Proclamation of sale is a mandatory requirement and failure to issue it invalidates the sale proceedings.

K.K. Sasidharan, J.

Introductory:

1. These two Writ Petitions raises a short point of some importance relating to the relevance of proclamation in Auction Sale proceedings.

2. The Writ Petitions are at the instance of a borrower, and the challenge is to the sale notice dated 16th May 2012 in DRC

No.36/2012 in O.A. No.222/2010 on the file of Debt Recovery Tribunal II, Chennai, and the related Auction proceedings dated 26th June 2012 on the file of the Recovery Officer, Debt Recovery Tribunal, Chennai.

The facts:

3. The Adyar Branch of Indian Bank granted financial assistance of M/s. Anbu Pazhamudir Nilayam, stated to be a Partnership Firm. The Writ Petitioner and Respondents 3 & 4 were the partners of the said Firm. The Petitioner also executed a Guarantee Deed undertaking to pay the amount due from the Second Respondent besides mortgaging the subject property.

4. The Second Respondent failed to pay the loan amount and this resulted in initiating recovery proceedings by the Bank. The Bank filed O.A.No.222 of 2010 before the Debt Recovery Tribunal II, Chennai [hereinafter referred to as the “Tribunal”]. Though the Petitioner was also a party to the proceedings, he has not chosen to appear before the Tribunal. The Tribunal was pleased to issue a Recovery Certificate for a sum of Rs.7,99,09,385/-authorizing the Bank to recover the said sum with interest. The Petitioner challenged the order dated 28th December 2011 in O.A. No.222 of 2010 before the Tribunal.

5. While so, the Recovery Officer initiated steps to auction the property mortgaged by the Petitioner. The Recovery Officer initially attached the property and thereafter issued an Auction Notice dated 16th May 2012 indicating that the property would be auctioned on 26th June 2012. Accordingly, auction was conducted on 26th June 2012. The bid submitted by Mr. M.C. Kandasami and V. Saravanan for a sum of Rs.65 lakhs was found to be the highest bid. The joint bidders have deposited a sum of Rs.16.25 lakhs being 25% of the bid amount. However, confirmation has not been issued. The Sale Notice dated 16th May 2012 and the related Auction proceedings are challenged in this Writ Petition primarily on the ground that before auctioning the property, proclamation of sale was not issued by the Recovery Officer.

6. According to the Petitioner, his statutory Appeal challenging the order passed by the Tribunal was pending before the Debt Recovery Appellate Tribunal [hereinafter referred to as “the Appellate Tribunal”]. The Appeal was not numbered on account of the delay in re-presentation. While so, the Recovery Officer issued the impugned Sale Notice and thereafter conducted the Sale proceedings on 26th June 2012. It is the case of the Petitioner that the mandatory provisions of the II Schedule to the Income Tax Act made applicable to the proceedings for recovery under the Recovery of Debts due to Banks and Financial Institutions Act has not been complied with by the Recovery Officer. According to the Petitioner, Rule 52(2) of the II Schedule mandates that the Tax Recovery Officer shall cause a proclamation of the intended sale to be made in the language of the District before ordering sale of the immovable property. It was his further contention that the property would easily fetch Rs.One crore and as such, the Recovery Officer was not justified in accepting the bid for Rs.65 lakhs without making earnest efforts to obtain the correct value of the property.

7. The Chief Minister, A.R.M. Branch, Indian Bank, filed a detailed Counter Affidavit disputing the claim made by the Petitioner. According to the Bank, all the procedures laid down under II Schedule to the Income Tax Act were followed by the Recovery Officer in its letter and spirit and as such, no interference is called for in the proceedings in question. The Bank further contended that the sale Notification was published in Daily Thanthi and on account of wide publicity, several bidders participated in the Auction proceedin