Idbi Bank Ltd vs Ramswaroop Daliya

2024 INSC 780 REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NOS. OF 2024 (Arising out of S.L.P. (C) Nos. 8159-8160 OF 2023)

IDBI BANK LTD. …APPELLANT(S)

VERSUS

RAMSWAROOP DALIYA AND ORS. …RESPONDENT(S)

JUDGMENT

PANKAJ MITHAL, J.

1. Leave granted.

2. The appellant-IDBI Bank has preferred these two appeals

challenging the judgment and order dated 19.09.2022

passed by the High Court in Writ Petition No. 3820 of 2020,

Signature Not Verified “Ramswaroop Daliya and 3 Ors. vs. IDBI Bank Ltd.” and the Digitally signed by SNEHA DAS Date: 2024.10.16 16:45:18 IST Reason: order dated 29.11.2022 passed in Review Petition No. 1 of

2022 arising from the above writ petition.

1

3. The respondents who were the petitioners in the writ petition

are the auction purchasers of the property which comprises

of 2 guntas of land of Survey No. 121 part, situated at

Bogaram village, Keesara Mandal, Medchal Malkajgiri

district, Telangana. Pursuant to the e-auction notice dated

17.03.2018, the auction took place on 10.04.2018. The

respondents were the highest bidders for a total sum of Rs.

1,42,50,000/-. They deposited 25% of the bid amount i.e.,

Rs. 36,00,000/- on the day of the auction itself. The auction

was confirmed but the sale certificate was not issued and the

sale deed was not executed as the respondents could not

deposit the balance sale consideration within 15 days, may

be for the reason that the appellant-Bank refused to accept

the balance amount for various reasons. Finally, the

appellant-Bank vide communication dated 24.12.2019

cancelled the auction and refunded the amount deposited by

the respondents by means of four demand drafts which were

never encashed by the respondents.

4. The respondents as such invoked the writ jurisdiction of the

High Court challenging the action of the appellant-Bank 2 cancelling the auction dated 10.04.2018 unilaterally and for

seeking a direction to issue the sale certificate after receiving

the balance sale consideration of Rs. 1,06,50,000/-.

5. The aforesaid Writ Petition No. 3820 of 2020 filed by the

respondents was allowed by the impugned judgment and

order dated 19.09.2022 passed by the High Court holding

that the appellant-Bank was not justified in withholding the

sale certificate. The respondents were always ready and

willing to pay the sale consideration. The appellant-Bank

could not have denied the issuance of the sale certificate and

the execution of the sale deed. The issuance of the sale

certificate was not refused by the appellant-Bank for want of

non-deposit of the balance sale consideration within 90 days

as stipulated under Rule 9(4) of the Security Interest

(Enforcement) Rules, 20021, therefore, such a plea taken by

the appellant-Bank for the first time in the writ petition is not

tenable.

1 Hereinafter referred to as ‘the Rules’

3

6. The argument of the learned counsel for the appellant-Bank

is that in view of the statutory provisions contained under

the Rules, especially Rule 9(4) of the Rules, since the

respondents had not deposited the balance sale

consideration within the mandatory period of 90 days, the

High Court has erred in directing the appellant-Bank to issue

the sale certificate and to execute the sale deed. The balance

sale consideration was never deposited by the respondents

within the time permitted and the letter(s) of the respondents

clearly establishes that they kept on seeking extension of

time without depositing the amount. Moreover, on the

complaint of the appellant-Bank to the Central Bureau of

Investigation2 made on 08.03.2018, the Enforcement

Directorate3 had taken suo moto cognizance and issued an

advisory to the appellant-Bank not to release the title deeds.

7. In the facts and circumstances of the case, the only issue

which arises for consideration is as to whether there was any

default on part of the respondents in depositing the balance

2 In short “CBI” 3 In short “ED”

4 amount within the time prescribed pursuant to the auction

sale dated 10.04.2018 so as to attract Rule 9(4) of the Rules

and allow the appellant-Bank to cancel the auction which

had already been confirmed.

8. There is no dispute to the fact that the appellant-Bank had

issued e-auction notice on 17.03.2018 and had conducted

the auction on 10.04.2018. The respondents had

participated in the said auction and were recognized as the

highest bidder who deposited 25% of the auction money

amounting to Rs. 36,00,000/- then and there. On the very

same day, a sale confirmation letter was issued by the

authorized officer of the appellant-Bank requiring the

respondents to pay the balance amount of Rs. 1,06,50,000/-

within 15 days so that the sale certificate may be issued.

9. It may be noted that the respondents at no point of time have

denied payment of the balance auction money as demanded

to be paid within the 15 days period. It was only the

appellant-Bank that denied the issuance of the sale

certificate, first on the pretext that the guarantor had filed

Writ Petition No. 12390 of 2018 challenging the e-auction 5 notice dated 17.03.2018 and had obtained a stay order on

18.04.2018. Secondly, the appellant-Bank on 08.03.2018

had made a complaint to the CBI and that ED took suo moto

cognizance whereby an advisory was issued to the appellant-

Bank not to release the original property documents and that

the same be kept in safe custody of the bank till further

directions of the ED.

10. The appellant-Bank issued e-auction Notice on 17.03.2018

after it had already made the complaint to the CBI but this

aspect of the matter was not disclosed in the advertisement.

Thus, a conscious decision was taken by the appellant-Bank

to go ahead with the e-auction despite there being a

complaint to the CBI. It is subsequent to the complaint to the

CBI that the e-auction notice was issued and the e-auction

was conducted on 10.04.2018 which was also confirmed in

favour of the respondents. In such a situation it does not lie

in the mouth of the appellant-Bank to take shelter on the

basis of the complaint made to the CBI and to deny issuance

of the sale certificate, particularly when there was no specific

direction either of the CBI or the ED not to confirm the 6 auction sale or to issue the sale certificate. The only rider was

to keep the property documents in safe custody. The

respondents, on the other hand, never insisted for the release

or the handing over of the property documents rather

submitted that they would not create any third-party interest

in the property auctioned and that the original documents of

the property would be collected by them, subsequently on the

consent and clearance from the CBI and ED. In the light of

such a stand taken by the respondents on affidavit, the

appellant-Bank apparently was not justified in refusing to

issue sale certificate to the respondents on the pretext that

there was an advisory from the ED. It is worth noticing that

even the advisory of ED dated 08.06.2018 is not material for

not accepting the balance sale consideration within the

period of 15 days stipulated in the sale confirmation letter

dated 10.04.2018 which period expired on 25.04.2018, much

before the issuance of the above advisory. The respondents

were not responsible either for the delay in depositing or non-

acceptance of the balance auction amount by the appellant-

Bank.

7

11. As far as the filing of Writ Petition No. 12390 of 2018 by one

of the guarantors is concerned, an interim stay order was

passed therein on 18.04.2018 by which time the auction had

already taken place and confirmed. The said writ petition was

ultimately dismissed on 18.07.2018 and as such the interim

stay order ceased to exist. The interim stay order granted

therein was of no effect insofar as the issuance of sale

certificate to the respondents was concerned as the sale had

already taken place and stood confirmed before the passing

of the interim stay therein. There was no direction or stay on

the issuance of sale certificate. The passing of the interim

stay order in the above writ petition was not on account of

the respondents so as to assign any default on their part in

depositing the balance sale consideration within the time

stipulated.

12. The communication dated 24.12.2019, by which the

appellant-Bank took a decision to cancel the auction sale and

to return the amount deposited by the respondents, is

completely silent as regards the default, if any, committed by

the respondents in depositing the balance auction amount as 8 per the mandate of Rule 9(4) of the Rules. The said plea was

taken by the appellant-Bank for the first time through the

counter affidavit filed in the writ petition. It is well recognized

that the validity of an order can only be adjudged on the basis

of the reasoning contained in the order and the said

reasoning cannot be supplemented in any manner much less

by means of a counter affidavit or a supplementary affidavit

when the parties have entered into a litigation. In Mohinder

Singh Gill & Anr. v. Chief Election Commissioner and

Ors.4 it has been clearly laid down that the parties are not

permitted to raise new pleas not contained in the order

impugned while assailing the correctness or the validity of

such an order. In view of the law so laid down, the appellant-

Bank was certainly not entitled to raise the plea of default

under Rule 9(4) of the Rules through the counter affidavit.

13. Notwithstanding the above, the provisions of sub-Rules (4)

and (5) of Rule 9 of the Rules, if read together in conjunction,

would reveal that it is only for the default in payment of the

4 (1978) 1 SCC 405

9 balance auction amount within the period mentioned that

the property could be resold and that the period of 15 days

stipulated therein for the deposit of the balance sale amount

may be extended, as may be agreed upon in writing. It means

that first there has to be a default on part of the auction

purchaser to invite cancellation of the auction and second,

that the period of deposit stipulated therein is not absolute

rather extendable with the agreement of the parties.

14. Sub-Rules (4) and (5) of Rule 9 of the Rules are extracted

below:

“(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorized officer on or before the fifteenth day of confirmation of sale of the immovable property or such extended period [as may be agreed upon in writing between the purchaser and the secured creditor, in any case not exceeding three months].

(5) In default of payment within the period mentioned in sub-rule (4), the deposit shall be forfeited [to the secured creditor] and the property shall be resold and the defaulting purchaser shall forfeit all claim to the property or to any part of the sum for which it may be subsequently sold.”

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15. In Varimadugu Obi Reddy v. Sreenivasulu and Ors.5, this

Court while interpreting Rule 9(4) of the Rules observed that

it refers to a period of 15 days for deposit of balance sale

consideration or such extended period for which no outer

limit has been prescribed. Therefore, it appears that the time

stipulated therein is not sacrosanct and the period can be

extended as agreed upon in writing by the parties. A similar

view has also been expressed in an earlier decision of this

Court in General Manager, Sri Siddeshwara Cooperative

Bank Ltd. and Anr. v. Ikbal and Ors.6 wherein referring to

Rule 9(4) of the Rules, it was held that the time for deposit

stipulated therein is not sacrosanct and may be extended if

there is a written agreement between the parties.

16. In the case at hand, the correspondence between the parties

reveals that the respondents only sought extension of time

for the reason that the appellant-Bank itself was not in a

position to accept the amount as there was a complaint to

the CBI, an advisory of the ED and a stay from the High

5 (2023) 2 SCC 168 6 (2013) 10 SCC 83

11 Court. The silence on part of the appellant-Bank in either

immediately revoking the sale confirmation or refusing to

extend the time, impliedly amounted to extension of time in

writing with consent.

17. Secondly, the non-deposit of the balance sale consideration

within the time limit prescribed under Rule 9(4) was not

attributable to the respondents so as to call them defaulters

within the meaning of the provisions of Rule 9 (4) and (5) of

the Rules.

18. The correspondence on record clearly reveals that the

respondents were always ready and willing to deposit the

balance auction amount of Rs.1,06,50,000/- and had rather

submitted a bank draft dated 15.10.2022 of the said amount

and had requested for the issuance of the sale certificate and

possession of the auction property. The said correspondence

clearly establishes the bona fide of the respondents and it

was only the appellant-Bank who had avoided the issuance

of the sale certificate. There is no material on record to justify

non-acceptance of the balance sale consideration from the

respondents within 15 days of the confirmation of the sale 12 and whatever pleas have been taken by the appellant-Bank

to avoid acceptance are all subsequent and are not very

material.

19. In these facts and circumstances, reason for the non-

issuance of the sale certificate is solely attributable to the

appellant-Bank and that there were no latches, negligence or

default on part of the respondents in offering to deposit the

balance auction amount. Since there is no default on their

part, non-deposit of the said amount within the stipulated

period would not be fatal within the meaning of sub-Rules (4)

and (5) of Rule 9 of the Rules.

20. It is pertinent to mention here that the cancellation of the

auction sale vide communication dated 24.12.2019 is purely

unilateral in nature without any notice or opportunity of

hearing to the respondents. The said cancellation as such is

per se in violation of the principles of natural justice and is

illegal.

21. Learned counsel for the appellant-Bank, relying upon Union

Bank of India v. Rajat Infrastructure Private Limited and

13 Others7, had submitted that the statutory period prescribed

under Rule 9(4) is not liable to be extended by this Court even

in exercise of powers under Article 142 of the Constitution of

India. In the said case, this Court accepted that though the

plenary powers of the Supreme Court under Article 142 of

the Constitution are inherent which are of very wide

amplitude but the said power cannot be used to supplement

the substantive law by ignoring the express statutory

provision. The aforesaid authority cited on behalf of the

appellant-Bank is not of any help to it in this case as we are

not providing for any new period of limitation for depositing

the balance sale consideration or extending the time period

provided under the Rules. We are simply holding that the

period to deposit the balance sale consideration, as provided

under the Rules, is not sacrosanct and is extendable with the

consent in writing of the parties and that Rule 9(4) will only

come into play when there is default on part of the party i.e.

the auction purchaser to deposit the amount and will not

7 (2023) 10 SCC 232

14 apply where there is no default or that the default, if any, lies

upon the auctioneer i.e. appellant-Bank in the case at hand.

22. Accordingly, we are of the considered opinion that the High

Court has not committed any error of law in the peculiar facts

and circumstances of the case in holding that the appellant-

Bank manifestly erred in cancelling the auction sale dated

10.04.2018 and in directing to issue sale certificate/register

the sale deed in favour of the respondents after getting the

balance auction amount deposited within a period of four

weeks.

23. In view of the foregoing, the civil appeals are dismissed with

no order as to costs.

24. Pending application(s), if any, shall stand disposed of.

...................………………………….. J.

(PANKAJ MITHAL)

.............……………………………….. J.

(R. MAHADEVAN)

NEW DELHI;

OCTOBER 16, 2024 15