SMRITI TALKIES Vs. CHANDRA KUMAR GALANI

JUDGEMENT

(1.) The present writ petition has been filed by the petitioner assailing the order dtd. 20/5/2013 passed by the Debts Recovery Appellate Tribunal, Allahabad, whereby the appellate tribunal set aside the order dtd. 30/11/2012 passed by the Debt Recovery Tribunal, Jabalpur, and restored the order dtd. 7/1/2010 passed by the Recovery Officer confirming the auction sale dtd. 2/9/2009.

(2.) Facts of the case in short are that the petitioner Smriti Talkies had availed two loans from respondent No.2 Bank, one on 13/6/1997 for a sum of Rs.13.00 lakhs and another on 25/7/1998 for Rs.3.25 lakhs, aggregating to Rs.16.25 lakhs. On account of default in repayment, the Bank issued a demand notice dtd. 28/03/03 under Sec. 13(2) of the SARFAESI Act, 2002 demanding Rs.24,12,102.00.Thereafter, a possession notice dtd. 12/7/2003 was issued in respect of the secured asset, namely land and building known as Smriti Talkies situated at Khasra No.259/1, Village Dongar Chikhali, Tahsil Parasia, District Chhindwara. In execution proceedings arising out of O.A. Ex. No.92/2004, the Recovery Officer issued an auction sale notice dtd. 23/7/2009, fixing the auction on 2/9/2009 at 12.00 noon with a reserve price of Rs.18.00 lakhs. The auction notice did not specify any closure time for the auction. On the date of auction, objections were submitted by M/s Harikishandas Jaikishan Rathi and Shri Bhagwan Prasad Khandelwal, stating that they were unable to submit demand drafts towards earnest money due to technical difficulties in the respective banks, though they were willing to participate and had offered a higher bid. One of the objectors offered Rs.24.00 lakhs and enclosed demand drafts amounting to Rs.6.8 lakhs. Despite this, the Advocate Commissioner concluded the auction in haste and did not permit the said persons to participate. The auction was finalized in favour of respondent No.1 for Rs.20.00 lakhs, without permitting any other bidder to participate, even though the auction notice did not prescribe any closing time and the objections were submitted during banking hours. Subsequently, on 24/9/2009, the petitioner submitted a proposal for one-time settlement of Rs.25.00 lakhs, enclosing a cheque of Rs.5.00 lakhs, and sought time to deposit the balance. The respondent No.2 Bank itself, vide letter dtd. 29/9/2009, addressed to the Recovery Officer, categorically stated that the auction dtd. 2/9/2009 was conducted in undue haste and requested re-auction, as willing bidders offering higher amounts were not permitted to participate. The petitioner also filed objections before the Recovery Officer on 1/10/2009, contending, inter alia, that the auction price was grossly inadequate, that the market value of the property exceeded Rs.1.00 crore, and that material irregularities were committed in the conduct of auction. Despite objections raised both by the borrower and the Bank, the Recovery Officer, vide order dtd. 7/1/2010, rejected the objections and confirmed the sale in favour of respondent No.1, holding that Rule 61 of the Second Schedule to the Income Tax Act, 1961 was not attracted.

(3.) Aggrieved, both the petitioner and the Bank filed appeals before the DRT, Jabalpur under Sec. 30 of the RDDBFI Act, 1993, which were registered as Appeal No.2/2010 and Appeal No.3/2010, within the period of limitation. During pendency of the appeals, the DRT, Jabalpur granted interim protection on 14/7/2010, restraining further action pursuant to the confirmation of sale. After considering the pleadings, objections, settlement proposal accepted by the Bank, and the way the auction was conducted, the DRT, Jabalpur, vide order dtd. 30/11/2012, allowed both appeals and set aside the order dtd. 7/1/2010, holding that the auction suffered from material irregularities and illegality.