BANK OF INDIA vs GAYATRI TRADING COMPANY on 3 June 2026

**J U D G M E N T**

1. 1. The Appellant begs to file this appeal against the order dated 24.10.2025 passed by the Learned Recovery Officer-I, Debt Recovery Tribunal, Dehradun in R.C. no. 122 of 2019 Bank of India vs. M/S Gyatri Trading and others whereby the learned Recovery Officer-I was pleased to set aside the auction held in pursuance of the sale notice dated 06.12.2024.


1. 2. Appellant Bank submits that the Appellant had filed the original application against the respondents no. 1 to 4 for recovery of Rs.18,54,152.00 (which includes uncharged interest upto 07.05.2018) and the Hon'ble Tribunal was pleased to allow the original application vide order dated 05.02.2019.

2. 3. Further submits that to secure the loan, the respondent no. 2 had equitably mortgaged all that industrial property bearing Khasra no.194/1, Khasra no. 288 Min, Khasra no. 287Min, 290 Min and Khasra no. 289/3 measuring 464.684 Sq. Mtrs. Situated at Mauza Bhagwanpur Chandanpur, Parganan Manglour, Tehsil Roorkee, District Haridwar and during the recovery proceedings the appellant Bank had come to know that the respondent no. 2 without the knowledge and consent of the appellant bank had executed the following sale deeds:- <table border="1"><thead><tr><th>Name of purchaser</th><th>date of sale deed</th><th>S. No.</th><th>Area transferred in sq. mtrs</th></tr></thead><tbody><tr><td>Shri Ankit Kaushik son of Shri Jai Krishan Kaushik resident of 171, Bankhandi, Rishikesh, District Dehradun.</td><td>20.01.2016</td><td>354</td><td>92.93</td></tr><tr><td>Shri Ravindra Kumar Agarwal son of Shri Radha Krishan Agarwal resident of H.no. 43, Maniram Road, Rishikesh, District Dehradun</td><td>07.04.2017</td><td>1439</td><td>185.873</td></tr><tr><td>Shri Ravindra Kumar Agarwal son of Shri</td><td>28.10.2015</td><td>7927</td><td>92.93</td></tr></tbody></table>

Bank of India Vs. M/s Gayatri Trading Company & Ors.

<table border="1"><tr><td>Radha Krishan Agarwal resident of H.no. 43, Maniram Road, Rishikesh, District Dehradun.</td><td></td><td></td><td></td></tr><tr><td>Shri Amit Chatterjee son of Shri Neelkamal Chatterjee resident of 15, Jiwanimai Road, Rishikesh, District Dehradun.</td><td>26.11.2015</td><td>8580</td><td>92.93</td></tr></table>

4. That thus vide the above four sale deeds the respondent no. 2 had sold the entire area measuring 464.684 Sq. Mtrs. and the appellant bank had brought the said facts before the Learned Recovery Officer by filing affidavit diary no-530 dated 09.03.2022. It is pertinent to submit that the borrower had earlier committed fraud and misrepresentation with the Bank in respect of the title documents and property details. The Bank had placed these facts on record before this Hon'ble Tribunal during the recovery proceedings. Despite such fraudulent conduct by the borrower, the Bank acted diligently and proceeded as per law to recover the public money through the process of auction under the supervision of this Hon'ble Tribunal. The Advocate Commissioner was duly appointed by this Hon'ble Tribunal to carry out the sale proclamation and auction proceedings.

5. That at the time of the auction the appellant bank was not in possession of the mortgaged property and the area of the property put to auction was on the basis of the sale deed in favour of the respondent no. 2, which has been deposited with the certificate holder bank.

1. 6. That the property was put to E-auction on 13.02.2025 in terms of the sale notice dated 06.12.2024 and the auction purchaser was the sole bidder and thereafter the sale was confirmed on 17.03.2025 in favour of the auction purchaser and sale certificate was issued after she deposited the entire sale consideration.

2. 7. That after the issue of the sale certificate by the learned Recovery Officer as per the directions of the learned Recovery Officer vide order dated 17.03.2025 the appellant bank was to take possession of the property and handover the same to the auction purchaser.

3. 8. That thereafter the appellant bank and the auction purchaser had gone to the site for taking over and handing over the possession of the auctioned property to the auction purchaser, however there was mismatch in the dimension of the mortgaged property and accordingly the auction purchaser had moved an application before the Ld. Recovery Officer.

4. 9. That the Court Receiver appointment by Ld. Recovery Officer with the assistance of learned Patwari of the area had visited the site alongwith the representative of the certificate holder bank and the auction purchaser and on measurement it was found that the total area of the land on the site is 373.16 Sq. Mtrs. It was also observed by the Learned Court Receiver that unauthorized boundary wall has been constructed within the premises of the property.

5. 10. That in pursuance of the order of the Learned Recovery Officer the inspection was carried out by the Revenue Authorities and as per their report the area found on the site measures 373.16 Sq. Mts. and a report was submitted, which has since been filed before the learned Recovery Officer.

6. 11. That at the time of the sale the appellant bank was not in knowledge of the exact area of the land of property and the property was put to auction on the basis of sale deed in favour of the certificate debtor.

7. 12. That the auction purchaser had deposited the sale consideration with the learned Recovery Officer, who in turn had directed that the amount be put in a fixed deposit.

**DEBTS RECOVERY TRIBUNAL, DEHRADUN**

1. 13. That the learned Recovery officer vide order dated 24.10.2025 set aside the sale and directed the appellant to pay interest @12% simple per annum w.e.f. 17.03.2025 till the date of payment. The Appellant Bank respectfully submits that the Bank has not received or retained any portion of the bid amount, which is deposited and maintained with the Tribunal. Hence, the Bank has derived no monetary benefit from the said deposit.

2. 14. That the direction to pay 12% interest upon such amount, which was never in possession or use of the Bank is wholly unjustified. The Bank acted bona fide, followed the procedure prescribed under law, and committed no negligence or irregularity.

3. 15. That the Bank has already suffered loss due to the borrower's default and fraudulent acts. To saddle the Bank with further liability for a fact unknown to it would be contrary to equity and the established legal principles governing judicial sales. The Ld. Recovery Officer erred in holding that the appellant bank has failed to provide the correct details of the mortgaged properties.

4. 16. The Ld. Recovery Officer erred in holding that the submission of the appellant bank that the property was put to E-auction on "as is where is condition" cannot be accepted as the authorized officer of the certificate holder bank is duty bound to take all the precautions before furnishing, affidavit before the Hon'ble Tribunal.

5. 17. The Ld. Recovery Officer erred in awarding simple interest @ 12% per annum calculated on purchase money of Rs.15,00,000.00 commencing from the date of issuance of sale certificate i.e. 17.03.2025 till realization to be paid by the appellant bank and the Ld. Recovery Officer erred in directing payment of 12% interest by the Appellant Bank, although the bid amount is lying with the DRT and not with the Appellant Bank. The Appellant Bank cannot be made liable for interest on an amount never held or utilized by it.

6. 18. The Learned Recovery Officer failed to appreciate that double compensation i.e. 12% simple interest from the date of certificate and also the FD interest cannot be awarded. The order to the extent of 12% interest is arbitrary, excessive and contrary to settled law that interest is payable only where a party wrongfully withholds or enjoys another's money. The appellant has prayed that this appeal be allowed and the order dated 24.10.2025 passed by Learned Recovery Officer -I, DRT, Dehradun in R. C. no. 122 of 2019 Bank of India versus M/s Gayatri Trading is set aside in relation to interest.

1. 19. The Auction purchaser has also filed its objections and stated that At the outset, the present Appeal is misconceived, legally untenable and founded upon suppression of material facts. The impugned order dated 24.10.2025 passed by the Learned Recovery Officer is reasoned, evidence-based, and in consonance with statutory provisions under the SARFAESI Act and RDB Act.

2. 20. It is most respectfully submitted that the auction purchaser never sought cancellation of the auction at any stage, she consistently opposed the Bank's repeated prayer for revocation and maintained that the sale must be honoured and in case of deficiency, refund be made proportionately as per law.

3. 21. The Hon'ble Supreme Court in Leelamma Mathew v. Indian Overseas Bank (2022) held that Bank cannot retain consideration for higher area while delivering lesser possession. As is where is" clause does not excuse suppression. Sale certificate must reflect actual transferable extent.

4. 22. The impugned order, therefore, contradicts judicial discipline and the spirit of the RDDB Act, whose objective is not only speedy recovery for banks but also protection of bona fide purchasers who participate in judicial sales in good faith. This is not a private sale, this is a judicial sale conducted through Recovery Officer under RDB Act and such sale carries, presumption of legality, duty of complete disclosure, obligation of clear title.

5. 23. The interest awarded by the Ld. Recovery Officer vide order dated 24.10.2025 is compensatory and justified. The purchaser deposited 15,00,000/- in full compliance but the Bank failed to deliver possession. Vide order dated 10.07.2025, amount was placed in High Interest Fixed Deposit TDR no 8080557989 from 10

July - 24 Oct 2025 (Total 75 Days) as deliberate judicial safeguard, clearly reflecting that the Learned Recovery Officer treated the interest component as a penalty for statutory violations and misrepresentation, and not as ordinary interest. The attempt of the Appellant Bank to now re-characterize this penal consequence as "unjust interest" is dishonest, misleading, and contrary to the factual and legal record.

24. The order of the Learned Recovery Officer, resting as it does on record, reason, and fairness, calls for affirmation.

25. Heard Ld. Counsel for appellant and auction purchaser in person.

26. In this matter, the appellant bank has approached this Tribunal against the award of interest, awarded by Ld. Recovery Officer concerned in favour of auction purchaser vide order dated 24.10.2025 in R.C. No. 122 of 2019, Bank of India v. M/s Gayatri Trading and others in relation to setting-aside auction sale due to deficiency in area on spot in comparison to documents, on the basis of which property was auctioned in recovery proceedings..

27. The appellant bank has taken plea that the auction purchaser has not taken physical possession of auctioned property due to lesser area in comparison to sale certificate. The accurate area was not in the knowledge of certificate holder at the time of taken action for recovery through auction sale. The auction money was not transferred to certificate holder and kept in fixed deposit form by Ld. Recovery Officer. The appellant cannot be liable for payment of interest in relation to amount in question never held or utilized by the certificate holder.

28. The auction purchaser has filed objections and stated that the order dated 24.10.2025 passed by the Ld. Recovery Officer is reasoned, evidence based and in consonance with statutory provisions of SARFAESI Act and RDDB Act. The auction purchaser never sought cancellation of auction and relied on Leelamma Mathew Vs Indian Overseas Bank (2022).

29. Again in objection stated that the interest awarded by Ld. Recovery Officer dated 24.10.2025 is compensatory and justified.

**DEBTS RECOVERY TRIBUNAL, DEHRADUN**

30. The objection filed by the respondent auction purchaser has shown that the auction purchaser is satisfied with the order passed by Ld. Recovery Officer in relation to auction money for refund and as stated that the order passed by Ld. Recovery Officer is justified and reasoned, not challenge the said order also. So other version of objection has no relevance in the light of statement made by auction purchaser in relation to order in question.

31. In Mrs. Leelamma Mathew Vs M/s Indian Overseas Bank & ors., Civil Appeal No. 7128 of 2022 decided on 17^th November 2022, the appellant/auction purchaser has taken physical possession of the property on basis of sale certificate and after that filed civil suit for recovery of damages/compensation in relation to deficient area. In the case in hand, the respondent auction purchaser has not taken possession of the property auctioned due to total area was not existed as per sale certificate and also stated in relation to order for refund passed by Ld. Recovery Officer is justified. Hence there is no prejudice to the respondent auction purchaser by the said order as supported in objection. The auction in Mrs. Leelamma Mathew's case (supra) has taken place in 2007 and was of different nature.

32. The Hon'ble Supreme Court in Vinay Kumar Sharma Vs The Improvement Trust & Anr, SLP No. 24811 of 2025 decided on 16^th January 2026 has awarded interest @9% per annum from the date of deposit. The said auction has taken place in 2021.

33. After considering the whole of the situation of the case in hand and version of the parties in the light of principles laid down by Hon'ble Supreme Court, the order passed by Ld. Recovery Officer concerned is liable to be modified.

34. Hence the order passed by Ld. Recovery Officer is modified as under:

The respondent auction purchaser is entitled for interest @ 9% per annum simple from the date of deposit till the date of refund. As the amount has already been refunded as per order passed by the Ld. Recovery Officer, which was in the form of FDR. The appellant bank after adjustment of amount of interest already paid to the respondent auction purchaser with auction money accrued on the basis of fixed deposit, shall repay the rest amount of interest @9% per annum simple within a period of 45 days from the judgment of this appeal.

The appeal is disposed off accordingly.

No order as to cost.

Interim order, if any, vacated. All interim applications are also disposed off.

***If any party is not satisfied with this judgment, may approach Hon'ble Debts Recovery Appellate Tribunal, Allahabad.***

Record be consigned.

Copy of this order be sent to Ld. Recovery officer concerned with file of Recovery certificate for further compliance immediately.

**Date: 03.06.2026**

(Umesh Kumār Sharma) Presiding Officer DRT, Dehradun