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DEBT RECOVERY APPELLATE TRIBUNAL, MUMBAI
RAJ MANI CHAUHAN, J. (Chairperson)
Ramakanthinani - Appellant
Versus
Madhukar R. Bhangay and Ors - Respondent
M.A. No. 142 of 2010
Decided On : 22-05-2013
Advocate Appeared:
For the Appellant : Shailesh Shah, Nilesh Ranawat, Mrudula Bhatia, Wadia Ghany and Co.
For the Respondent: V.V. Krishnamurthy, Rajesh Nagori, S. Ghogare, Kusumakar Kaushik, Vivek Sawant, J.B. Navlani
Headnote:
The auction sale of the suit property was conducted by the Recovery Officer on 9th January 2003. The appellants were declared as successful purchasers and were directed to deposit 25% of the sale consideration immediately and the balance 75% within 15 days from the date of the auction sale. The appellants deposited 25% of the sale consideration on the same day but failed to deposit the balance 75% within the stipulated time. The Recovery Officer extended the time for payment of the balance amount of the sale consideration and the appellants deposited the same on 13th October 2003. The respondent No. 1 filed an application before the Recovery Officer for setting aside the auction sale on the ground that it was null and void as the appellants had failed to deposit the balance 75% of the sale consideration within the stipulated time. The Recovery Officer dismissed the application on the ground that it was barred by limitation. The respondent No. 1 filed an appeal before the learned P.O., DRT, Hyderabad, who allowed the appeal and set aside the auction sale. The appellants filed an appeal before the DRAT, Chennai, which was transferred to the Appellate Tribunal for disposal.
Fact of the Case:
The appellants were declared as successful purchasers of the suit property in an auction sale conducted by the Recovery Officer on 9th January 2003. They deposited 25% of the sale consideration on the same day but failed to deposit the balance 75% within the stipulated time. The Recovery Officer extended the time for payment of the balance amount of the sale consideration and the appellants deposited the same on 13th October 2003. The respondent No. 1 filed an application before the Recovery Officer for setting aside the auction sale on the ground that it was null and void as the appellants had failed to deposit the balance 75% of the sale consideration within the stipulated time. The Recovery Officer dismissed the application on the ground that it was barred by limitation. The respondent No. 1 filed an appeal before the learned P.O., DRT, Hyderabad, who allowed the appeal and set aside the auction sale. The appellants filed an appeal before the DRAT, Chennai, which was transferred to the Appellate Tribunal for disposal.
Finding of the Court:
The Appellate Tribunal held that the auction sale was null and void as the appellants had failed to deposit the balance 75% of the sale consideration within the stipulated time. The Tribunal relied on the judgments of the Hon'ble Supreme Court in Himadri Coke & Petro Ltd. v. Soneko Developers Pvt. Ltd. and Balram Son of Bhasa Ram v. Ilam Singh, which held that non-compliance with the rules requiring the deposit of 25% of the purchase money immediately on the person being declared as a purchaser and the payment of the balance within 15 days of the sale renders the sale void.
Issues: Whether the auction sale was null and void as the appellants had failed to deposit the balance 75% of the sale consideration within the stipulated time.
Ratio Decidendi: The Tribunal held that the auction sale was null and void as the appellants had failed to deposit the balance 75% of the sale consideration within the stipulated time. The Tribunal relied on the judgments of the Hon'ble Supreme Court in Himadri Coke & Petro Ltd. v. Soneko Developers Pvt. Ltd. and Balram Son of Bhasa Ram v. Ilam Singh, which held that non-compliance with the rules requiring the deposit of 25% of the purchase money immediately on the person being declared as a purchaser and the payment of the balance within 15 days of the sale renders the sale void.
Final Decision: The appeal was dismissed and the order of the learned P.O., DRT, Hyderabad, setting aside the auction sale was upheld.
RAJ MANI CHAUHAN, J. (Chairperson)
1. This Miscellaneous Appeal under Section 20 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred as "RDDBFI Act") has been directed by the Auction Purchasers against the judgment and order dated 23rd December, 2009 passed by the learned Presiding Officer (learned P.O.), D.R.T., Hyderabad, (Andhra Pradesh) in R.A. No. 3/2009 arising out of the Miscellaneous Petition (M.P.) No. 11/2006 in Recovery Proceeding (R.P.) No. 33/2002, whereby the learned. P.O. has allowed the Appeal filed by respondent No. 1 under Section 30 of the RDDBFI Act against the order dated 5th June, 2009 passed by the then Recovery Officer in M.P. No. 11/2006 in R.P. No. 33/2002, whereby he had dismissed petition filed by the Applicant/respondent No. 1 under Rules 57 and 58 of the Second Schedule to the Income-tax Act, 1961 for setting aside the auction sale dated 9th January, 2003 conducted by him in R.P. No. 33/2002 in which the appellant, Mr. Ramakanth Inani and family were declared as successful purchasers. The relevant facts giving rise to the present Appeal may be summarized as under:
2. The respondent No. 2, Auriferous Aqua Farms Ltd., a Company incorporated under the Indian Companies Act, 1956, having its Registered Office at 10.1.27/1, Masab Tank, Hyderabad, A.P., involved in carrying on business of shrimp culture, availed Working Capital Loan Facility (WCLF) of Rs. 3,79,00,000/- (Rupees three crores seventy-nine lacs only) sanctioned by respondent No. 6, the State Bank of India with the following sub-limits:
3. The respondent No. 1, Shri Madhukar R. Bhangay; respondent No. 3, Mr. J. Sridhar Reddy; respondent No. 4, Mr. M. Sreedhar; and respondent No. 5, Mr. J. Gopal Reddy who were the directors of respondent No. 2, stood as guarantors to the credit facilities availed by the respondent No. 2, the borrower.
4. The respondent No. 1, Shri Madhukar R. Bhangay and respondent No. 3, Mr. J. Sridhar Reddy created equitable mortgage of their following immovable properties in favour of respondent No. 6 to secure the amount of loan availed by respondent No. 2 by depositing the title deeds:
(1) Description of the mortgaged property created by respondent No. 1, Shri Madhukar R. Bhangay:
Plot No. 623/3, 1593 sq. yards (1332 sq. mtrs.) in Survey No. 40/1 (New 120) of Sheikpet Village and Survey No. 102/1 of Hakimpet Village, within the limits of Municipal Corporation of Hyderabad, A.P., personally known as "Jubilee Hills", Hyderabad bounded by as under:
North: Plot No. 623/4
South: Plot No. 622/A
East: Plot No. 621
West: Plot No. 30 feet, Road No. 34.
(2) Description of the mortgaged property ordered by respondent No. 3, Shri J. Sridhar Reddy:
House bearing Plot No. 747, admeasuring 1884 sq. yards (1577 sq. metres) in Survey No. (Old) 403/1 (New-120) of Sheikpet and Survey No. 102/1 of Hakimpet Village, within the limits of Municipal Corporation of Hyderabad with Ward No. 2, Block No. 8, presently known as "Jubilee Hills", Hyderabad, A.P. bounded by as under:
North: Plot No. 50 feet wide Road No. 38
South: Plot Nos. 766, 767-A, 767-A
East: Plot No. 748
West: Plot No. 746.
(hereinafter referred as the 'suit property').
5. Admittedly, the respondent No. 2 could not repay the amount of credit facilities availed by it within the stipulated time as provided in the Credit Facility Agreement. Consequently, respondent No. 6 had filed O.A. No. 123/1997 against the borrowers/guarantors in D.R.T. Karnataka and Andhra Pradesh at Bangalore for recovery of its outstanding dues of Rs. 1,78,48,687.80 (Rupees one crore seventy-eight lakh forty-eight thousand six hundred eighty-seven and paise eighty only) together with pendente lite and future interest @ 18.75% per annum with quarterly rests till full and final realization of the claimed amount.
6. The defendants despite service of summons, did not appear to contest the O.A. Consequently, the learned P.O., D.R.T. vide judgment and order dated 14th May, 1999 all
