioned above i.e. where the auction is not subject to confirmation by any authority, the auction is complete on the fall of the hammer, and certain rights accrue in favour of the auction-purchaser. However, where the auction is subject to subsequent confirmation by some authority (under a statute or terms of the auction) the auction is not complete and no rights accrue until the sale is confirmed by the said authority. Once, however, the sale is confirmed by that authority, certain rights accrue in favour of the auction-purchaser, and these rights cannot be extinguished except in exceptional cases such as fraud.

31. In the present case, the auction having been confirmed on 30-7-2003 by the Court it cannot be set aside unless some fraud or collusion has been proved. We are satisfied that no fraud or collusion has been established by anyone in this case."

19. It is, therefore, apparent that the rights of an auction- purchaser in the property purchased by him cannot be extinguished except in cases where the said purchase can be assailed on grounds of fraud or collusion.

(200) The above-referred judicial precedents support the Appellant’s case as a bonafide auction purchaser. The Appellant is a bonafide third-party auction purchaser, and unsettling its accrued legal rights by the Recovery Officer contradicts the verdict in

(i) Jaykay Industries and (ii) Janatha Textiles on the ground of sale adjournment and the price inadequacy. Respondents 4 and 5 did not set up the case of material irregularity, illegality, fraud or substantial injury caused to them. The Recovery Officer erred in not using the correct law in Kay Jay Industries and Eva Agro. The refusal to confirm the sale and protect the third-party bonafide auction purchaser contradicts the settled provisions of the law.

(201) Respondents 4 or 5 did not plead the cartel issue. On 26th September 2023, Chandra Laxmi filed I.A.25 of 2023 (Exhibit 848). In paragraph 5 of I.A. No.25 of

Chandra Laxmi alleged collusion between Trivesh and Shakuntalam because they signed minutes of the order dated 24th August 2023, which, according to it, creates room for cartelization. Chandra Laxmi abandoned its application Exhibit 848. On 15th September 2023, Chandra Laxmi filed Appeal (D) No.2041 of 2023 to set aside the Recovery Officer's order dated 16th August 2023 and 28th August 2023 and for other reliefs. Chandra Laxmi took no steps (i) to remove the office objections or (ii) to move for urgent ad-interim or interim relief.

(202) As of 13th September 2023, neither the service provider, C1 India, nor the Recovery Officer found any suspicious activity, collusion, or connivance between the Appellant and Trivesh. Chandra Laxmi filed application Exhibit 848 on 3rd October 2023, i.e. more than one month after e-auction. Except for taking the application Exhibit 848, the Recovery Officer, a quasi-judicial officer, did not bother to direct Chandra Laxmi to serve or deliver application Exhibit 848 upon all the parties, specifically "Trivesh". Because Chandra Laxmi made allegations against Trivesh, it did not make any competitive bid; it colluded or formed a cartel with the Appellant. The Tribunal views it as a breach of principles of natural justice. On 4th October 2023, Chandra Laxmi's advocate sought an adjournment to argue application Exhibit 848 on the next date. However, the Recovery Officer reserved application Exhibit 848 for orders on 5th October 2023. There is no whisper of application 848 in the order sheet dated 5th October 2023 and 9th October 2023. On 17th August 2023, the Recovery Officer partly passed an order in application Exhibit 848, which relates to Chandra Laxmi's allegation against him for unregulated procedures. According to the Recovery Officer granting bidders an opportunity to correct the defects in the physical bids, in one line, he says that the challenge to the process and procedure adopted for e-auction dated 28th August 2023 are

untenable. The Recovery Officer records Chandra Laxmi filed an appeal before this Tribunal and the Hon'ble DRAT through Misc. Appeal No.117 of 2023. The Recovery Officer dismissed application Exhibit 848 to the extent of allegations against him and kept other issues for decision at an appropriate stage.

(203) The Recovery Officer suo motto raised the cartel issue. In paragraphs 11.56 to 11.58 of the impugned order, the Recovery Officer discussed and opined after referring to (i) the service provider's report Exhibit 835 and its affidavit Exhibit 838, (ii) this Tribunal's order dated 24th August 2023 and minutes of the order in Appeal (D) No.1855 of 2023 to arrive at a finding that there is no competitive bidding between the Appellant and Trivesh and therefore, there is an element of conspiracy or cartelization between them. The Recovery Officer formed an opinion based on the allegation made by Chandra Laxmi in its abandoned or unpursued application, Exhibit 848, which he dismissed for non- prosecution. In paragraph 11.57 of the impugned order, the Recovery Officer relied upon the judgment of the Hon'ble Bombay High Court in (i) Appellate Side Writ Petition No.8572 of 2014 with Civil Application No.2214 of 2014 in Writ Petition

No.9078 of 2014, (ii) Writ Petition No.9078 of 2014 with I.A.No.1 of 2019 and (iii) Writ Petition No.10703 of 2014 and extracted relevant portion in it.

(204) Keeping in mind the Recovery Officer's analysis of the facts and evidence, the Tribunal examined and tested the impugned order on the finding of creating room for cartelization. The Recovery Officer first refers to the minutes of the order Exhibit 8 in Appeal No.19 of 2023. The Recovery Officer read what Respondents 4 and 5 wanted him to do. Minutes of the order form part of the order dated 24th August 2023 in Appeal 19 of 2023. The signatories to the minutes are (i) Trivesh, (ii) Respondents 1 and 2, (iii) Respondent 3 and (iv) the Appellant. The minutes show the stakeholders lost faith and confidence in the Recovery Officers' and, therefore, recorded it to remit or transfer the bid amount to the 1st Respondent's account. This Tribunal's order dated 24th August 2023 records that the Recovery Officer openly flouted the Hon'ble (i) DRAT's order dated 9th August 2023 and (ii) Bombay High Court's order dated 11th August

The Recovery Officer refused to hear the Official Liquidator's lawyer. This Tribunal noted Asteroid's allegation against the Recovery Officer that he received the order dated 17th August 2023 on 16th August 2023. The Tribunal allowed the parties to file the order minutes with abundant precaution.

(205) Asteroid instructed its lawyer to appear in Appeal no.19 of 2023, though not impleaded. Asteroid's counsel had an audience in Appeal no.19 of 2023. But Chandra Laxmi attempted to find fault with the minutes of the order, which is an integral part of the order dated 24th August 2023.

(206) In its application, Exhibit 848 Chandra Laxmi neither set up the case to create room for cartelization nor provided any evidence or demonstrated any circumstances. The Tribunal finds the mere use of "collusion" irrelevant without setting up a case of malafide intent to cause substantial damage or loss. It is pertinent to note that neither Chandra Laxmi nor the Recovery Officer attempted to discuss how and in what manner the minutes of the order created room for cartelization. Chandra Laxmi and the Recovery Officer found no role of Asteroid, Respondents 1 to 3 in cartelization. Importantly, Chandra Laxmi abandoned or waived its right to pursue Exhibit 848 until the Recovery Officer, by the impugned order, dismissed it for want of prosecution.

(207) Chandra Laxmi alleged the Recovery Officers'

involvement in "cartelization". Chandra Laxmi refers to the Recovery Officers' unregulated procedure, giving rise to cartelization. Paragraph 12 of Exhibit 848 Chandra Laxmi raised the issue that the Recovery Officers' exceeded their jurisdiction by inviting the physical bids, which defeats the aim and object of the e-auction. Paragraph 13 of Exhibit 848 reveals Chandra Laxmi's lack of confidence in the Recovery Officers of this Tribunal. It says that the Recovery Officer disclosed the bidders' names, which resulted in a threat. The Tribunal discussed the threat issue in Appeal (D) No.2208 of 2023 vide order dated 24th November 2023. In its application Exhibit 848, Chandra Laxmi did not pray to investigate the issue of cartelization.

(208) The Appellant, Respondents 1 to 4, Trivesh and Chandra Laxmi, questioned the Recovery Officer's authority to call for the physical bids in an e- auction. Both the Recovery Officers selectively picked up the word "cartelization" but ignored or avoided answering their authority to call for physical bids. In the impugned order, the Tribunal found the answer to their question of Recovery Officers inserting the conditions to submit physical bids in an e-auction. The Recovery Officers perused and understood the service provider's report. The impugned order reveals that they would physically verify or evaluate the bids if they could not find any defect in the service provider's report. The Recovery Officers purposely or intentionally avoided opining on the service provider's report. The Recovery Officers are duty- bound to follow the guidelines issued by the Ministry of Finance, Department of Financial Services vide letter No.3/1/2012-DRT dated 13th June 2012 regarding e-auctions. Disobedience of the competent authority's direction is an act of insubordination. This Tribunal noted the Recovery Officers' act of disclosing the bidders' details. It is unbecoming of a public servant and a disservice to the institution. The Recovery Officers' unregulated procedural act is unacceptable. The Recovery Officers are accountable, responsible, and liable for adopting unregulated procedures to show their supremacy and retain control over the e-auction process.

(209) The Tribunal, therefore, rejects the Recovery Officer's view that minutes of the order created room for cartelization.

(210) The predecessor or the service provider found no cartel, but the successor suo-moto raised the issue. In the present case, there is no collusive agreement or bid rigging. The Recovery Officer’s impugned order declares the cartel solely because Trivesh enhanced its bid. The Recovery Officer’s impugned order has its basis in inference and not evidence. The Recovery Officer did not introspect whether an oral or written agreement was possible. Because the Recovery Officer fixed the reserve price and incremental bid value, there were only three bidders. The Recovery Officer pushed the Appellant to the wall for the reverse burden of proof. The inference drawn by the Recovery Officer does not meet the requirement of law and judicial precedent.

(211) The Tribunal examined Chandra Laxmi's allegation and the Recovery Officer's view on the 2nd issue, which leads to conspiracy or cartelization. In paragraph 11.56, the Recovery Officer says that Chandra Laxmi did not participate in the open public e-auction conducted on 28th August 2023. True. Chandra Laxmi did not step into the bidding process because of the internal dispute between its directors, who belong to the two groups. The findings in this regard are in paragraphs 55 to 57 of the order dated 24th November 2023 in Appeal (D) No.2208 of 2023.

(212) In paragraph 5.56, the Recovery Officer relied upon the report of the service provider C1 India Pvt Ltd. and recorded that three bidders participated, viz. (i) Trivesh, (ii) the Appellant and

(iii) Chandra Laxmi. He then says Trivesh just accepted the auction start amount of Rs.355.05 crores. Therefore, the reserve price increased to Rs.355.05 crores. After that, the Appellant raised its bid by Rs.4 crores. Thus, the final bid rose to Rs.359.05 crores. Because Trivesh did not compete with the Appellant, the Recovery Officer saw it as an element of collusion or cartel. Chandra Laxmi failed to establish a collusion or a cartel between the Appellant and Trivesh. The Recovery Officer does not say that the Appellant and Trivesh formed a cartel; therefore, the transaction is, per se, illegal. The Recovery Officer does not refer to any oral or written agreement to form a cartel between the Appellant and Trivesh.

(213) The Recovery Officer did not introspect that merely because Trivesh did not compete with the Appellant, whether per se it amounts to cartelization. There is no discussion or findings like the ruling in Rockline (supra) that Trivesh designated the Appellant as bid winner in advance. When a bidder does not bid per se, it does not indicate cartel behaviour or implied involvement. Not making a bid by Trivesh may be for a variety of reasons. It may be a legitimate decision based on the bidder's evaluation of the situation and their interest on that day. To arrive at such a finding, the Recovery Officer grossly erred in not discussing various factors and behaviours essential to determine the presence of a cartel behaviour within the bidding process. It is typical for the bidders to back out after winning the e-auction due to many reasons, including personal or business decisions, price factors, or fear of incurring losses. There are no readymade solutions to this kind of behaviour, i.e. (i) Chandra Laxmi did not participate in the bidding process due to their internal disputes, and (ii) Trivesh did not bid. However, the Recovery Officer concluded without facts, evidence, or an erroneous investigation. As discussed above, Chandra Laxmi alleged that the Recovery Officers' act or activity appears suspicious and doubtful.

(214) The Tribunal’s further examining the application filed by Chandra Laxmi, Respondents 4 and 5 reveals that none have set up a case alleging a written or oral agreement between the Appellant and Trivesh regarding bid rigging, collusion, or a consensual or concerted act. The Tribunal found no allegations referring to the ulterior motive or malafide intentions to injure the public interest or to defeat the 3rd party's rights. There is no injury to the 3rd Respondent also. There is no evidence to establish an oral or written agreement between the Tribunal and the Appellant for bid rigging or collusive bidding. So, should the Recovery Officer deny the Appellant the relief it is entitled to? An agreement between A and B to purchase jointly the property at an auction sale and not to bid at each other is perfectly lawful. In paragraphs 26 and 27 of Rockline’s ruling, the Hon’ble Bombay High Court referred to the law laid down in (i) Bhagwant Genuji Girmi versus Gangabisan Ramgopal, AIR

Bombay and

(ii) Gurumukh Singh versus Amar Singh (1991) 3 SCC 79 for the proposition of an agreement between two bidders not to bid against each other at an auction, being not opposed to public policy is not illegal or it is not void.

(215) In A.K. Jain versus Canara Bank, the Hon’ble DRAT directed to conduct the fresh sale as it found the sale proclamation defective, which did not clarify the encumbrances clearly and transparently who shall bear and pay the liability of DDA. In that case, the undervaluation of the property was also an issue. In the present case, there is no dispute about (i) valuation or (ii) encumbrance. Therefore, the ruling of A.K. Jain’s case lends no assistance. In the present case, ten e-auctions failed, and there is no dispute that the

Appellant purchased the mortgaged property above the reserve price. Respondents 4 and 5 raised no dispute about valuation. Because of the law referred to in Kayjay Industries and Eva Agro, the verdict in the case of AK Jain will not apply.

(216) The Recovery Officer failed to appreciate the wide publicity of the e-auction dated 17th August 2023 and 28th August 2023. Therefore, the law laid down in Navalakha will not apply to the facts and circumstances of the present case.

(217) Valji Khimji (supra) and Vedica Procon (supra) ruling requires the objector to establish fraud, collusion or material irregularities. Neither the 4th Respondent nor the 5th Respondent established that there was any fraud or collusion. The Recovery Officer misunderstood the ruling in Bafna Motors (supra).

(218) The Recovery Officer exceeded his jurisdiction and erroneously applied the law laid down in K. Kumara Gupta on the issue of material irregularity. The ruling assists the Appellant and not the Recovery Officer’s decision to set aside the sale on the representation by the 4th and 5th Respondents. They have failed to plead and establish fraud, conspiracy, undervaluation, or irregularity.

(219) The Recovery Officer relied upon the judgment in

Mehul Dilipbhai Pandya versus SICOM, AIR 2021 Gujarat 139. In that case, SICOM did not accept the sole bidder's bid. Under these circumstances, the ruling in Kerala Financial Corporation versus Vincent Paul (2011) 4 SCC 171 was relied upon for the proposition that the highest bidder cannot insist on the sale confirmation. The facts are different, so the ruling in Mehul Pandya will not apply.

(220) In the Lica Pvt. Ltd. ruling, the Hon’ble Supreme Court held that mere acceptance of the bid does not get the right to confirm the sale. The Tribunal cannot dispute the proposition. That differs from the present case, where the Recovery Officer set aside a completed sale even after receiving the entire sale consideration and poundage fees. Therefore, the ruling in Lica does not assist in setting aside the completed sale.

(221) The Recovery Officer passed the impugned order setting aside the completed sale contrary to the ruling in Janatha Textiles & Ors. vs. Tax Recovery Officer and Anr. (2008) 12 SCC 582. The Recovery Officer’s impugned order contradicts the judicial precedent in Sadashiv Prasad Singh vs. Harender Singh & Ors. (2015) 5 SCC 574 and Eva Agro.

(222) In Mohan Wahi versus Commissioner of Income Tax (2001) 4 SCC 362, the Hon’ble Supreme Court held that the service of demand notice upon assessee is mandatory. Non-service of notice vitiated the sale in the recovery proceedings. There is no dispute about non-service of notice in the present case. The decision in Mohan Wahi will render no assistance in supporting the setting aside of the completed sale favouring the Appellant.

(223) The print media publication influenced the Recovery Officer about the completed sale, favouring and commenting on the Appellant. The Recovery Officer should have proceeded based on the established principles, not his ideas. The Recovery Officer erred in deviating from the established principles of law. The Recovery Officer got carried away by the elitisation of the arguments and the borrowed creativity of Respondents 4 and 5.

(224) The Tribunal finds the 4th Respondent as an interrupter or an interloper and not an intervener in the true sense. The 5th Respondent remained away. The impugned order does not stand to the cartel test. Therefore, the Tribunal rejects the theory of “cartel”.

(225) After examining the facts and circumstances of the case and evidence produced by the parties, and given the reasons recorded above, the

Tribunal finds merit in the Appellant’s case. The Tribunal holds that the Recovery Officer exceeded his jurisdiction by passing the impugned order. Accordingly, the Appeal is allowed, and the Tribunal set aside the impugned order dated 17th January 2024. The Tribunal directs the Recovery Officer to conclude the sale by issuing a sale certificate to the Appellant within one week of receiving this order. I.A.s stand disposed of. Conduct of the Recovery Officers:

(226) The Appellant, Respondents 1 and 2, raised an additional issue against the three recovery officers,

(i) Mr Sujeet Kumar, (ii) Mr Sunil Meshram and (iii) Mr Sandeep Sharma, for judicial indiscipline and their habit in this case of conducting proceedings and passing orders suo motto in the absence of pleadings, applications, evidence and arguments to cause damage or prejudice to the concerned party or parties. They have opened Pandora's box to show the Recovery Officers acted arbitrarily and unreasonably. They grossly misused and abused the chair and powers they derived from the 1993 Act, read with the Rules under the Second Schedule of the Income Tax Act.

(227) The parties drew the Tribunal’s attention to take judicial notice that the Recovery Officers adopted a practice to suo motto review or revise their predecessor’s order. Respondents 1 and 2 referred to the Recovery Officer’s order dated 15th January 2015, forfeiting Rs.267.75 crores of Pan India, the erstwhile auction purchaser. In Appeal, this Tribunal rejected on 3rd July 2015 to stay the forfeiture order. On 25th February 2021, the Recovery Officer, Mr Sujit Kumar, passed an order directing Respondent 1 to bring back the forfeited amount of Rs.267.75 crores and to deposit it with a non-government organization. On 9th March 2022, this Tribunal rendered judgment in Appeal 11 of 2021 filed by the 1st Respondent. This Tribunal quashed and set aside the Recovery Officer’s unrealistic order dated 25th February 2021. Paragraphs 35, 39 and 40 are relevant:

35. “I agree with the learned counsel’s submission that the learned Recovery Officer’s duty to apply the correct law is missing in the present case. The learned Recovery Officer had or has no discretion to recall the order dated 15th January 2015 passed by the then learned Recovery Officer. The learned Recovery Officer suo moto passed the order without there being an application on record. As aforesaid, the appellant and respondent no.2 are the beneficiaries claiming pari passu charge vide order dated 16th October 2007. Respondent no.1 is the liquidator. Save and except the appellant and respondents, there are no other parties. No application is made by the parties before the learned Recovery Officer. In the absence of any application, the learned Recovery Officer exceeded his jurisdiction and passed an order in utter disregard to the judicial pronouncement in Standard Chartered Bank versus Dharminder Bohi and others, (2013) 15 SCC 341.

39. Sensing serious prejudice and bias based on the oral observations made by the learned Recovery Officer in the open Court, the appellant applied for transfer of the Recovery Proceeding before the Hon’ble DRAT, Mumbai. The learned counsel’s submission demonstrates the learned Recovery Officer’s acted with bias mind based on his previous conduct. The appellant demonstrated that the learned Recovery Officer’s act was suspicious and unfair. The impugned order is the result of the learned Recovery Officer’s bias or prejudiced mind for extraneous circumstances. The learned Recovery Officer failed to recuse himself from the case and hurriedly pronounced two impugned orders dated 25th February 2021. According to the learned counsel’s submission, the learned Recovery Officer’s conduct would mean that he failed to act as an officer and passed impugned order unbecoming of a public servant. In uncertain terms, the appellant dented the learned Recovery Officer’s conduct far from satisfaction. The learned Recovery Officer adopted an attitude of unjudicial indifference towards the Court proceedings.

40. The appellant’s counsel’s submission concerning the learned Recovery Officer’s conduct would mean that the duty of every officer to maintain discipline, dignity and decorum. It would mean the appellant sees no credibility in the learned Recovery Officer’s conduct or integrity. It would mean that the impugned order was passed to harass the appellant and respondent no.2. He failed to appropriately answer the cause of justice. The appellant’s case would mean the misuse of power by the learned Recovery Officer.”

(228) Sunil K. Meshram: The Recovery Officer settled the sale proclamation and conducted an e-auction. As discussed above, the last date/time to submit a bid was 11th August 2023 by 4:30 pm. The Hon’ble DRAT passed an order on 9th August 2023 rejecting Asteroid’s request to stay the e-auction on 17th August 2023. The Hon’ble DRAT held that Asteroid has sufficient time to submit his bid. On 11th August 2023, the Hon’ble Bombay High Court, in paragraphs 5 to 7 of its order, rejected the Asteroid’s request to postpone the e-auction. The Hon’ble Bombay High Court stated that everybody must adhere to the schedule. However, Mr Meshram openly flouted the Hon’ble Bombay High Court’s order dated 11th August 2023. In the Tribunal’s view, the Recovery Officer committed contempt by disobeying the higher forum’s order dated 9th August 2023 and 11th August 2023, respectively. It is a continuing contempt.

(229) The Recovery Officer suo motto ordered the issuance of the corrigendum inviting the new bidders. On 24th August 2023, this Tribunal set aside the corrigendum to the extent of inviting or accepting new bids. On 28th August 2023, after satisfying, the Recovery Officer directed the Appellant to deposit 25%, 75% of the bid value and poundage fees. On 13th September 2023, the Recovery Officer records receiving the entire sale consideration of Rs.359.05 crores and poundage fees from the Appellant. Thus, under Rule 63, the Recovery Officer was duty-bound to confirm the sale and issue a sale certificate under Rule 65. As of 13th September 2023, no applications were pending to set aside the completed sale under Rules 11 or 61. However, on one pretext or another, Mr Meshram avoided confirming the sale and issuing the sale certificate despite the higher forums’ order.

(230) On 17th September 2023, Mr Meshram heard Chandralaxmi’s application and concluded that the process and procedure adopted in the e- auction held on 28th August 2023 was legal and valid. Until the completion of his tenure, on 10th November 2023, Mr Meshram failed to confirm the sale and issue the sale certificate.

(231) Mr Sandeep Sharma: The Recovery Officer adopted the same modus operandi as Mr Sujit Kumar and Mr S.K. Meshram. The Recovery Officer set in Appeal and suo motto reviewed or revised the order dated 28th August 2023, 13th September 2023 and 17th September 2023. He openly rebelled against the higher forums’ order by aiding and abetting the contempt. The Recovery Officer committed contempt of this Tribunal’s order dated 24th November 2023 and the Hon’ble DRAT’s order dated 6th December 2023.

(232) The parties allege that Mr Sunil Meshram and Mr Sandeep Sharma, the Recovery Officers, favoured Respondents 4 and 5 despite the Rules in the Second Schedule of the Income Tax Act. The Recovery Officer’s conduct in passing the impugned order appears

(i) suspicious and doubtful, (ii) dereliction in discharging the judicial function, and

(iii) grave misconduct, which tantamounts to unbecoming of the judicial officer. Their conduct requires investigation and action by the competent authority under Administrative Law and the Contempt Act.

ORDER

(A) The Tribunal allows Appeal No.1 of 2024 parties to bear their respective costs. (B) I.A.’s stand disposed of.

Sd/- (Deepak M. Thakkar) Presiding Officer, DRT-2, Mumbai Nidhi