Procedural adherence in auction sales is critical; failure to follow statutory requirements results in invalidation of the sale.

JUDGMENT :

(PER : HONOURABLE THE CHIEF JUSTICE MRS. JUSTICE SUNITA AGARWAL)

1. These appeal arise out of a common judgment and order dated 4.08.2023 passed by the learned Single Judge in Special Civil Application Nos. 15060 of 2022 with Civil Application (For Vacating Interim Relief) No. 1 of 2022 with Special Civil Application No. 18857 of 2022 and hence, they have been heard together and are being decided by this common judgment.

2. Heard the learned counsel for the appellants and perused the record. The present appeals have been directed against the judgment and order dated 04.08.2023 passed by the learned Single Judge whereby the auction sale held in favour of appellant - Jignesh Natwarlal Dhameliya on 09.05.2022 was set aside being contrary to the GUJARAT CO-OPERATIVE SOCIETIES RULES , 1965 (hereinafter, referred to as “the Rules of 1965”). The learned Single Judge has returned the finding that once the auction sale was postponed, the bank was required to issue fresh auction notice inviting offers as per the prescribed procedure. It is also noted that auction, which was initially scheduled on 06.05.2022, was adjourned to 09.05.2022 without recording any reasons by the respondent No. 4 - bank (in LPA Nos. 1177 & 1178 of 2023). The provisions contained in Rules 119 and 120 of the Rules of 1965 have been noted by the learned Single Judge to note the procedure of sale by auction.

3. It is argued by the learned counsel for the appellants (in LPA Nos. 1177 & 1178 of 2023) that the learned Single Judge has erred in law in setting aside the auction holding that a fresh auction sale was required to be conducted for the reason that the sale which was scheduled on 06.05.2022, was rescheduled for 09.05.2022, and thus, held within a period 7 days from the scheduled date of auction in the sale proclamation which was published on 05.04.2022. All the bidders who participated in the auction held on 09.05.2022 had submitted their 10% of the EMD amount and necessary papers on 5.05.2022, one day prior to the scheduled date of auction, which was 06.05.2022 initially. It is submitted that in the sale proclamation dated 05.04.2022, it was clarified that the bidders were required to submit their papers and 10% of the EMD amount one day prior to the date of auction, to seek consideration of their bid in the public auction. The submission is that, the original petitioner / respondent herein did not submit his bid on or before 05.05.2022 and therefore, their disqualification on the date of auction i.e. 09.05.2022, cannot be said to be illegal. Reliance is placed on the decision of the Apex Court in Deendayal Nagari Sahakari Bank Limited and Another v. Munjaji and Others with Ratnakar S/o. Manikrao Gutte v. Munjaji and Others , (2022) 7 SCC 594 , to submit that in pari materia provisions of Rule 107 of the MAHARASHTRA CO-OPERATIVE SOCIETIES RULES , 1961, the Apex Court has held that once the auction sale was postponed for the reasons beyond the control of the competent authority, there was no requirement of issuance of fresh sale proclamation.

3.1 Noticing the above, we may extract the provisions contained in Rules 119 and 120 of the Rules 1965, which hold the field as on date:

“119. Proclamation before sale. - Proclamation of sale shall be published by affixing a notice in the office of the Recovery Officer and the Taluka Office atleast thirty days before the date fixed for the sale and [the Recovery Officer shall cause the publication of the proclamation regarding the time and place of intended sale to be made by beat of drum in the village on the day prior to a fortnight and on two consecutive day previous to the date fixed for sale and on the date of sale prior to the commencement of the sale]. Such proclamation shall where attachment is required before sale, be ma