M/S R.S. Infra Transmission Ltd. vs Saurinindubhai Patel .

CIVIL APPEAL NO. 3469 OF 2022

M/s. R.S. Infra-Transmission Ltd. …Appellant

Versus

Saurinindubhai Patel and Ors. …Respondents

JUDGMENT

M.R. SHAH, J.

1. Feeling aggrieved and dissatisfied with the impugned judgment

and order dated 22.12.2015 passed by the High Court of Gujarat at

Ahmedabad in Special Civil Application No. 17981 of 2015 by which the

High Court has allowed the said petition preferred by the respondent

Nos. 1 and 2 herein – original writ petitioners before the High Court and

has set aside the order passed by the Debts Recovery Appellate Signature Not Verified Digitally signed by R Natarajan Tribunal, Mumbai (hereinafter referred to as “DRAT”) dated 07.09.2015 Date: 2022.07.11 17:11:57 IST Reason:

in Appeal No. 223 of 2007 and has consequently confirmed the sale in

1 favour of the 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:-

2.1 A Bank namely, IndusInd Bank Ltd. (hereinafter referred to as the

“Bank”) filed an O.A. bearing No. 424 of 1999 before the Debt Recovery

Tribunal, Ahmedabad (hereinafter referred to as “DRT”) on 25.05.2006

for recovery of debt and enforcement of security against the original

respondent Nos. 3 to 5 (original borrowers). Recovery Certificate

bearing RP No.153/2006 was issued in favour of the Bank for recovery

of 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 expenses of the proceedings for recovery thereof.

2.2 The immovable properties, being Survey No.188/P admeasuring

36,735 square meters owned by respondent No.3 (borrower) and Survey

No.187/P admeasuring 8280.51 square meters owned by respondent

No.5 (borrower) situated at Mauje Karan Nagar, Tehsil Kadi, District

Mehsana got attached in pursuance of the above Recovery

Order/Certificate.

2.3 A proclamation of sale of the properties came to be issued by the

Recovery Officer, DRT on 28.11.2006 fixing the public auction on

2 08.01.2007. As per the proclamation of the sale, the amount due and

payable was Rs.1,27,30,527/- including interests as on 30.06.2006. In

the 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

crores came 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 under

Rule 60 of the Second Schedule of the Income Tax Act, 1961 read with

Sections 25 to 29 of the Recovery of Debts due to Banks and Financial

Institutions Act, 1993 for setting aside the above auction vide application

dated 25.01.2007 and submitted a Demand Draft for an amount of

Rs.1,27,30,527/- as specified in the sale proclamation. Respondent

No.3 herein (borrower) also submitted a Demand Draft for Rs.6,75,000/-

for payment to the purchaser as penalty, a sum equal to 5% of the

purchase money 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 06.02.2007

directing the respondents to serve a copy of the order and the

application on the Bank and the auction purchaser. In the meantime,

the appellant herein expressed its interest in purchasing the properties

3 which were the subject matter of the auction sale and entered into a

Memorandum of Understanding with respondent No.3 (borrower).

2.5 The Bank filed its reply on 06.02.2007 before the Recovery Officer

in response to the application of the respondent No.5 (on the 29 th day

from the date of auction). In its reply, the Bank claimed that there was

some shortfall in the amount deposited by the borrower but no

calculation sheet was attached to the reply. The matter was adjourned

for filing of reply by the auction purchaser and the Bank was also

directed to file compliance affidavit. The auction purchasers -

respondent Nos. 1 and 2 herein filed its objection/reply to the

application. The borrower also filed its rejoinder to the reply filed by the

Bank. The matter got adjourned to 15.02.2007 with the following order

passed by the Recovery Officer:-

 “………..the bank had still not served the copy of the calculation sheet.

 "Further, he submits a DD for an amount of Rs.2.80 lacs towards difference in calculations, if any. He farther submits that the CH Bank be directed to serve a copy of the calculation sheet on the CDs, so that, any further difference in interest, etc. in calculation may be paid. Request is allowed. CH Bank is again directed to serve a· copy of the calculation sheet on the CDs, so that, the CDs may be able to pay the difference in payment, if any. "

2.6 Thereafter, the Bank submitted a calculation sheet before the

Recovery Officer on 12.02.2007. According to the calculation sheet, the

4 borrower - respondent No.3 deposited a further sum of Rs.77,647/- with

the Recovery Officer, which was over and above Rs. 2.80 lakhs

deposited as per the order dated 15.02.2007. The Recovery Officer

thereafter passed an order dated 15.02.2007 allowing the application

submitted by the respondent No.3 – borrower by holding that the

borrower had deposited the requisite amount for setting aside the sale

under Rule 60 of the Second Schedule of the Income Tax Act.

Accordingly, the sale of the properties in question came to be set aside.

The Recovery Officer also directed the Bank to hand over all the original

documents pertaining to the immovable properties in question to the

borrower immediately. In compliance of the order passed by the

Recovery Officer, the Bank handed back to the original borrowers the

documents pertaining to the properties in question on 19.02.2007 and on

release of the documents, the request of the Bank to release the amount

deposited was allowed by the Recovery Officer. Immediately on

19.02.2007 itself, the borrowers – respondent Nos.3 to 5 herein

executed two sale deeds in favour of the appellant herein for a sale

consideration of Rs.1,40,89,855/-. That after the sale deeds were

executed in favour of the appellant dated 19.02.2007, the auction

purchasers – respondent Nos. 1 and 2 preferred an appeal bearing

No.11 of 2007 before the DRT, Ahmedabad on 20.02.2007.

5 2.7 The DRT Ahmedabad by order dated 18.05.2007 allowed the said

Appeal No.11 of 2007 and set aside the order passed by the Recovery

Officer passed in Recovery Proceedings No.153 of 2006. The borrowers

then preferred the appeal bearing No.233 of 2007 before the DRAT,

Mumbai against the order dated 18.05.2007 passed by the DRT in

Appeal No.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

Recovery Officer on 31.05.2007 for seeking a direction to the appellant

to maintain status quo over the properties in question and to appoint the

receiver to take possession of the same from the appellant. The said

application came 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 properties in question, respondent Nos. 1 and 2 herein preferred

appeal before the DRT being Appeal No. 34 of 2007, which came to be

dismissed by the order dated 08.02.2008. Thereafter respondent Nos. 1

and 2 herein filed an Appeal No.43 of 2008 before the DRAT, Mumbai

against the order dated 08.02.2008.

6 2.9 Further, respondent Nos. 1 and 2 moved cross objections in

Appeal No.223 of 2007 aggrieved by certain observations in the order

dated 18.05.2007 pertaining to the right of redemption of the mortgagers

till the time conveyance is not executed in favour of the successful

auction purchaser.

2.10 By order dated 07.09.2015, the DRAT, Mumbai allowed Appeal

No.223 of 2007 preferred by the borrowers and set aside the auction

sale dated 08.01.2007, which was in favour of the respondent Nos. 1

and 2 herein.

2.11 Feeling aggrieved and dissatisfied with the order passed by the

DRAT, Mumbai dated 07.09.2015, allowing the Appeal No.223 of 2007

and setting aside the auction sale, respondent Nos. 1 and 2 herein (the

auction purchasers) preferred the writ petition before the High Court

being Special Civil Application No.17981 of 2015. By the impugned

judgment and order, the High Court has allowed the said writ petition and

has quashed and set aside order dated 07.09.2015 passed by the DRAT,

Mumbai in Appeal No.223 of 2007 and consequently confirmed the sale

in favour of respondent Nos. 1 and 2 herein (the auction purchasers).

2.12 Feeling aggrieved and dissatisfied with the impugned judgment

and order passed by the High Court, the subsequent purchaser -

respondent No.5 – M/s. R.S. Infra-Transmission Ltd. has preferred the

present appeal.

7

3. Shri Guru Krishnakumar, learned Senior Advocate appearing on

behalf of the appellant – subsequent purchaser has vehemently

submitted that in the present case, as such, the appellant can be said to

be a bona fide purchaser, who purchased the property in question on

payment of full sale consideration. It is submitted that at the time when

the appellant purchased the properties in question, the judgment debtor

had already exercised the rights under Rule 60 of the Second Schedule

of the Income Tax Act, 1961 and after the Recovery Officer passed the

order in favour of the Judgement Debtor and directed the Bank to hand

over the original documents pertaining to the properties in question and

at the time when the appellant purchased the properties in question, the

documents pertaining to the properties in question were handed back to

the judgment debtor. It is submitted that therefore as such any

subsequent order cannot defeat the rights of the appellant, who is a

bona fide purchaser, who purchased the properties in question pursuant

to the order passed by the Recovery Officer dated 15.02.2007.

3.1 On merits, the learned Senior Advocate appearing on behalf of the

appellant has vehemently submitted that if at all there was any mistake

in the proclamation, in not mentioning the correct amount due and

payable by the judgment debtor, it was that of the Recovery Officer. It is

submitted that therefore, any lacuna in the proclamation would not

8 defeat the rights of the judgment debtor when the judgment debtor acted

in a bonafide manner and deposited the entire amount mentioned in the

proclamation of sale.

3.2 It is submitted that in the present case, the judgment debtor

deposited the amount specified in the sale proclamation, i.e.,

Rs.1,27,30,527/- alongwith 5% of the purchase money as penalty for

payment to the auction purchaser and 15% interest from the date of sale

proclamation till the date of deposit as per Rule 60. In fact, an additional

sum 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 purported

shortfall (after being supplied with the calculation sheet by the Bank).

3.3 It is further submitted that the judgment debtor had on 25.01.2007

(about 17 days after auction) preferred an application under Rule 60 of

the Second Schedule of the Income Tax Act, 1961 seeking to set aside

the auction sale and he, in compliance thereof, had deposited the

amount as above. It is submitted that the Bank filed its reply before the

Recovery Officer on 06.02.2007 and in its reply, the Bank claimed that

there was some shortfall in the amount deposited by the judgment

debtor but no calculation sheet was supplied. It is submitted that the

same was on the 29th day from the date of auction. That if, on

06.02.2007, the Bank would have submitted the calculation sheet and

would have pointed out the shortfall in the amount deposited by the

9 judgment debtor, the latter would have deposited the balance shortfall

amount on the 29th day itself, i.e., within 30 days. That however, the

bank submitted the calculation sheet before the Recovery Officer on

12.02.2007 and immediately on the very next day, i.e., 13.02.2007, the

judgment debtor deposited Rs.77,647/-, which was the shortfall as per

the calculation sheet. Therefore, it can be said that the judgment debtor

had substantially complied with the Rule 60.

3.4 It is submitted that the provisions of the statute and the legislative

intent embodied in Rule 60 of the Second Schedule of the Income Tax

Act, 1961 provides a course of last resort to the judgment debtor to save

his property. That once Rule 60 is exercised in letter and spirt, then the

rights of the judgment debtor are crystallized and correspondingly, the

rights of the auction purchaser reach a vanishing point. That the salient

objective of Rule 60 is to provide a judgment debtor a last and final

opportunity to save/retain his asset. It is urged that such right should not

be defeated on a highly pedantic and hyper technical construction.

Therefore, in the facts and circumstances of the case, the High Court

ought to have appreciated that in the present case, the judgment debtor

had complied with Rule 60 in letter and spirit.

3.5 It is contended that in the present case, the Recovery Officer ought

to have specifically mentioned the exact amount due and payable in the

sale proclamation. That it was the Recovery Officer, who was required

10 to determine the entire amount alongwith the interest, which was due till

the date of issuance of the proclamation. It is submitted that the

Recovery Officer would be in a better position to know the actual value

of the property and to indicate the correct upset price.

3.6 It is urged that it is the duty of the Recovery officer to apply his

mind for determining all the necessary particulars that should be inserted

in the proclamation of sale. Reliance is placed on the decision of this

Court in the case of Gajadhar Prasad Vs. Babu Bhakta Ratan, (1973)

2 SCC 629.

3.7 It is submitted by learned senior counsel that in the present case,

at the most, it can be said that there was an ambiguity in the sale

proclamation to extent that in the sale proclamation, it was mentioned

that the amount due and payable is Rs.1,27,30,527/- including interests

as on 30.06.2006. That however, it was the duty cast upon the

Recovery Officer to mention the exact amount alongwith interest as

interest is paid upto the date of sale proclamation. Therefore, the

judgment debtor has 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 purchase money as penalty for payment to the auction

purchaser and 15% interest from the date of sale proclamation till the

date of deposit. However, there was a shortfall of Rs.77,647/- towards

11 the interest for the period between 30.06.2006 to 08.01.2007, which the

judgment debtor deposited as soon as he was informed by the Bank.

3.8 It is further submitted that a mistake/inaccuracy in the amount

specified in the proclamation, as recovery through sale was ordered,

cannot prejudice the application filed under Rule 60. That a person, who

makes an application under Rule 60 cannot be made to suffer due to the

fault/shortfall, if any, in the computation of the amount sought to be

recovered. It is submitted that the applicant is bound to go by the

amount specified in the proclamation. That the borrower/judgment

debtor cannot be 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 be made

to the Recovery Officer by depositing, inter alia, the amount specified in

the proclamation, as that with the recovery of which the sale was

ordered. That as per Rule 53, the proclamation shall be drawn by the

Tax Recovery Officer, after notice to the defaulter. The proclamation

shall state the time and place of sale and shall specify as fairly and

accurately as possible the amount for the recovery of which the sale is

ordered. It is submitted that therefore the legislative intent is that the

amount to be specified in the proclamation of sale must be a fair

estimate of the amount due from the borrowers. That once the provision

12 provides that a specific amount prescribed in the proclamation is to be

deposited and the same is deposited, it would be unjust to hold that the

provisions have not been complied with. It is submitted that an

applicant/judgment debtor cannot be compelled to deposit any

unspecified demands.

3.10 It is further submitted by the learned senior counsel appearing on

behalf of the appellant that even the bona fides of the judgment debtor

are also required to be considered. That in the present case, the auction

of the subject properties took place on 08.01.2007. On the 17 th day of

the auction sale, the borrower filed the requisite application under Rule

60 and deposited the amount specified in the proclamation alongwith

other 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 is

made and a sum equal to 5% of the purchase money as penalty. That

on 28th/29th day of the auction, the Bank filed its reply to the application

under Rule 60. However, in its reply, the bank did not specifically state

the exact amount of shortfall. That upon the request of the borrowers,

vide order dated 09.02.2007, the Recovery Officer directed the Bank to

serve a copy of the calculation sheet so that the judgment debtor may be

able to pay the amount of difference, if any. In fact, even without waiting

for the supply of the calculation sheet, the borrower deposited Rs.2.80

lakhs in anticipation of the shortfall. Subsequently, the Bank submitted

13 the calculation sheet on 12.02.2007 and it was found that an amount of

Rs.77,647/- was the shortfall. Therefore, immediately on the very next

day, 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

bonafide manner. Therefore, it cannot be said that there was any

deliberate and/or wilful non-compliance of the provisions of Rule 60,

which defeats the valuable right of the judgment debtor provided under

Rule 60.

3.11 It is further submitted by the learned counsel appearing on behalf

of the appellant that the provisions of Rule 60 ought to be interpreted in

favour of the borrower liberally, as it is the last chance to save his

property without assigning any cause. Reliance is placed upon the

decision of Bombay High Court in the case of Hotel Paras Garden,

Balapur & Anr. Vs. Central Bank of India, Balapur & Ors., 2015 SCC

Online Bom 3398.

3.12 Relying upon the decision of the Punjab & Haryana High Court in

the case of M/s. National Rice and General Mills, Jagraon and Ors.

Vs. Bank of India and Ors., C.W.P. No. 19113 of 2005, it is submitted

that as observed and held by the High Court while considering

compliance of Rule 60, the Court has to consider, firstly, that the deposit

has been made in compliance of Rule 60 with regard to the deposit of

14 the money and then, to see, whether, such irregularity, which has

surfaced has caused any substantial injury to the objector.

3.13 It is submitted that in any case, there has been substantial

compliance of Rule 60. From the aforesaid facts, it can be seen that the

borrower has substantially complied with the provisions of Rule 60 so as

to accomplish the reasonable objectives for which the provision was

passed. Reliance is placed upon the decision of this Court in the case of

Commissioner of Central Excise, New Delhi Vs. Hari Chand Shri

Gopal 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 deficit amount

was nominal and in fact was due to the mistake on the part of the

Recovery Officer in specifying the accurate amount for the recovery of

which the sale was ordered. Therefore, the right of the borrower to save

his property conferred under Rule 60 can be said to be a valuable right

and the same shall not be affected on the technical ground and/or

should not be made to suffer due to the mistake on the part of the

Recovery Officer.

3.15 It is further submitted on behalf of the learned counsel appearing

on behalf of the appellant that the right of redemption of mortgage under

Section 13(8) of the Securitization and Reconstruction of Financial

Assets and Enforcement of Security Interest Act, 2002 is to enable the

15 borrower to protect his constitutional right guaranteed under Article 300A

of the Constitution of India. That in fact the borrower’s right 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 the present case,

the auction sale was not confirmed in favour of the auction purchasers

as the title and ownership of the subject property has been crystallised in

favour of the appellant and sale deeds have been executed and

registered in favour of the appellant.

3.16 Making the above submissions, it is prayed to allow the present

appeal and quash and set aside the impugned judgment and order

passed by the High Court.

4. Present appeal is vehemently opposed by learned counsel

appearing on behalf of the respondent Nos. 1 and 2. It is submitted by

the learned counsel appearing on behalf of respondent Nos. 1 and 2 –

auction purchasers that in the present case, the Hon’ble High Court has

rightly observed and held that there was a non-compliance of Rule 60, in

as much as, the entire amount mentioned in the sale proclamation was

not deposited and there was a shortfall.

4.1 That in the present case, in the said proclamation itself, it was

mentioned that as on 30.06.2006, the amount due and payable would be

Rs.1,27,30,527/- including interest. Therefore, it was for the borrower to

calculate and deposit the amount alongwith the interest on

16 Rs.1,27,30,527/- from the date of recovery certificate till the date of

deposit. It is contended that it is an admitted position that the borrower

deposited a sum of Rs.1,27,30,527/- only and did not deposit the interest

from 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 on the

application under Rule 60 was issued on 06.02.2007 itself, which was

within 30 days as contemplated by Rule 60. That on the returnable date,

the Bank filed a reply pointing out that the amount paid by the judgment

debtor was less than what was required to be paid and annexed a

calculation sheet. It is submitted that despite the fact that the judgment

debtor was having knowledge about what was the shortfall, he made a

statement 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 no basis of the said amount was shown. It is submitted that this

attempt was clearly dishonest. That according to the Bank, Rs. 4.63

lakhs was outstanding, which the borrower refused to pay. Therefore,

the amount, which was due and payable was Rs. 4.63 lakhs, which was

not deposited by the judgment debtor. That as there was a breach of

Rule 60, the High Court has not committed any error.

17 4.3 It is further submitted by the learned counsel appearing on behalf

of respondent Nos. 1 and 2 – auction purchasers that even the

acquisition is also in favour of the respondents. It is submitted that

respondent Nos. 1 and 2 have deposited a sum of Rs. 1.35 crores in

2007. It is urged that the land in question is a very valuable land so far

as the respondent Nos. 1 and 2 are concerned, as they purchased the

land through Court auction for their business purpose as it already has a

factory adjacent to this plot of land. That on the other hand, the

appellant is a buyer by an internal agreement between the borrower and

the appellant whereas the auction purchaser bought it by auction in court

and by following due process of law. It is submitted that even the

borrower and the appellant did not wait for the appeal period against the

order passed by the Recovery Officer and the appellant and the

borrower executed the sale deeds without waiting for appeal period to

defeat the rights of auction purchaser.

4.4 Making the above submissions, it is prayed to dismiss the present

appeal.

5. We have heard the learned counsel appearing for the respective

parties at length.

6. At the outset, it is required to be noted that by the impugned

judgment and order, the High Court has set aside the order passed by

the DRAT and has confirmed the sale in favour of respondent Nos. 1 and

18 2 – auction purchasers by dismissing the application submitted by the

judgment debtor under Rule 60 of the Second Schedule of the Income

Tax Act, 1961 by observing that as there was a shortfall in the deposit of

the amount while exercising the right under Rule 60 and hence, there

was non-compliance of the provisions of Rule 60.

6.1 However, it is required to be noted that in the sale certificate, the

amount mentioned was Rs.1,27,30,527/- including interest as on

30.06.2006. The judgment debtor while exercising the right under Rule

60 deposited Rs.1,27,30,527/- alongwith Rs. 6,75,000/- for payment to

the purchaser as penalty, a sum equal to 5% of the purchase money and

also further deposited Rs. 3,01,290/- towards interest @ 15% from the

date of sale proclamation to the date of deposit i.e., 25.01.2007.

However, it was the case on behalf of the auction purchasers that there

was a shortfall in not making the payment of interest from 30.06.2006 to

25.01.2007. However, at this stage, it is required to be noted that as

such it was the duty cast upon the Recovery Officer to mention the exact

amount in the sale certificate. The Recovery Officer mentioned the

amount in the Sale Certificate of Rs.1,27,30,527/- including the interest

as on 30.06.2006, however, did not specify any further amount towards

the interest for the period between 30.06.2006 till the date of the sale

proclamation, i.e., 08.01.2007, which the Recovery Officer ought to have

mentioned specifically. The aforesaid mistake and/or inaccuracy on the

19 part of the Recovery Officer led to the shortfall in the deposit of the

amount, which was towards the interest for the period between

30.06.2006 to 08.01.2007, otherwise, the judgment debtor had

substantially complied with Rule 60. The shortfall was Rs.3,57,647/-.

When the judgment debtor deposited the substantial amount of Rs.

1,27,30,527/- and other amounts due and payable under Rule 60

including the penalty and the interest, there was no reason for the

judgment debtor not to deposit Rs. 3,57,647/- which is a very small

amount as against the amount deposited. At this stage, it is required to

be noted that though the Bank filed its reply before the Recovery Officer

in response to the application made by the judgment debtor - borrower

made under Rule 60 and in which it was stated that there was some

shortfall in the amount deposited, but according to the judgment debtor,

no calculation sheet was attached to the reply and/or supplied to the

judgment debtor.

6.2 At the time of hearing of the application under Rule 60 on

09.02.2007, a grievance was made before the Recovery Officer as to

why the Bank had not served a copy of the calculation sheet and in the

meantime, the judgment debtor had himself deposited a further sum of

Rs.2.80 lakhs towards the difference in calculation, if any. The Recovery

Officer directed the Bank to supply the calculation sheet and the Bank

submitted the calculation sheet before the Recovery Officer on

20 12.02.2007 and on that day, a sum of Rs.77,647/- was the shortfall,

which the judgment debtor deposited on the very next day, i.e., on

13.02.2007. If the Bank would have submitted the calculation sheet

earlier alongwith the 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 that there was a substantial compliance/ compliance of

Rule 60. If the Recovery Officer would have been accurate in submitting

the exact amount in the sale proclamation due and payable on the date

of sale proclamation then the eventuality which has arisen in the present

case would not have arisen. There was an absurd misconduct on the

part of the Recovery Officer for which the judgment debtor should not be

made to suffer.

6.3 At this stage, it is required to be noted that the right available to the

judgment debtor under Rule 60 is a valuable right and the last

resort/opportunity to the judgment debtor to save his property. It is a

right available to the judgment debtor after his property is sold in a court

auction. Therefore, such a valuable right available to the judgment

debtor to save his property should not be affected on the technical

ground and/or for the mistake and/or the bona fide mistake for which he

was not at all responsible.

21 6.4 The legislative intent of Rule 60 has been dealt with and

considered in detail by the Bombay High Court in the case of Hotel

Paras Garden, Balapur & Anr. (supra). In the aforesaid case, it is

observed that the legislative intent of Rule 60 is to give the defaulter as

much latitude as possible till the end and he can, under Rule 60, without

assigning any cause but after depositing the sum therein mentioned as

mentioned in the sale proclamation within the stipulated time, avoid the

auction and protect his property. Thus, the right which is available to the

judgment debtor under Rule 60 is a most valuable right available and the

same 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. 1 and

2 that according to the Bank, a sum of Rs.4.63 lakhs was the balance

amount due and payable against which even subsequently the borrower

has deposited Rs. 3,57,647/- and therefore, still there is a shortfall is

concerned, the aforesaid has no substance. At this stage, it is required

to be 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

Officer directed the Bank to hand over the original documents pertaining

to the impugned properties and file compliance affidavit and thereafter

the Bank was allowed to appropriate the decretal amount deposited by

the judgment debtor and that on 19.02.2007 itself, the Bank complied

22 with the order passed by the Recovery Officer dated 15.02.2007 and

handed back to the judgment debtor the documents pertaining to the

properties in question and requested to release the amount deposited,

which came to be allowed by the Recovery Officer. At that time, no

dispute was raised by the Bank that any further amount was due and

payable. The Bank was satisfied with the deposit of the amount by the

judgment debtor.

7. In view of the above discussion and for the reasons stated above,

the High Court has committed a grave/serious error in quashing and

setting aside the order passed by the DRAT and the Recovery Officer by

which the Recovery Officer and the DRAT set aside the sale in favour of

the auction purchasers. The view taken by the High Court is too

technical. The High Court has not at all considered the facts narrated

hereinabove in its true perspective. The High Court has not at all

appreciated and considered the fact that for the inaccuracy and/or

mistake on the part of the Recovery Officer, the judgment debtor cannot

be made to suffer for no fault of his. The High Court has also not

properly appreciated and considered the valuable right available to the

judgment debtor under Rule 60. As observed and held hereinabove,

when the substantial amount was deposited, there was no reason for the

judgment debtor not to deposit the shortfall, which as such can be said

to be very meagre amount. As and when the judgment debtor was made

23 aware about the shortfall, immediately, the shortfall amount has been

deposited by the judgment debtor.

Under the circumstances, the impugned judgment and order

passed by the High court is unsustainable and the same deserves to be

quashed and set aside.

8. In view of the above and for the reasons stated above, present

appeal succeeds. The impugned judgment and order passed by the

High Court is hereby quashed and set aside. The order passed by the

DRAT dated 07.09.2015 setting aside the auction sale dated 08.01.2007

is hereby restored. The amount deposited by respondent Nos. 1 and 2

shall be returned to them alongwith the interest accrued thereon, if not

received by them so far. To do the substantial justice, we also direct that

the appellant 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

four weeks from today.

Present appeal is allowed accordingly. However, in the facts and

circumstances of the case, there shall be no order as to costs.

…………………………………..J. [M.R. SHAH]

NEW DELHI; …………………………………..J. JULY 11, 2022. [B.V. NAGARATHNA]

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