M/S. R.S. INFRA-TRANSMISSION LTD. versus SAURININDUBHAI PATEL AND ORS. on 11 July 2022

930

SUPREME COURT REPORTS

[2022] 6 S.C.R.

M/S. R.S. INFRA-TRANSMISSION LTD.

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v.

SAURININDUBHAI PATEL AND ORS.

(Civil Appeal No. 3469 of 2022)

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JULY 11, 2022

[M. R. SHAH AND B. V. NAGARATHNA, JJ.]

Income Tax Act, 1961: Second Schedule, r. 60 – ApplicationCto set aside sale of immovable property on deposit – Right availableto the judgment debtor u/r. 60 – Held: Is a valuable right and thelast resort/opportunity to the judgment debtor to save his property– It is a right available to the judgment debtor after his property issold in a court auction – Such a valuable right available to thejudgment debtor to save his property should not be affected on theDtechnical ground and/or for the mistake and/or the bona fide mistakefor which he was not at all responsible – On facts, judgment debtorfiled an application u/r 60 to set aside the auction sale and incompliance thereof, deposited the amount, and the application wasallowed by the Recovery Officer as also by DRAT which had setEaside the sale in favour of the auction purchasers – However, theHigh Court while dismissing the application by the judgment debtoru/r. 60 holding that as there was a shortfall in the deposit of theamount while exercising the right u/r. 60, quashed and set aside theorder passed by the DRAT and the Recovery Officer – High Courtdid not at all appreciate and consider the fact that for the inaccuracyFand/or mistake on the part of the Recovery Officer, the judgmentdebtor cannot be made to suffer for no fault of his – When thesubstantial amount was deposited, there was no reason for thejudgment debtor not to deposit the shortfall, which as such can besaid to be very meagre amount – As and when the judgment debtorGwas made aware about the shortfall, immediately, the shortfallamount was deposited by the judgment debtor – Thus, the orderpassed by the High court is unsustainable, and is quashed and setaside, and that of the DRAT is restored – Recovery of Debts due toBanks and financial Institutions Act, 1993 – ss. 25 to 29.

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Allowing the appeal, the Court

Conclusion

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Allowing the appeal, the Court

HELD: 1.1 In the sale certificate, the amount mentionedwas Rs.1,27,30,527/- including interest as on 30.06.2006. Thejudgment debtor while exercising the right under Rule 60deposited Rs.1,27,30,527/- alongwith Rs. 6,75,000/- for paymentto the purchaser as penalty, a sum equal to 5% of the purchasemoney and also further deposited Rs. 3,01,290/- towards interest@ 15% from the date of sale proclamation to the date of depositi.e., 25.01.2007. However, it was the case on behalf of the auctionpurchasers that there was a shortfall in not making the paymentof interest from 30.06.2006 to 25.01.2007. However, it is requiredto be noted that as such it was the duty cast upon the RecoveryOfficer to mention the exact amount in the sale certificate. TheRecovery Officer mentioned the amount in the Sale Certificateof Rs.1,27,30,527/- including the interest as on 30.06.2006,however, did not specify any further amount towards the interestfor the period between 30.06.2006 till the date of the saleproclamation, i.e., 08.01.2007, which the Recovery Officer oughtto have mentioned specifically. The said mistake and/orinaccuracy on the part of the Recovery Officer led to the shortfallin the deposit of the amount, which was towards the interest forthe period between 30.06.2006 to 08.01.2007, otherwise, thejudgment debtor had substantially complied with Rule 60. Theshortfall was Rs.3,57,647/-. When the judgment debtor depositedthe substantial amount of Rs. 1,27,30,527/- and other amountsdue and payable under Rule 60 including the penalty and theinterest, there was no reason for the judgment debtor not todeposit Rs. 3,57,647/- which is a very small amount as againstthe amount deposited. At this stage, it is required to be notedthat though the Bank filed its reply before the Recovery Officerin response to the application made by the judgment debtor -borrower made under Rule 60 and in which it was stated thatthere was some shortfall in the amount deposited, but accordingto the judgment debtor, no calculation sheet was attached to thereply and/or supplied to the judgment debtor. [Para 6.1][944-G-H; 945-A-E]

1.2 At the time of hearing of the application under Rule 60,a grievance was made before the Recovery Officer as to why the A

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ABank had not served a copy of the calculation sheet and in themeantime, the judgment debtor had himself deposited a furthersum of Rs.2.80 lakhs towards the difference in calculation, if any.The Recovery Officer directed the Bank to supply the calculationsheet and the Bank submitted the calculation sheet before theRecovery Officer on 12.02.2007 and on that day, a sum ofBRs.77,647/- was the shortfall, which the judgment debtordeposited on the very next day, i.e., on 13.02.2007. If the Bankwould have submitted the calculation sheet earlier alongwith thereply on 06.02.2007, which was 29th day from the date of auction,the judgment debtor would have deposited the balance shortfallCamount. Therefore, in the facts and circumstances of the case,there was a substantial compliance of Rule 60. If the RecoveryOfficer would have been accurate in submitting the exact amountin the sale proclamation due and payable on the date of saleproclamation then the said eventuality would not have arisen.There was an absurd misconduct on the part of the RecoveryDOfficer for which the judgment debtor should not be made tosuffer. [Para 6.2][945-E-H; 946-A]

1.3 The right available to the judgment debtor under Rule60 is a valuable right and the last resort/opportunity to thejudgment debtor to save his property. It is a right available to theEjudgment debtor after his property is sold in a court auction.Therefore, such a valuable right available to the judgment debtorto save his property should not be affected on the technical groundand/or for the mistake and/or the bona fide mistake for which hewas not at all responsible. [Para 6.3][946-B-C]F

1.4 The submission on behalf of respondent Nos. 1 and 2that according to the Bank, a sum of Rs.4.63 lakhs was the balanceamount due and payable against which even subsequently theborrower has deposited Rs. 3,57,647/- and thus, still there is ashortfall is concerned, has no substance. On deposit of the amountGof Rs. 3,5,7647/-, (Rs.2,80,000/- + Rs.77,647/-) as on 13.02.2007,the Recovery Officer directed the Bank to hand over the originaldocuments pertaining to the impugned properties and filecompliance affidavit and thereafter the Bank was allowed toappropriate the decretal amount deposited by the judgment debtor H

and that on 19.02.2007 itself, the Bank complied with the orderpassed by the Recovery Officer and handed back to the judgmentdebtor the documents pertaining to the properties in questionand requested to release the amount deposited, which came tobe allowed by the Recovery Officer. At that time, no dispute wasraised by the Bank that any further amount was due and payable.The Bank was satisfied with the deposit of the amount by thejudgment debtor. [Para 6.5][946-F-H; 947-A]

1.5 The High Court erred in quashing and setting asidethe order passed by the DRAT and the Recovery Officer by whichthe Recovery Officer and the DRAT set aside the sale in favourof the auction purchasers. The view taken by the High Court istoo technical. The High Court did not at all consider the facts inits true perspective. The High Court did not at all appreciate andconsider the fact that for the inaccuracy and/or mistake on thepart of the Recovery Officer, the judgment debtor cannot be madeto suffer for no fault of his. The High Court also did not properlyappreciate and consider the valuable right available to thejudgment debtor under Rule 60. When the substantial amountwas deposited, there was no reason for the judgment debtor notto deposit the shortfall, which as such can be said to be verymeagre amount. As and when the judgment debtor was madeaware about the shortfall, immediately, the shortfall amount wasdeposited by the judgment debtor. Under the circumstances, theimpugned judgment and order passed by the High court isunsustainable, and is quashed and set aside. The order passedby the DRAT setting aside the auction sale is restored. Theamount deposited by respondent Nos. 1 and 2 would be returnedto them alongwith the interest accrued thereon, if not receivedby them so far. To do the substantial justice, the appellant isdirected to pay a further sum of Rupees Ten Lakhs to respondentNos. 1 and 2 by Demand Draft within the stipulated period. [Para7, 8][947-B-G]

Gajadhar Prasad v. Babu Bhakta Ratan (1973) 2 SCC629 : [1974] 1 SCR 372; Hotel Paras Garden, Balapur& Anr. v. Central Bank of India, Balapur & Ors. (2015)SCC Online Bom 3398; M/s. National Rice and GeneralMills, Jagraon and Ors. v. Bank of India and Ors.

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AC.W.P. No. 19113 of 2005; Commissioner of CentralExcise, New Delhi v. Hari Chand Shri Gopal and Ors.(2011) 1 SCC 236 : [2010] 13 SCR 820; ExciseCommissioner & Ors. v. Ajith Kumar and Anr. (2008) 5SCC 495 : [2008] 6 SCR 778 – referred to.

Case Law Reference

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CCIVIL APPELLATE JURISDICTION: Civil Appeal No. 3469of 2022.

From the Judgment and Order dated 22.12.2015 of the High Courtof Gujarat at Ahmedabad in Special Civil Application No.17981 of 2015.

Guru Krishnakumar, Dhruv Mehta, Huzefa Ahmadi, Sr. Advs.,DKuriakose Varghese, Rajendra K. Salecha, V. Shyamohan, DheerajVerma, Surya Prakash, Ms. Astu Khandelwal, Martin Geomin George,Neeraj Shekhar, Ashutosh Thakur, Dr. Sumit Kumar, Keith Varghese,Abhishek Pandey, Hemant Kumar Sunny, Keshav Baheti, M/s. S. M.Jadhav and Company, Pranab Kumar Mullick, Mrs. Soma Mullick, SebatEKumar Deuria, Nikhil Goel, Anirudha Deshmukh Advs. for the appearingparties.

The Judgment of the Court was delivered by

M. R. SHAH, J.

F1. Feeling aggrieved and dissatisfied with the impugned judgmentand order dated 22.12.2015 passed by the High Court of Gujarat atAhmedabad in Special Civil Application No. 17981 of 2015 by which theHigh Court has allowed the said petition preferred by the respondentNos. 1 and 2 herein – original writ petitioners before the High Court andhas set aside the order passed by the Debts Recovery Appellate Tribunal,GMumbai (hereinafter referred to as “DRAT”) dated 07.09.2015 in AppealNo. 223 of 2007 and has consequently confirmed the sale in favour ofthe original writ petitioners, respondent No.5 – subsequent purchaser –M/s. R.S. Infra-Transmission Ltd. has preferred the present appeal.

2. The facts leading to the present appeal in nutshell are as under:- H

2.1 A Bank namely, IndusInd Bank Ltd. (hereinafter referred toas the “Bank”) filed an O.A. bearing No. 424 of 1999 before the DebtRecovery Tribunal, Ahmedabad (hereinafter referred to as “DRT”) on25.05.2006 for recovery of debt and enforcement of security against theoriginal respondent Nos. 3 to 5 (original borrowers). Recovery Certificatebearing RP No.153/2006 was issued in favour of the Bank for recoveryof an amount of Rs.71,88,819.87/- recoverable from the original borrowers- respondent Nos. 3 to 5 with further interest payable at the rate of 12%p.a. from 27.12.1999 till realization and the costs, charges and expensesof the proceedings for recovery thereof.

2.2 The immovable properties, being Survey No.188/Padmeasuring 36,735 square meters owned by respondent No.3 (borrower)and Survey No.187/P admeasuring 8280.51 square meters owned byrespondent No.5 (borrower) situated at Mauje Karan Nagar, Tehsil Kadi,District Mehsana got attached in pursuance of the above RecoveryOrder/Certificate.

2.3 A proclamation of sale of the properties came to be issued bythe Recovery Officer, DRT on 28.11.2006 fixing the public auction on08.01.2007. As per the proclamation of the sale, the amount due andpayable was Rs.1,27,30,527/- including interests as on 30.06.2006. Inthe auction held on 08.01.2007, the bid of respondent Nos. 1 and 2 herein(original writ petitioners) being the highest offer being Rs.1.35 crorescame to be accepted by the Recovery Officer. The successful bidders –respondent Nos. 1 and 2 herein deposited the bid amount on 22.01.2007.

2.4 That the original borrowers thereafter filed an application underRule 60 of the Second Schedule of the Income Tax Act, 1961 read withSections 25 to 29 of the Recovery of Debts due to Banks and FinancialInstitutions Act, 1993 for setting aside the above auction vide applicationdated 25.01.2007 and submitted a Demand Draft for an amount ofRs.1,27,30,527/- as specified in the sale proclamation. Respondent No.3herein (borrower) also submitted a Demand Draft for Rs.6,75,000/- forpayment to the purchaser as penalty, a sum equal to 5% of the purchasemoney and a Demand Draft for Rs.3,01,290/- towards interest @ 15%from the date of the sale proclamation to the date of deposit, i.e.,25.01.2007. The Recovery Officer adjourned the matter to 06.02.2007directing the respondents to serve a copy of the order and the applicationon the Bank and the auction purchaser. In the meantime, the appellantherein expressed its interest in purchasing the properties which were A

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Athe subject matter of the auction sale and entered into a Memorandumof Understanding with respondent No.3 (borrower).

2.5 The Bank filed its reply on 06.02.2007 before the RecoveryOfficer in response to the application of the respondent No.5 (on the29[th] day from the date of auction). In its reply, the Bank claimed thatBthere was some shortfall in the amount deposited by the borrower but nocalculation sheet was attached to the reply. The matter was adjournedfor filing of reply by the auction purchaser and the Bank was also directedto file compliance affidavit. The auction purchasers - respondent Nos. 1and 2 herein filed its objection/reply to the application. The borroweralso filed its rejoinder to the reply filed by the Bank. The matter gotCadjourned to 15.02.2007 with the following order passed by the RecoveryOfficer:- •“………..the bank had still not served the copy of thecalculation sheet.

D•“Further, he submits a DD for an amount of Rs.2.80 lacstowards difference in calculations, if any. He farther submitsthat the CH Bank be directed to serve a copy of the calculationsheet on the CDs, so that, any further difference in interest,etc. in calculation may be paid. Request is allowed. CH Bankis again directed to serve a· copy of the calculation sheet onEthe CDs, so that, the CDs may be able to pay the differencein payment, if any.’’

2.6 Thereafter, the Bank submitted a calculation sheet before theRecovery Officer on 12.02.2007. According to the calculation sheet, theborrower - respondent No.3 deposited a further sum of Rs.77,647/- withFthe Recovery Officer, which was over and above Rs. 2.80 lakhs depositedas per the order dated 15.02.2007. The Recovery Officer thereafterpassed an order dated 15.02.2007 allowing the application submitted bythe respondent No.3 – borrower by holding that the borrower haddeposited the requisite amount for setting aside the sale under Rule 60Gof the Second Schedule of the Income Tax Act. Accordingly, the sale ofthe properties in question came to be set aside. The Recovery Officeralso directed the Bank to hand over all the original documents pertainingto the immovable properties in question to the borrower immediately. Incompliance of the order passed by the Recovery Officer, the Bank handedback to the original borrowers the documents pertaining to the propertiesH

in question on 19.02.2007 and on release of the documents, the requestof the Bank to release the amount deposited was allowed by the RecoveryOfficer. Immediately on 19.02.2007 itself, the borrowers – respondentNos.3 to 5 herein executed two sale deeds in favour of the appellantherein for a sale consideration of Rs.1,40,89,855/-. That after the saledeeds were executed in favour of the appellant dated 19.02.2007, theauction purchasers – respondent Nos. 1 and 2 preferred an appeal bearingNo.11 of 2007 before the DRT, Ahmedabad on 20.02.2007.

2.7 The DRT Ahmedabad by order dated 18.05.2007 allowed thesaid Appeal No.11 of 2007 and set aside the order passed by the RecoveryOfficer passed in Recovery Proceedings No.153 of 2006. The borrowersthen preferred the appeal bearing No.233 of 2007 before the DRAT,Mumbai against the order dated 18.05.2007 passed by the DRT in AppealNo.11 of 2007. The appellant herein moved an application bearing M.A.No.704 of 2007 seeking impleadment in Appeal No.223 of 2007.

2.8 Prior to the borrower preferring Appeal No.223 of 2007,respondent Nos.1 and 2 herein moved an application before the RecoveryOfficer on 31.05.2007 for seeking a direction to the appellant to maintainstatus quo over the properties in question and to appoint the receiver totake possession of the same from the appellant. The said applicationcame to be rejected by the Recovery Officer vide order dated 31.05.2007.Against the order passed by the Recovery Officer dated 31.05.2007,rejecting the application seeking status quo order in regard to the propertiesin question, respondent Nos. 1 and 2 herein preferred appeal before theDRT being Appeal No. 34 of 2007, which came to be dismissed by theorder dated 08.02.2008. Thereafter respondent Nos. 1 and 2 herein filedan Appeal No.43 of 2008 before the DRAT, Mumbai against the orderdated 08.02.2008.

2.9 Further, respondent Nos. 1 and 2 moved cross objections inAppeal No.223 of 2007 aggrieved by certain observations in the orderdated 18.05.2007 pertaining to the right of redemption of the mortgagerstill the time conveyance is not executed in favour of the successful auctionpurchaser.

2.10 By order dated 07.09.2015, the DRAT, Mumbai allowedAppeal No.223 of 2007 preferred by the borrowers and set aside theauction sale dated 08.01.2007, which was in favour of the respondentNos. 1 and 2 herein.

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A2.11 Feeling aggrieved and dissatisfied with the order passed bythe DRAT, Mumbai dated 07.09.2015, allowing the Appeal No.223 of2007 and setting aside the auction sale, respondent Nos. 1 and 2 herein(the auction purchasers) preferred the writ petition before the High Courtbeing Special Civil Application No.17981 of 2015. By the impugnedjudgment and order, the High Court has allowed the said writ petitionBand has quashed and set aside order dated 07.09.2015 passed by theDRAT, Mumbai in Appeal No.223 of 2007 and consequently confirmedthe sale in favour of respondent Nos. 1 and 2 herein (the auctionpurchasers).

2.12 Feeling aggrieved and dissatisfied with the impugned judgmentCand order passed by the High Court, the subsequent purchaser -respondent No.5 – M/s. R.S. Infra-Transmission Ltd. has preferred thepresent appeal.

3. Shri Guru Krishnakumar, learned Senior Advocate appearingon behalf of the appellant – subsequent purchaser has vehementlyDsubmitted that in the present case, as such, the appellant can be said tobe a bona fide purchaser, who purchased the property in question onpayment of full sale consideration. It is submitted that at the time whenthe appellant purchased the properties in question, the judgment debtorhad already exercised the rights under Rule 60 of the Second ScheduleEof the Income Tax Act, 1961 and after the Recovery Officer passed theorder in favour of the Judgement Debtor and directed the Bank to handover the original documents pertaining to the properties in question andat the time when the appellant purchased the properties in question, thedocuments pertaining to the properties in question were handed back tothe judgment debtor. It is submitted that therefore as such any subsequentForder cannot defeat the rights of the appellant, who is a bona fidepurchaser, who purchased the properties in question pursuant to the orderpassed by the Recovery Officer dated 15.02.2007.

3.1 On merits, the learned Senior Advocate appearing on behalfof the appellant has vehemently submitted that if at all there was anyGmistake in the proclamation, in not mentioning the correct amount dueand payable by the judgment debtor, it was that of the Recovery Officer.It is submitted that therefore, any lacuna in the proclamation would notdefeat the rights of the judgment debtor when the judgment debtor actedin a bonafide manner and deposited the entire amount mentioned in theHproclamation of sale.

3.2 It is submitted that in the present case, the judgment debtordeposited the amount specified in the sale proclamation, i.e.,Rs.1,27,30,527/- alongwith 5% of the purchase money as penalty forpayment to the auction purchaser and 15% interest from the date of saleproclamation till the date of deposit as per Rule 60. In fact, an additionalsum of Rs.2.80 lakhs was also paid on 09.02.2007 (anticipated shortfall)and further a sum of Rs.77,647/- on 13.02.2007 towards the purportedshortfall (after being supplied with the calculation sheet by the Bank).

3.3 It is further submitted that the judgment debtor had on25.01.2007 (about 17 days after auction) preferred an application underRule 60 of the Second Schedule of the Income Tax Act, 1961 seeking toset aside the auction sale and he, in compliance thereof, had depositedthe amount as above. It is submitted that the Bank filed its reply beforethe Recovery Officer on 06.02.2007 and in its reply, the Bank claimedthat there was some shortfall in the amount deposited by the judgmentdebtor but no calculation sheet was supplied. It is submitted that thesame was on the 29[th] day from the date of auction. That if, on 06.02.2007,the Bank would have submitted the calculation sheet and would havepointed out the shortfall in the amount deposited by the judgment debtor,the latter would have deposited the balance shortfall amount on the29[th] day itself, i.e., within 30 days. That however, the bank submitted thecalculation sheet before the Recovery Officer on 12.02.2007 andimmediately on the very next day, i.e., 13.02.2007, the judgment debtordeposited Rs.77,647/-, which was the shortfall as per the calculationsheet. Therefore, it can be said that the judgment debtor had substantiallycomplied with the Rule 60.

3.4 It is submitted that the provisions of the statute and thelegislative intent embodied in Rule 60 of the Second Schedule of theIncome Tax Act, 1961 provides a course of last resort to the judgmentdebtor to save his property. That once Rule 60 is exercised in letter andspirt, then the rights of the judgment debtor are crystallized andcorrespondingly, the rights of the auction purchaser reach a vanishingpoint. That the salient objective of Rule 60 is to provide a judgmentdebtor a last and final opportunity to save/retain his asset. It is urged thatsuch right should not be defeated on a highly pedantic and hyper technicalconstruction. Therefore, in the facts and circumstances of the case, theHigh Court ought to have appreciated that in the present case, thejudgment debtor had complied with Rule 60 in letter and spirit.

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A3.5 It is contended that in the present case, the Recovery Officerought to have specifically mentioned the exact amount due and payablein the sale proclamation. That it was the Recovery Officer, who wasrequired to determine the entire amount alongwith the interest, whichwas due till the date of issuance of the proclamation. It is submitted thatthe Recovery Officer would be in a better position to know the actualBvalue of the property and to indicate the correct upset price.

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3.6 It is urged that it is the duty of the Recovery officer to applyhis mind for determining all the necessary particulars that should beinserted in the proclamation of sale. Reliance is placed on the decisionof this Court in the case of Gajadhar Prasad Vs. Babu Bhakta Ratan,C(1973) 2 SCC 629.

3.7 It is submitted by learned senior counsel that in the presentcase, at the most, it can be said that there was an ambiguity in the saleproclamation to extent that in the sale proclamation, it was mentionedthat the amount due and payable is Rs.1,27,30,527/- including interestsDas on 30.06.2006. That however, it was the duty cast upon the RecoveryOfficer to mention the exact amount alongwith interest as interest ispaid upto the date of sale proclamation. Therefore, the judgment debtorhas virtually believed that he is required to deposit a sum of Rs.1,27,30,527/- and therefore, he deposited the same alongwith 5% of the purchaseEmoney as penalty for payment to the auction purchaser and 15% interestfrom the date of sale proclamation till the date of deposit. However,there was a shortfall of Rs.77,647/- towards the interest for the periodbetween 30.06.2006 to 08.01.2007, which the judgment debtor depositedas soon as he was informed by the Bank.

F3.8 It is further submitted that a mistake/inaccuracy in the amountspecified in the proclamation, as recovery through sale was ordered,cannot prejudice the application filed under Rule 60. That a person, whomakes an application under Rule 60 cannot be made to suffer due to thefault/shortfall, if any, in the computation of the amount sought to berecovered. It is submitted that the applicant is bound to go by the amountGspecified in the proclamation. That the borrower/judgment debtor cannotbe caused to suffer on account of a mistake on the part of the Court/Executing Officer/Recovery Officer.

3.9 It is further submitted that Rule 60 is to be read with Rule 53.That as per Rule 60, an application to set aside a sale/auction must beH

made to the Recovery Officer by depositing, inter alia, the amountspecified in the proclamation, as that with the recovery of which the salewas ordered. That as per Rule 53, the proclamation shall be drawn bythe Tax Recovery Officer, after notice to the defaulter. The proclamationshall state the time and place of sale and shall specify as fairly andaccurately as possible the amount for the recovery of which the sale isordered. It is submitted that therefore the legislative intent is that theamount to be specified in the proclamation of sale must be a fair estimateof the amount due from the borrowers. That once the provision providesthat a specific amount prescribed in the proclamation is to be depositedand the same is deposited, it would be unjust to hold that the provisionshave not been complied with. It is submitted that an applicant/judgmentdebtor cannot be compelled to deposit any unspecified demands.

3.10 It is further submitted by the learned senior counsel appearingon behalf of the appellant that even the bona fides of the judgment debtorare also required to be considered. That in the present case, the auctionof the subject properties took place on 08.01.2007. On the 17[th] day ofthe auction sale, the borrower filed the requisite application under Rule60 and deposited the amount specified in the proclamation alongwithother amounts to be deposited under Rule 60, i.e., interest @ 15% p.a.from the proclamation of date of sale to the date when the deposit ismade and a sum equal to 5% of the purchase money as penalty. That on28[th]/29[th] day of the auction, the Bank filed its reply to the applicationunder Rule 60. However, in its reply, the bank did not specifically statethe exact amount of shortfall. That upon the request of the borrowers,vide order dated 09.02.2007, the Recovery Officer directed the Bank toserve a copy of the calculation sheet so that the judgment debtor may beable to pay the amount of difference, if any. In fact, even without waitingfor the supply of the calculation sheet, the borrower deposited Rs.2.80lakhs in anticipation of the shortfall. Subsequently, the Bank submittedthe calculation sheet on 12.02.2007 and it was found that an amount ofRs.77,647/- was the shortfall. Therefore, immediately on the very nextday, i.e., 13.02.2007, the judgment debtor deposited the shortfall amount,i.e., Rs.77,647/- with the Recovery Officer. It is submitted that therefore,all throughout the judgment debtor acted promptly and in a bonafidemanner. Therefore, it cannot be said that there was any deliberate and/or wilful non-compliance of the provisions of Rule 60, which defeats thevaluable right of the judgment debtor provided under Rule 60.

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A3.11 It is further submitted by the learned counsel appearing onbehalf of the appellant that the provisions of Rule 60 ought to be interpretedin favour of the borrower liberally, as it is the last chance to save hisproperty without assigning any cause. Reliance is placed upon the decisionof Bombay High Court in the case of Hotel Paras Garden, Balapur& Anr. Vs. Central Bank of India, Balapur & Ors., 2015 SCCBOnline Bom 3398.

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3.12 Relying upon the decision of the Punjab & Haryana HighCourt in the case of M/s. National Rice and General Mills, Jagraonand Ors. Vs. Bank of India and Ors., C.W.P. No. 19113 of 2005, itis submitted that as observed and held by the High Court while consideringCcompliance of Rule 60, the Court has to consider, firstly, that the deposithas been made in compliance of Rule 60 with regard to the deposit ofthe money and then, to see, whether, such irregularity, which has surfacedhas caused any substantial injury to the objector.

3.13 It is submitted that in any case, there has been substantialDcompliance of Rule 60. From the aforesaid facts, it can be seen that theborrower has substantially complied with the provisions of Rule 60 so asto accomplish the reasonable objectives for which the provision waspassed. Reliance is placed upon the decision of this Court in the case ofCommissioner of Central Excise, New Delhi Vs. Hari Chand ShriEGopal and Ors., (2011) 1 SCC 236 and Excise Commissioner &Ors. Vs. Ajith Kumar and Anr., (2008) 5 SCC 495.

3.14 It is submitted that in the present case, the alleged deficitamount was nominal and in fact was due to the mistake on the part ofthe Recovery Officer in specifying the accurate amount for the recoveryFof which the sale was ordered. Therefore, the right of the borrower tosave his property conferred under Rule 60 can be said to be a valuableright and the same shall not be affected on the technical ground and/orshould not be made to suffer due to the mistake on the part of theRecovery Officer.

3.15 It is further submitted on behalf of the learned counselGappearing on behalf of the appellant that the right of redemption ofmortgage under Section 13(8) of the Securitization and Reconstructionof Financial Assets and Enforcement of Security Interest Act, 2002 is toenable the borrower to protect his constitutional right guaranteed underArticle 300A of the Constitution of India. That in fact the borrower’sHright to redeem his property survives till there has been completion of the sale by the mortgagee, i.e., the bank by registered deed. That in thepresent case, the auction sale was not confirmed in favour of the auctionpurchasers as the title and ownership of the subject property has beencrystallised in favour of the appellant and sale deeds have been executedand registered in favour of the appellant.

3.16 Making the above submissions, it is prayed to allow the presentappeal and quash and set aside the impugned judgment and order passedby the High Court.

4. Present appeal is vehemently opposed by learned counselappearing on behalf of the respondent Nos. 1 and 2. It is submitted bythe learned counsel appearing on behalf of respondent Nos. 1 and 2 –auction purchasers that in the present case, the Hon’ble High Court hasrightly observed and held that there was a non-compliance of Rule 60, inas much as, the entire amount mentioned in the sale proclamation wasnot deposited and there was a shortfall.

4.1 That in the present case, in the said proclamation itself, it wasmentioned that as on 30.06.2006, the amount due and payable would beRs.1,27,30,527/- including interest. Therefore, it was for the borrower tocalculate and deposit the amount alongwith the interest onRs.1,27,30,527/- from the date of recovery certificate till the date ofdeposit. It is contended that it is an admitted position that the borrowerdeposited a sum of Rs.1,27,30,527/- only and did not deposit the interestfrom the date of recovery certificate till the actual deposit. Therefore,there was a shortfall and hence, it can be said that there was non-compliance of Rule 60.

4.2 It is further submitted that in the present case, the notice onthe application under Rule 60 was issued on 06.02.2007 itself, whichwas within 30 days as contemplated by Rule 60. That on the returnabledate, the Bank filed a reply pointing out that the amount paid by thejudgment debtor was less than what was required to be paid and annexeda calculation sheet. It is submitted that despite the fact that the judgmentdebtor was having knowledge about what was the shortfall, he made astatement before the DRT that he was not aware of the amount/difference claimed by the Bank and offered to pay Rs. 2.8 lakhs and nobasis of the said amount was shown. It is submitted that this attemptwas clearly dishonest. That according to the Bank, Rs. 4.63 lakhs wasoutstanding, which the borrower refused to pay. Therefore, the amount, A

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Awhich was due and payable was Rs. 4.63 lakhs, which was not depositedby the judgment debtor. That as there was a breach of Rule 60, the HighCourt has not committed any error.

4.3 It is further submitted by the learned counsel appearing onbehalf of respondent Nos. 1 and 2 – auction purchasers that even theBacquisition is also in favour of the respondents. It is submitted thatrespondent Nos. 1 and 2 have deposited a sum of Rs. 1.35 crores in2007. It is urged that the land in question is a very valuable land so far asthe respondent Nos. 1 and 2 are concerned, as they purchased the landthrough Court auction for their business purpose as it already has afactory adjacent to this plot of land. That on the other hand, the appellantCis a buyer by an internal agreement between the borrower and theappellant whereas the auction purchaser bought it by auction in courtand by following due process of law. It is submitted that even the borrowerand the appellant did not wait for the appeal period against the orderpassed by the Recovery Officer and the appellant and the borrower Dexecuted the sale deeds without waiting for appeal period to defeat therights of auction purchaser.

4.4 Making the above submissions, it is prayed to dismiss thepresent appeal.

5. We have heard the learned counsel appearing for the respectiveEparties at length.

6. At the outset, it is required to be noted that by the impugnedjudgment and order, the High Court has set aside the order passed bythe DRAT and has confirmed the sale in favour of respondent Nos. 1and 2 – auction purchasers by dismissing the application submitted byFthe judgment debtor under Rule 60 of the Second Schedule of the IncomeTax Act, 1961 by observing that as there was a shortfall in the deposit ofthe amount while exercising the right under Rule 60 and hence, therewas non-compliance of the provisions of Rule 60.

6.1 However, it is required to be noted that in the sale certificate,Gthe amount mentioned was Rs.1,27,30,527/- including interest as on30.06.2006. The judgment debtor while exercising the right under Rule60 deposited Rs.1,27,30,527/- alongwith Rs. 6,75,000/- for payment tothe purchaser as penalty, a sum equal to 5% of the purchase money andalso further deposited Rs. 3,01,290/- towards interest @ 15% from thedate of sale proclamation to the date of deposit i.e., 25.01.2007. However,H

it was the case on behalf of the auction purchasers that there was ashortfall in not making the payment of interest from 30.06.2006 to25.01.2007. However, at this stage, it is required to be noted that as suchit was the duty cast upon the Recovery Officer to mention the exactamount in the sale certificate. The Recovery Officer mentioned theamount in the Sale Certificate of Rs.1,27,30,527/- including the interestas on 30.06.2006, however, did not specify any further amount towardsthe interest for the period between 30.06.2006 till the date of the saleproclamation, i.e., 08.01.2007, which the Recovery Officer ought to havementioned specifically. The aforesaid mistake and/or inaccuracy on thepart of the Recovery Officer led to the shortfall in the deposit of theamount, which was towards the interest for the period between30.06.2006 to 08.01.2007, otherwise, the judgment debtor had substantiallycomplied with Rule 60. The shortfall was Rs.3,57,647/-. When thejudgment debtor deposited the substantial amount of Rs. 1,27,30,527/-and other amounts due and payable under Rule 60 including the penaltyand the interest, there was no reason for the judgment debtor not todeposit Rs. 3,57,647/- which is a very small amount as against the amountdeposited. At this stage, it is required to be noted that though the Bankfiled its reply before the Recovery Officer in response to the applicationmade by the judgment debtor - borrower made under Rule 60 and inwhich it was stated that there was some shortfall in the amount deposited,but according to the judgment debtor, no calculation sheet was attachedto the reply and/or supplied to the judgment debtor.

6.2 At the time of hearing of the application under Rule 60 on09.02.2007, a grievance was made before the Recovery Officer as towhy the Bank had not served a copy of the calculation sheet and in themeantime, the judgment debtor had himself deposited a further sum ofRs.2.80 lakhs towards the difference in calculation, if any. The RecoveryOfficer directed the Bank to supply the calculation sheet and the Banksubmitted the calculation sheet before the Recovery Officer on12.02.2007 and on that day, a sum of Rs.77,647/- was the shortfall, whichthe judgment debtor deposited on the very next day, i.e., on 13.02.2007.If the Bank would have submitted the calculation sheet earlier alongwiththe reply on 06.02.2007, which was 29[th] day from the date of auction,the judgment debtor would have deposited the balance shortfall amount.Therefore, in the facts and circumstances of the case, it can be said thatthere was a substantial compliance/compliance of Rule 60. If theRecovery Officer would have been accurate in submitting the exact AB

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Aamount in the sale proclamation due and payable on the date of saleproclamation then the eventuality which has arisen in the present casewould not have arisen. There was an absurd misconduct on the part ofthe Recovery Officer for which the judgment debtor should not be madeto suffer.

B6.3 At this stage, it is required to be noted that the right availableto the judgment debtor under Rule 60 is a valuable right and the lastresort/opportunity to the judgment debtor to save his property. It is aright available to the judgment debtor after his property is sold in a courtauction. Therefore, such a valuable right available to the judgment debtorto save his property should not be affected on the technical ground and/Cor for the mistake and/or the bona fide mistake for which he was not atall responsible.

6.4 The legislative intent of Rule 60 has been dealt with andconsidered in detail by the Bombay High Court in the case of HotelParas Garden, Balapur & Anr. (supra). In the aforesaid case, it isDobserved that the legislative intent of Rule 60 is to give the defaulter asmuch latitude as possible till the end and he can, under Rule 60, withoutassigning any cause but after depositing the sum therein mentioned asmentioned in the sale proclamation within the stipulated time, avoid theauction and protect his property. Thus, the right which is available to theEjudgment debtor under Rule 60 is a most valuable right available and thesame shall not be permitted to be affected on the technical ground and/or bona fide mistake for which he cannot be said to be at fault.

6.5 Now, so far as the submission on behalf of respondent Nos. 1and 2 that according to the Bank, a sum of Rs.4.63 lakhs was the balanceFamount due and payable against which even subsequently the borrowerhas deposited Rs. 3,57,647/- and therefore, still there is a shortfall isconcerned, the aforesaid has no substance. At this stage, it is required tobe noted that on deposit of the aforesaid amount of Rs. 3,5,7647/-,(i.e.,Rs.2,80,000/- + Rs.77,647/-) as on 13.02.2007, the Recovery Officerdirected the Bank to hand over the original documents pertaining to theGimpugned properties and file compliance affidavit and thereafter the Bankwas allowed to appropriate the decretal amount deposited by the judgmentdebtor and that on 19.02.2007 itself, the Bank complied with the orderpassed by the Recovery Officer dated 15.02.2007 and handed back tothe judgment debtor the documents pertaining to the properties in questionHand requested to release the amount deposited, which came to be allowed by the Recovery Officer. At that time, no dispute was raised by theBank that any further amount was due and payable. The Bank wassatisfied with the deposit of the amount by the judgment debtor.

7. In view of the above discussion and for the reasons statedabove, the High Court has committed a grave/serious error in quashingand setting aside the order passed by the DRAT and the Recovery Officerby which the Recovery Officer and the DRAT set aside the sale infavour of the auction purchasers. The view taken by the High Court istoo technical. The High Court has not at all considered the facts narratedhereinabove in its true perspective. The High Court has not at allappreciated and considered the fact that for the inaccuracy and/or mistakeon the part of the Recovery Officer, the judgment debtor cannot bemade to suffer for no fault of his. The High Court has also not properlyappreciated and considered the valuable right available to the judgmentdebtor under Rule 60. As observed and held hereinabove, when thesubstantial amount was deposited, there was no reason for the judgmentdebtor not to deposit the shortfall, which as such can be said to be verymeagre amount. As and when the judgment debtor was made awareabout the shortfall, immediately, the shortfall amount has been depositedby the judgment debtor.

Under the circumstances, the impugned judgment and order passedby the High court is unsustainable and the same deserves to be quashedand set aside.

8. In view of the above and for the reasons stated above, presentappeal succeeds. The impugned judgment and order passed by the HighCourt is hereby quashed and set aside. The order passed by the DRATdated 07.09.2015 setting aside the auction sale dated 08.01.2007 is herebyrestored. The amount deposited by respondent Nos. 1 and 2 shall bereturned to them alongwith the interest accrued thereon, if not receivedby them so far. To do the substantial justice, we also direct that theappellant shall pay a further sum of Rs. 10,00,000/- (Rupees Ten Lakhs)to respondent Nos. 1 and 2 by Demand Draft within a period of fourweeks from today.

Present appeal is allowed accordingly. However, in the facts andcircumstances of the case, there shall be no order as to costs.

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