1. Auction sale of property was conducted against a judgment-debtor's firm; later, legal heirs challenged the sale, citing irregularities in deposit payments and lack of notice. (Para 3 , 4 , 6 , 9 )
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2026 Supreme(SC) 212
SUPREME COURT OF INDIA
PAMIDIGHANTAM SRI NARASIMHA, MANOJ MISRA, JJ.
M/s. Adishakti Developers – Appellant
Versus
The State Of Maharastra & Ors. – Respondents
Civil Appeal Nos. 002545 - 002548 of 2026 (Arising out of SLP (C) No. 12343-12346 of 2018)
with
Mahanagar Co-Operative Bank Ltd – Appellant
Versus
The Divisional Joint Registrar, Co-Operative Societies & Ors. – Respondents
Civil Appeal No. 002549 of 2026 (Arising out of SLP (C) Nos. 12617 of 2018)
with
Mahanagar Co-Operative Bank Ltd. – Appellant
Versus
The State Of Maharastra & Ors. – Respondents
Civil Appeal No. 002550 of 2026 (Arising out of SLP (C) No. 12591 of 2018)
Decided On : 25-02-2026
Important Points
Mandatory conditions for auction sales under the Maharashtra Co-operative Societies Act cannot be waived; violation results in nullity of the sale and requires fresh proceedings.
Subject
Civil Law - Property and Cooperative Society
Act Referred
CONSTITUTION OF INDIA: Art.227
MAHARASHTRA CO-OPERATIVE SOCIETIES ACT: S.91, S.98
MAHARASHTRA CO-OPERATIVE SOCIETIES RULES: R.107, R.107(11)(e), R.107(11)(f), R.107(11)(g), R.107(11)(h), R.107(11)(i), R.107(11)(k), R.107(13), R.107(14)
SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT: R.13(2)
SECURITY INTEREST ENFORCEMENT RULES: R.9(4), R.9(5)
MAHARASHTRA CO-OPERATIVE SOCIETIES ACT: S.91, S.98
MAHARASHTRA CO-OPERATIVE SOCIETIES RULES: R.107, R.107(11)(e), R.107(11)(f), R.107(11)(g), R.107(11)(h), R.107(11)(i), R.107(11)(k), R.107(13), R.107(14)
SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT: R.13(2)
SECURITY INTEREST ENFORCEMENT RULES: R.9(4), R.9(5)
Headnote
(A) Maharashtra Co-operative Societies Act, 1960 - Section 91 and Section 154 - Maharashtra Co-operative Societies Rules, 1961 - Rule 107 - Auction sale for recovery of dues challenged - High Court affirmed that mandatory condition of deposit within specified time was violated, rendering auction void. (Paras 11, 12, 45, 56)
(B) Legal representatives of a debtor may challenge auction's validity post-confirmation if proper procedures, like timely deposits and legal remedies, are not followed - The court denied waiver on the grounds of public interest. (Paras 11, 51, 55)
Facts of the case:
The dispute arose from an auction to recover debts owed by a partnership firm, involving properties from a deceased partner. Legal representatives contested the auction due to procedural violations during the sale confirmation. (Paras 3, 4, 8)
Findings of Court:
The court annulled the auction sale due to failure to comply with mandatory payment timelines, ordered a fresh auction for the property, and directed a refund to the initial bidders. (Paras 57, 58)
Issues: Whether the sale was valid given the failure to follow mandated procedures; validity of the challenge by the legal representatives of the debtor; and whether a waiver of the deposit requirement could apply. (Paras 20, 21)
Ratio Decidendi: The court emphasized strict adherence to the stipulated regulations for public auctions, stating that mandatory conditions, such as timely deposits, cannot be waived and their violation renders sale agreements void. (Paras 56, 55)
Result: Appeals partly allowed. The auction sale was set aside, and the subject property was to be auctioned again. (Paras 58, 59)
(B) Legal representatives of a debtor may challenge auction's validity post-confirmation if proper procedures, like timely deposits and legal remedies, are not followed - The court denied waiver on the grounds of public interest. (Paras 11, 51, 55)
Facts of the case:
The dispute arose from an auction to recover debts owed by a partnership firm, involving properties from a deceased partner. Legal representatives contested the auction due to procedural violations during the sale confirmation. (Paras 3, 4, 8)
Findings of Court:
The court annulled the auction sale due to failure to comply with mandatory payment timelines, ordered a fresh auction for the property, and directed a refund to the initial bidders. (Paras 57, 58)
Issues: Whether the sale was valid given the failure to follow mandated procedures; validity of the challenge by the legal representatives of the debtor; and whether a waiver of the deposit requirement could apply. (Paras 20, 21)
Ratio Decidendi: The court emphasized strict adherence to the stipulated regulations for public auctions, stating that mandatory conditions, such as timely deposits, cannot be waived and their violation renders sale agreements void. (Paras 56, 55)
Result: Appeals partly allowed. The auction sale was set aside, and the subject property was to be auctioned again. (Paras 58, 59)
Legal Category Hierarchy
Advocates appeared:
For the Petitioner(s): Mr. Vijay Hansaria, Sr. Adv. Mr. M. Y. Deshmukh, AOR Ms. Manjeet Kirpal, Adv. Mr. Shiv Kumar, Adv. Mr. Ashvathaman Dinesh, Adv. Mrs. V.Mohana, Sr. Adv. Mr. Dinesh Chandra, Adv. Mr. Ravindra Keshavrao Adsure, AOR Mr. Sagar N.pahune-patil, Adv. Mr. Yash Prashant Sonavane, Adv.
For the Respondent(s): Mr. Vinay Navare, Sr. Adv. Mr. Yashodhan Chandurkar, Adv. Ms. Mansni Jain, Adv. Ms. Abha R. Sharma, AOR Mr. Samrat Krishnarao Shinde, Adv. Mr. Siddharth Dharmadhikari, Adv. Mr. Aaditya Aniruddha Pande, AOR
For the Petitioner(s): Mr. Vijay Hansaria, Sr. Adv. Mr. M. Y. Deshmukh, AOR Ms. Manjeet Kirpal, Adv. Mr. Shiv Kumar, Adv. Mr. Ashvathaman Dinesh, Adv. Mrs. V.Mohana, Sr. Adv. Mr. Dinesh Chandra, Adv. Mr. Ravindra Keshavrao Adsure, AOR Mr. Sagar N.pahune-patil, Adv. Mr. Yash Prashant Sonavane, Adv.
For the Respondent(s): Mr. Vinay Navare, Sr. Adv. Mr. Yashodhan Chandurkar, Adv. Ms. Mansni Jain, Adv. Ms. Abha R. Sharma, AOR Mr. Samrat Krishnarao Shinde, Adv. Mr. Siddharth Dharmadhikari, Adv. Mr. Aaditya Aniruddha Pande, AOR
Table of Contents
2. Parties disputed whether auction sale followed mandatory statutory deposit requirements, whether violation is curable by waiver, and whether revisional jurisdiction could be invoked alongside alternative remedies. (Para 10 , 16 , 17 , 18 , 19 )
3. The court found statutory deposit requirements in public auctions are mandatory and not mere formalities, serving public interest; therefore, non-compliance renders an auction sale void, not voidable. (Para 47 , 55 )
4. Failure to deposit the remainder of the auction purchase money within the mandatory statutory period renders the auction sale a nullity, regardless of any subsequent acceptance by the creditor. (Para 47 , 48 , 55 )
5. The High Court order set aside the null auction sale and directed a fresh public auction, while ordering refund of deposits with interest and preserving settlement rights between parties. (Para 58 , 59 )
6. Is the requirement to deposit the remainder of the auction purchase money within the prescribed period under the relevant Rules mandatory?
Yes. The court held that the statutory requirement to deposit the remaining purchase money within the specified time frame is mandatory and not subject to extension, serving a public purpose to maintain the sanctity of public auctions. (Para 47 , 55 )
7. Can the violation of mandatory auction deposit conditions be waived by the creditor?
The court held that mandatory auction deposit requirements serve a larger public purpose and are not solely for the creditor's benefit; thus, the creditor cannot unilaterally waive these statutory provisions to validate an auction that fails to meet mandatory procedural requirements. (Para 54 , 55 )
8. Does the failure to utilize specific rule-based remedies for setting aside an auction sale bar the exercise of statutory revisional powers?
No. The court concluded that wide revisional powers authorized by statute are not limited by procedural rules for setting aside sales; thus, the absence of an application under specific sub-rules does not denude the revisional authority of jurisdiction to review the legality of an auction sale. (Para 39 )
JUDGMENT :
MANOJ MISRA, J.
1. Leave granted.
2. These six appeals are directed against common judgment and order dated 26.03.2018 passed by the High Court of Judicature at Bombay1[High Court.] whereby four writ petitions i.e., W.P. No. 1543 of 2009; W.P. No. 6544 of 2009; W.P. No. 393 of 2010; and W.P. No. 1779 of 2010 were disposed of.
Facts
3. A plot of land bearing No. 21, admeasuring 810 Sq. mtr., pertaining to Survey No. 14, Village Chembur, Tehsil Kurla, Bombay Suburban District2[Hereinafter described as property in dispute.] was subjected to auction sale to recover dues of Mahanagar Co- operative Bank3[Hereinafter described as the Bank.] payable by a partnership firm i.e., M/s. Borse Brothers4[Hereinafter referred to as the firm.]. The firm had availed cash credit facility of Rs. 10,00,000/- from the Bank. As it failed to repay the amount, proceedings were initiated by the Bank under Section 91 of Maharashtra Co-operative Societies Act, 19605[Hereinafter referred to as the 1960 Act.]. In the said proceedings, on 04.04.1994 the Co-operative Court passed an ex parte award of Rs.24,19,904.92 plus interest @ 17.5% per annum against the firm, which was represented through its partners including Panditrao Borse. Pursuant to the award, on 04.07.1996 the Co-operative Court issued a recovery certificate under Section 98 of the 1960 Act. Thereafter, a notice of demand of Rs.52,27,800 was served upon the firm and its partners. On 16.04.2004, the Special Recovery and Sale Officer6[Hereinafter referred to as SRO] took possession of the disputed property. However, legal representatives of Panditrao Borse i.e., one of the partners, who died in between, moved an application before the Co-operative Court for setting aside the ex parte award and for stay of execution. This application was rejected by the Co- operative Court on 06.09.2004. On 24.12.2004, notice inviting bids for the property in dispute was published in the local newspapers. On 29.01.2005, SRO found bid of M/s. Adhishakti Developers at Rs.1,51,00,000 highest and the same was accepted. On the same day, M/s. Adhishakti Developers deposited Rs. 52,85,000 and balance of Rs. 98,15,000 was deposited on 17.03.2005, which the Bank accepted. On 18.03.2005, SRO issued order for confirmation of sale and handed physical possession to M/s. Adhishakti Developers. Thereafter, on 21.03.2005, sale certificate was issued, followed by execution of registered conveyance deed dated 13.06.2005 in favour of M/s. Adhishakti Developers.
4. The heirs/ legal representatives of Panditrao Borse filed a writ petition before the High Court, which was dismissed on the ground of availability of alternative remedy under Rule 107 of MAHARASHTRA CO-OPERATIVE SOCIETIES RULES , 19617[Hereinafter referred to as 1961 Rules]. However, instead of availing that remedy, the legal representatives of Panditrao Borse filed a Revision Application No. 326 of 2008 under Section 154 of 1960 Act before Divisional Joint Registrar, Co- operative Societies, Mumbai8[Hereinafter referred to as Joint Registrar].
5. In between, acting on the conveyance deed, the appellant i.e., M/s Adishakti Developers (i.e., the appellant in the appeal title) moved an application for correction / mutation of the revenue records. However, the Collector, vide order dated 09.03.2006, rejected the application. This order was challenged by the appellant by filing an appeal which came to be dismissed vide order dated 01.12.2008. Aggrieved therewith, the appellant filed Writ Petition No. 1543 of 2009, and the Bank filed Writ Petition No. 6544 of 2009.
6. In the meantime, vide order dated 20.03.2009, the Joint Registrar condoned the delay in filing of revision by heirs and legal representatives of Panditrao Borse against the auction sale and, later vide order dated 29.12.2009, the Joint Registrar set aside the auction including its confirmation and consequential sale dated 18.03.2005 while exercising power under Section 154 of the 1960 Act, read with Rule 1
