NARENDRA THAKKER vs CANARA BANK LIMITED on 18 February 2021

J U D G M E N T

The appellants have assailed the correctness and validity of the orders dated 29th December, 2020 and 30th December, 2020 (for short “the impugned orders”) passed by the learned Recovery Officer, disqualifying the appellants from participating in the bidding process. The appellants’ prayer is to examine the legality and validity of the auction conducted by the learned R.O. on 30th December, 2020 and to quash and set-aside and allow the relief in term of application (Exhibit 128). It is an Appeal under Section 30 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (for short “the 1993 Act”).

The facts leading to the filing of the Appeal is as under:

The Respondent No.1 is the certificate holder in

Recovery Proceeding No.551 of 2004 in Original Application No.226 of 2001.

The Respondent No.2 is successful bidder and declared as auction purchaser.

To recover the sum of Rs.456,26,64,246/-, the learned R.O. put up the immovable property for sale by public auction namely all that piece and parcel lying and situated at Survey No.395/5-1, Survey No.395/7 and Survey No.395/6 at Nandur Road, New Bombay, Agra Road, Nashik City admeasuring 2 acres and 16 gunthas, 034 gunthas and acres and gunthas or thereabout respectively admeasuring about 19500 sq. meters and thereabouts hereinafter referred to as “the said property”). On 24th November, 2020, the learned R.O. issued sale notice and got it published in newspaper. The learned R.O. set reserve price of the said property at Rs.21.84 crores. The learned R.O. set 28th December, 2020 as the last date of submitting the on line offer by 4.30 p.m. Condition Nos.4 & 5 of the sale notice dated 24th November, 2020 is relevant for adjudicating the present Appeal, which is reproduced hereunder:

(4) The public at large is hereby invited to bid in the said E-Auction. The online offers along with EMD amount of Rs.5,00,00,000/- (Rupees Five Crores only), is payable by way of RTGS/NEFT in the Account No.138929600003, Canara Bank, Assets Recovery Management Branch – II, New Marine Lines, Mumbai, IFSC Code No.CNRB0001389 of the Certificate Holder Bank at Mumbai. Attested photocopy of TAN/PAN card and address proof shall be uploaded with the online offer. The offer for more than one property shall be made separately. The last date for submission of online offers along with EMD and the other information/details is 28.12.2020 by 4.30 p.m. The physical inspection of the properties may be taken between 2.00 p.m. and 4.00 p.m. on date 24.12.2020 at the property site.

(5) The copy of PAN card, Address proof and identity proof, E-mail ID, Mobile No. and declaration if they are bidding on their own behalf or on behalf of their principals. In the latter case, they shall be required to deposit their authority and in default their bids shall be rejected. In case of the company copy of resolution passed by the board members of the company or any other document confirming representation/ attorney of the company and the receipt/counter file of such deposit should

reach to the said service provider or CH bank by e-mail or otherwise by the said date and hard copy shall be submitted before the Recovery Officer – II, DRT – II, Mumbai on or before 28.12.2020 upto 4.30 p.m.

On 28th December 2020, the respondent No.2 submitted before 4.30 p.m. all documents online as per terms and conditions of the sale notice.

The Appellants decided to participate in the e- auction scheduled on 30th December 2020. On 28th December 2020, the Appellants remitted by RTGS, EMD amount of Rs.5.00 crores. The appellants’ authorized representative attempted to upload the necessary documents to the portal of the service provider. However, the applicants’ representative faced technical glitch and could not upload any documents to qualify for the bidding process. The appellants are at Nasik. The specialised experts could upload by feeding the details of appellant no.1. The software did not accept the PAN Card and the relevant documents of other intending bidders that is appellant nos.2 to 7. The appellant no.1 could successfully upload his documents. The appellants immediately mailed the relevant documents to the Mumbai office. The clerk at the Mumbai office submitted the papers in this

Tribunal at about 5.20 pm. On 29th December, 2020, the appellant no.1, received e-mail disqualifying him from the bidding process.

The appellant applied before the learned R.O. seeking permission to rectify the mistakes, if any, in the bidding process. On 30th December 2020, the learned R.O. rejected the appellants’ application.

On 30th December 2020, the appellants’ advocate attended the matter before the learned R.O. and informed that the appellants attempted to upload the documents on the website mentioned in the sale notice. However, due to technical glitch, the documents could not be uploaded. The appellants’ advocate therefore requested the learned R.O. to grant permission to allow them to tender the bid and thereafter to participate in the auction proceedings. The learned R.O. refused to accept the request of the appellant’s advocate.

According to the appellants the impugned orders are untenable in law, perverse, manifestly, wrong and incorrect. By the present Appeal, the appellants makes request on equity to allow the participation in the auction or in the alternate, the learned R.O. be directed to conduct fresh sale by setting aside the impugned orders.

The aggrieved appellants would state that before

disqualifying the appellants’ bid, the learned R.O. ought to have granted an opportunity to complete the online form. The appellants are new to the online auction process and therefore, it was very likely that mistakes happen in submitting the online bid. It is for this reason that the appellants seek permission to cure the defects.

Mr Rahul Holkar, the clerk of the appellants at Mumbai office, unknowingly reached late to DRT at about 5.20 p.m.

According to the appellants, the learned R.O. was incorrect in rejecting the bid and observing that the application to cure the defect as an afterthought.

The appellants have challenged the impugned orders on the ground that the learned R.O. failed to consider the delay in uploading the required documents due to technical glitch. According to the appellants, the learned R.O. failed to exercise his right to extend the time period.

The delay caused because of the due diligence conducted by the appellants. Their endeavour was to ensure that there are no litigations.

If the appellants were granted the chance of inter-se bidding, the said property would have fetched higher price.

The appellants alleged that the respondent no.2

has failed to comply with the terms and conditions of the sale notice.

The failure to upload the documents does not in any manner affect the bidding process. The impugned order is passed by the learned R.O. without any application of mind and violates the principles of natural justice. It is arbitrary and therefore, liable to be set-aside.

The appellants claim that they have chance to succeed in the Appeal, the equity and balance of convenience lies in their favour. The appellants therefore pray to quash and set-aside the impugned orders and request this Tribunal for fresh e-auction.

The Appeal is opposed by the respondent no.2 who has filed affidavit (exhibit-8). It is opposed on the ground that the Appeal is a classic case of suppressoveri and suggestiofalsi. The appellants have not come to this Tribunal with clean hands. Therefore, the Appeal is liable to be dismissed with exemplary costs.

The Appeal as well as the Interim Application does not make out any legal ground. It is grossly false, frivolous, vexatious and mischievous. On this ground also, the Appeal is liable to be dismissed.

The respondent no.2 is the successful bidder and the auction purchaser of the sale property.

It has complied with the terms and conditions of the sale notice dated 24th November 2020. The participation of the respondent no.2 is as per law. It has submitted all documents online on 28th December 2020, before 4.30 pm as per condition no.4. The respondent no.2 responded to the advertisement published in newspaper which is circulated in city of Nasik. On 28th November 2020, the respondent no.2 tendered the amount in the sum of Rs.5 crores to the account of respondent no.1 and simultaneously uploaded of the KYC and supporting documents on the portal of M/s. C1 India Pvt. Ltd. In addition thereto, it also hand delivered the envelope containing the hard copies of the KYC documents and unconditional offer. Before the auction sale on 30th December the respondent no.2 successfully uploaded all the relevant documents. In response thereto, the respondent no.1 sent a confirmation e-mail acknowledging the requisite documents along- with login credentials to enable the respondent no.2 to participate in online auction scheduled on 30th December 2020.

The respondent no.2 was surprised to note that the appellants applied before the learned R.O. to accept the conditional offer, allow the compliances and documents which were not filed

until 4.30 pm on 28th December 2020. The respondent no.2 noted that the appellants’ representative submitted the documents at 5.20 pm which is not in accordance with the terms and conditions of the sale notice.

On 29th December 2020, the learned R.O. opened the bids and observed that the appellants had not filed the required documents which includes PAN card, identity proof, address proof, mobile number and e-mail ID of the intending bidders namely the appellant nos.2 to 7. The learned R.O. also observed that the appellant nos.2 to 7 did not authorise the appellant no.1 in this regard. The respondent no.2 has relied upon the paragraph nos.4 and 5 of the sale proclamation notice dated 24th November 2020 for dismissal of the Appeal. The respondent no.2 has also relied upon Rule 59(2) of the 2nd schedule of the Income-tax Act for the dismissal of the Appeal.

The respondent no.2 alleges that the appellants have annexed the copy of the Review Application filed by certificate debtor no.3 along-with various orders passed in the recovery proceeding. The respondent no.2 has placed the emphasis on the observation made by the learned R.O. stating thus: “Prima-facie, it appears that either intending bidders are intending to participate on behalf of defendants

or it may be a case of cartel”.

The respondent no.2 opposes the Appeal on the ground that any documents which are required to be uploaded on any government website or court website, it will not allow the user to proceed further until necessary and relevant details and documents are uploaded. A pop-up message will be displayed drawing attention of the user with the registration is incomplete. The appellants have failed to explain the technical glitch which is the only reason for delay in uploading the documents.

Even the respondent no.2 is based in Nasik. However, the appellants faced the difficulty in uploading the documents whereas the respondent no.2 could successfully upload the documents.

The appellants’ application was heard by the learned R.O. and detailed order was passed. All the issues raised by the appellants were answered by the learned R.O. The present Appeal is a serious abuse of process of law.

The respondent no.2 supports the impugned order stating that the learned R.O. has reserved his right to accept or reject all or any bid if found unreasonable or to postpone the auction at any time without assigning any reason. The respondent no.2 opposes the Appeal for want of

authority by the appellant nos.2 to 7.

It is further opposed on the ground that such unscrupulous filing of the Appeal by the appellants defeats the aim and object of the 1993 Act and to make the auction as never ending process. The respondent no.2 seeks the dismissal of the Appeal with exemplary costs.

Submissions:

Mr Thakker, the learned senior counsel for the appellants, would submit that the appellants attempted to upload the documents but could not do so because of the technical glitch. The appellants have tendered the EMD amount in the sum of Rs.5 crores which shows their intention to participate in the bidding process. The appellant nos.2 to 7 could not upload the documents because of the technical glitch. The hard copy was delivered to the office of the learned R.O. at about 5.20 pm. Since the appellants were disqualified from participating in the auction sale, they made application before the learned R.O. seeking permission to rectify the mistakes, if any. The appellants requested the learned R.O. to allow them to complete the online form. The appellants are new to the online auction process and mistakes may have happened while submitting the auction bid.

Mr Thakker would further submit that the

appellants are ready and willing to bear entire expenses of the already concluded auction sale and if it is set-aside, the expenses of the fresh sale as well. Mr Thakker would submit to grant relief on equitable ground.

Mr Arif Bookwala, the learned senior counsel for the respondent no.1, fairly submitted that he is concerned with the recovery of the bank’s due. Mr Bookwala further submitted that there are two decrees in favour of the respondent no.1 which are put to execution. Mr Bookwala further submitted that sub-section (2) of Section 30 of the 1993 Act empowers this Tribunal to confirm, modify or set-aside the order made by the learned R.O. in exercise of powers conferred under Sections 25 to 28.

Mr Shah would submit that the respondent no.2 is the successful auction purchaser and supports the order passed by the learned R.O. Mr Shah would further submit that the appellants have failed to upload the necessary and required documents viz. PAN card, address proof, identity proof, e-mail ID and mobile number of the appellant nos.2 to

7. The condition no.4 prescribed the deadline of submitting the online offer along-with EMD and other information/details on 28th December 2020 by 4.30 pm. Rule 59(2) of the 2nd schedule

of the Income-tax Act provides for the submission of the authority in case where the bidding is made on behalf of the principals. The appellants have not given any explanation with regard to the technical glitch, no evidence is produced by the appellants and therefore, the Appeal be dismissed with exemplary cost.

I have heard the learned counsels for the appellants, the respondent nos.1 and 2. No argument was advanced by Mr Kishore Vig. No representation was made by other respondents either personally or through their advocates.

The appellant nos.2 to 7 have no locus-standi to challenge the impugned orders. Admittedly, the appellants nos.2 to 7 did not grant any authority to the appellant no.1 to submit the bid on 28th December 2020. No cause of action has accrued in favour of the appellant nos.2 to 7.

The aggrieved appellants have knocked this Tribunal’s door in the Appeal challenging their disqualification in the biding process and consequently, to quash and set-aside the impugned orders. In the alternate, the appellants seeks direction of this Tribunal to conduct the fresh auction sale.

In paragraph no.1 of the Appeal, the appellants set up the case about their disqualification knowledge. It further proceeds on the footing of making an application to remove the defects. The appellants do not think fit to annex the application to the paper book. The respondent no.2 in its reply have categorically recorded that instead of annexing the application made before the learned R.O., the appellants have annexed the copy of Review Application filed by the certificate debtor no.3. The appellants have surreptitiously, appended the copy of Review Application filed by certificate debtor no.3, under the guise of application to remove defects. There is no whisper about the Review Application in the Appeal.

Whether the appellants attempted to collude and connive with the review applicant to sabotage the e-auction? Whether the appellants are used as a proxy litigant to protract the legitimate recovery of the respondent no.1 that is certificate holder? By annexing the Review Application, this Tribunal can safely infer the closeness or connection between appellants and the review applicant. The Review Application reached the appellants and got it annexed to the Appeal, to prejudice this Tribunal’s mind. The conduct of the appellants is reprehensible and does not deserve any sympathy. It is nothing sort of fraudulent activity.

The document styled as a letter dated 28th

December 2020, delivered at the inward counter and recorded as inward no.1056. The concerned department of this Tribunal received it at about 5.20 p.m. It does not contain the name and address of the person who communicated with the learned R.O. The authorized person signs it but his name is missing. It is not the appellant no.1’s signature, under the power of attorney. No authority is produced at this stage also. The intending bidders’ perception is that the letter has reached to the learned R.O. Whether the letter dated 28th December 2020 complies with the terms and conditions of the sale notice? The answer is no. The appellants even failed to ratify the action of the person signing the letter dated 28th December 2020. The order dated 29th December 2020, reveals that six co-bidders/ joint bidders did not grant any authority to the appellant no.1. If this document is analysed, it has no evidentiary value. The letter dated 28th December 2020, cannot be read in evidence by this Tribunal for want of authority. The author of the letter dated 28th December 2020, failed to file the affidavit supporting the appellants’ plea. The letter signed by the person without authority is also the ground for rejection of the Appeal. The appellants have failed to abide by the terms of the auction notice dated 24th

November 2020.

The non-submission of the hard copy is attempted by explaining that Mr Rahul Holkar reached DRT at about 5.20 p.m. According to the appellants, they immediately mailed the required documents to their Mumbai office. Mr Rahul Holkar, the clerk of the appellants, unknowingly reached late in the DRT. The appellants did not choose to place any evidence of Mr Rahul Holkar to prove their case. Merely by words of mouth of the appellants, want me to believe their narratives. The unreasoned plea of the appellants does not inspire any confidence. Whatever may be the reasons for the delay, the terms and conditions of the sale notice stipulates to make the bid within the prescribed time.

Technical Glitch : Now let us look at the dictionary meaning of the word ‘glitch’. Cambridge dictionary: “To experience us a small fault or problem, especially one that stops something from working.” Technopedia explains Glitch: “In the event of the glitch, the system experiences a temporary failure. In networks, the glitch can cause a loss of data or service and short-lived failure in the case of a power system. Glitches are not only common in electrical and electronic systems

where hardware is involved; the software also experiences glitches, data commonly known as bugs. Software bugs often go away once the problem is restarted because it eliminates conditions that caused the glitch. However, sometimes restarting the programme is not enough and systems need to be rebooted in order to get rid of a system’s glitch.”

From the dictionary meaning, it appears that it is only a temporary disruption. The errors are within the operating system or problem created by computer bugs or viruses. Undisputedly, the mistake or error or so-called technical glitch or fault in the functioning of the computer or other device used could have been discovered and notified if the appellants had taken proper care and diligence. The appellants knew the so-called technical glitch but failed to avoid by reasonable care and diligence. In such circumstances, the appellants cannot be permitted to take advantage of their own mistake.

Now, the issue of whether six co-bidders/joint bidders could not upload the documents was intentional or unintentional. Whether it was bonafide or malafide? The appellants have approbated and reprobated at the same time. It is not in dispute that the appellants uploaded insufficient documents. What would appellants do if they were unable to upload the bidding documents? The person would call on the contact number given in the terms and conditions of the sale notice, immediately sent an e-mail to the concerned officer expressing their difficulty to upload the documents. A person would check the network connectivity or attempt to reboot the system if it got hanged at their end. Take the screenshot of the page at which they faced problem or difficulty and forward it to the service provider by way of evidence.

The respondent no.2 correctly pointed out about getting the pop-up message in case of the details with incorrectly filled or registration being incomplete. The appellants did not take any of these steps. In paragraph no.7 of the Appeal, the appellants have set up the plea of failure to upload the documents because of the technical glitch. Then, the appellants say that the technical experts uploaded the details of the appellant no.1. According to the appellants and their technical experts, the software did not accept additional documents. I do not have the benefit of the details of the technical experts or their affidavit for consideration. Whatever is stated by the appellants is by words of mouth. The appellants want me to believe whatever is

said by them is the gospel truth. The appellants have to blame themselves for acting against their interest.

Mistakes and curing of defects: The appellants have pleaded mistake, but it was within their control to correct it. The appellants were not vigilant in submitting the bid online. The appellants could have avoided the error. The appellants knew that the respondent no.1 advertised the auction in newspaper which will postulate keen competition. The appellants failed to maintain the high efficiency and degree of care required to submit an online bid. The terms and conditions of the auction notice binds the appellants and the respondent no.2. There is no ambiguity in the terms and conditions that the bidders who fulfil the criteria will be eligible for the bidding process. The learned R.O. justified by adhering to the terms and conditions of the sale notice, otherwise, it would provide the scope of the favouritism, arbitrariness and discrimination which in my view are opposed to the rule of law.

The Learned R.O. invited the bids and has followed the procedure. There cannot be any justification to deviate from the terms and conditions of the sale notice and take upon himself the responsibility of accepting the bid

which did not satisfy the notices’ requirement. The Tribunal cannot rewrite the contact between the parties.

The disqualification of the appellants’ participation in the bidding process is proper. It is as per the terms and conditions laid down in the sale notice. The learned R.O. has no authority to waive such condition on incomplete bid. There is no arbitrariness or irrationality in disqualifying the appellants. It is not in dispute that the terms and conditions laid down the compliance in details. The appellants’ act of omission or commission violates Rule 59(2) of the 2nd Schedule of the Income Tax Act. It does not contemplate to condone the delay in tendering the bid beyond due date and time. There are other clauses also which postulates strict compliance. The appellants failed to comply with the requirements of Rule 59(2), which is mandatory.

For the fault of the appellants, the right accrued in favour of the respondent nos.1 and 2 cannot be unsettled.

The learned R.O. in his order has made reference to the following judicial pronouncement: (i) M/s. Shubham Enterprises Versus K. Srinivas Rao and others in Writ Petition No.5068 of 2019 passed by the Hon’ble

Hyderabad High Court dated 11th October, 2019;

(ii) C.N. Paramsivam and another Versus Sunrise Plaza and others reported in (2013) 9 SCC 460 and; (iii) Chhotu Sood Versus Tax Recovery Officer and others reported in (1983) 141 ITR 54 Punjab-Haryana High Court. The appellants did not choose to advance any arguments on the aforesaid judicial precedents.

Request on equity and principles of natural justice: The conduct of the appellants does not warrant any interference. The appellants did acts with full knowledge of its taking the shelter of technical glitch and its consequences. They must face the result and not claim and are not entitled to any equitable relief. The appellants are at fault cannot claim, when the respondent nos.1 and 2 are not at fault. The appellants have made averments as per their convenience without regard to the truth. The appellants certainly did not act reasonably. One who seeks equity must do equity. The appellants have not come to this Tribunal with clean hands. The easy access to justice is misused by the appellants by filing the frivolous Appeal. The terms and conditions of the sale notice dated 24th November 2020, are in the nature of the commercial functions. In such cases, the principles of natural justice and equity would not apply. The appellants with a grievance can always approach the court of competent jurisdiction to seek damages. The appellants have annexed the Review Application of the certificate debtor no.3. Mr Kishor Vig applied for extension of the stay order after the learned senior counsels for the appellants and respondent no.1, respectively, had left online video conference hearing after completion of their arguments. Be that as it may, Mr Vig does not hold any authority on behalf of the appellants. The request made by Mr Vig to extend the stay order raises suspicion in my mind about the collusion between the appellants and Mr Vig’s client. In the present case, I do not see any public interest being affected. The appellants appears to be the proxy litigants of Mr Vig’s clients. It was an attempt to cancel the concluded sale at the behest of the borrowers which cannot be allowed in any circumstances.

On the legality and validity of the order dated 29th December 2020 and 30th December 2020 is concerned, I can safely say that the learned R.O. has not exceeded his powers or abused it. The learned R.O. has not committed (i) any error of law; and (ii) breach of Rules. There is no procedural impropriety also. The order of the

learned R.O. demonstrates fair-play without any favour or discrimination.

After examining the facts and circumstances of the case and evidence produced by the parties, I have come to the conclusion that the appellants’ Appeal is devoid of merit and is therefore, liable to be dismissed. Hence, I pass the following order:

ORDER

The Appeal No.2 of 2021 is dismissed. The parties to bear their respective costs.

Sd/- (Deepak M. Thakkar)

Presiding Officer, DRT-2, Mumbai

Dhawale, Sharma, Sagar & Srishti