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IN THE HIGH COURT OF JHARKHAND AT RANCHI
DEEPAK ROSHAN, J.
JogendraSingh, son of Pritpal Singh - Petitioners
Vs.
Punjab National Bank (E-United Bank of India) - Respondent
W.P. (C) No. 7608 of 2023
Decided On : 20-02-2025
(A) Recovery of Debt and Bankruptcy Act, 1993 - The petitioners sought to quash a letter directing the handover of property to an auction purchaser, claiming violations of the Act. The property was mortgaged by a company that defaulted on a loan, leading to recovery proceedings. (Paras 2-3, 12-13)
(B) Writ Jurisdiction - The court held that the petition was maintainable; however, it was found to be an abuse of process as it challenged a confirmation of sale that was not appealed within the statutory period. (Paras 20-22, 37-38)
(C) Bona Fide Purchaser - The court emphasized that a bona fide purchaser at auction is protected and cannot be compelled to return the property even if the judgment debtor succeeds in subsequent appeals. (Paras 39-42)
Facts of the case:
The petitioners, directors of a company, challenged the handover of property sold at auction due to a loan default. The property was mortgaged and sold after the company’s loan was declared a non-performing asset. (Paras 2-6)
Findings of Court:
The court found that the petitioners failed to challenge the auction proceedings in a timely manner and that the auction purchaser was a bona fide purchaser. (Paras 20-22, 37-42)
Issues: The key issues included the maintainability of the writ petition and the rights of the auction purchaser versus the judgment debtor. (Paras 20-22, 38)
Ratio Decidendi: The court ruled that the petition was an abuse of process, emphasizing the need for timely appeals against recovery orders, and affirmed the rights of bona fide purchasers in auction sales. (Paras 20-22, 39-42)
Result: Writ petition dismissed with costs.
JUDGMENT :
DEEPAK ROSHAN, J.
Petitioners have approached this Court for following reliefs:-
(i) For issuance of appropriate writ(s)/order(s)/direction(s) for quashing up of the letter No. 688, dated 21.07.2022 (Annexure-5) by which the Deputy Commissioner, SaraikellaKharsawan has illegally handed over the property of the petitioners to Respondent No.5 which was located at Plot No. M-18, 6th Phase, Adityapur Industrial Area, Jamshedpur, District-SaraikellaKharsawan being survey plot No. 2147 (P), Khata No. 744 measuring an area of land about 45000 square feet at Village Bara Gamharia, Thana No. 66, Thana Saraikella, P.S. Adityapur, District Saraikella Kharsawan (hereinafter to be referred to as ‘the property);
(ii) For issuance of appropriate writ(s)/order(s)/direction(s) upon Respondent No.5 for restraining him from further construction on the property located at Plot No. M-18, 6th Phase, Adityapur Industrial Area, Jamshedpur, District-SaraikellaKharsawan being survey plot No. 2147(P), Khata No. 744 measuring an area of land about 45000 square feet at Village Bara Gamharia, Thana No. 66, Thana Saraikella, P.S. Aditdyapur, District SaraikellaKharsawan.
(iii) For issuance of appropriate writ(s)/order(s)direction(s) upon the concerned respondents for handing over the possession of the property located at Plot No. M-18, 6th Phase Adityapur Industrial Area, Jamshedpur, District-SaraikellaKharsawan being survey plot No. 2147 (P), Khata No. 744 measuring an area of land about 45000 square feet at Village Bara Gamharia, Thana No. 66, Thana Saraikella, P.S. Adityapur, District-SaraikellaKharsawan to the petitioners during the pendency of the O.A. No. 64/2016 pending in the learned Debt Recovery Tribunal, Ranchi.
(iv) Any other relief(s)s for which the petitioners may be found entitled, may be granted.
2. On marshaling of the facts as available from the records, it would transpire that on 16.02.2015 a cash credit facility of Rs. 300.00 lakh and a term loan of Rs. 200.00 lakh was sanctioned to the loaneeM/s. Mountain Movers and Trainers Pvt. Ltd. by Respondent-Punjab National Bank. A landed property of the loanee-company, located at Plot No. M-18, 6th Phase, Adityapur Industrial Area, Jamshedpur, District Saraikela-Kharsawan, bearing survey plot no. 2147-C, Khata No. 744, measuring an area of 45,000 sq.ft. was mortgaged with Respondent-Bank. Loan advanced to the company turned into NPA and an Original Application, under Recovery of Debt and Bankruptcy Act, 1993 was filed before Debt Recovery Tribunal at Ranchi which was registered as O.A. No. 64/2016.
3. Initially proceeding in said Original Application was declared ex- parte against the Defendants vide order dated 18.07.2016, but same was recalled vide order dated 05.10.2016 and, thereafter, Judgment in O.A. No. 64/2016 was passed on 19.09.2017 issuing Certificate of recovery against the company, its Director and Guarantor namely, Dharamveer Singh (Petitioner No.2). Consequent upon issuance of Certificate for recovery, recovery proceeding was instituted before Recovery Officer,registered as R.C. Case No. 571/2017 and objection regarding valuation report was made by Petitioner No.1, being one of the Directors of the company and Petitioner No.2-Guarantor. Said objection towards valuation was dismissed by Recovery Officer vide order dated 16.03.2021. However, in the meantime, review application was filed only by Guarantor i.e. Petitioner No.2, namely, Dharamveer Singh for setting aside the ex-parte Judgment in O.A. No. 64/2016, which was registered as Review Application No. 02/2021.
4. In the said Review Application No. 02/2021, an order was passed by Debt Recovery Tribunal dated 25.03.2021 deferring e-Auction scheduled to be held by Bank on 30.03.2021. However, on 30.03.2021, auction process was completed and Respondent No.5 wasdeclared as successful bidder.
5. Since in the review petition filed by Guarantor, auction process was directed to be deferred,, Recovery Officer, in R.C. Case No. 571/2017
A bona fide purchaser at auction is protected, and a writ petition challenging the confirmation of sale is not maintainable if filed beyond the statutory period.
The court affirmed the validity of a mortgage auction, emphasizing banks' rights over secured properties despite challenges from subsequent purchasers and procedural compliance in auction processes.
The judgment emphasizes the finality of sale transactions, the need to balance the interests of defaulters and creditors, and the importance of following the statutory provisions for challenging the ....
Auction sale under SARFAESI Act upheld; simultaneous civil proceedings do not invalidate the completed transaction, and allegations of undervaluation found unsubstantiated.
The court upheld the dismissal of a writ petition due to the availability of an alternative remedy under the Recovery of Debts and Bankruptcy Act, emphasizing the need for statutory compliance in auc....
The court upheld the Recovery Officer's discretion in auction conduct, ruling that established legality and auction terms prevent invalidation due to later higher bids.
The Recovery Officer should cancel the auction sale if the bank's dues are paid before the sale is confirmed. The auction purchaser has no right over the property before the sale is confirmed.
The central legal point established in the judgment is the importance of upholding consent terms, the obligations of the parties, and preventing deliberate obstruction of recovery proceedings.
Recovery Officers must adhere to jurisdictional limits and cannot impose binding interim orders affecting property rights without proper evidentiary basis and due process.
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