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2022 Supreme(Online)(KER) 27582
HIGH COURT OF KERALA
V. G. Arun, J
BANK OF BARODA – Appellant
Versus
OIKO CREDIT ECUMENICAL DEVELOPMENT CO-OPERATIVE SOCIETY – Respondent
CRP 206 2021
SABU P.JOSEPH, C.N.SREEKUMAR, MANJU PAUL, ANIL PRASAD, GEORGE ABRAHAM
The court upheld that sale confirmations in execution proceedings are valid if procedural rules are followed, even if challenges are raised on procedural grounds.
Headnote:
Judgment - Sale Confirmation - Code of Civil Procedure - Order XXI, Rules 84, 85, 92 - The court upheld the validity of a sale despite arguments regarding failure to deposit purchase money, emphasizing the importance of compliance with procedural rules in execution proceedings.
Fact of the Case:
The case involves a bank's challenge to the confirmation of a property sale in execution proceedings related to recovery from a defaulting debtor, where a compromise agreement was previously established between the parties.
Finding of the Court:
The court found no merit in the bank's challenge to the sale confirmation, affirming that the sale was conducted in accordance with applicable rules and that all necessary procedures had been followed.
Issues: The primary issue was whether the confirmation of the sale was justified given the arguments concerning non-compliance with procedural rules related to deposit amounts for the purchase.
Ratio Decidendi: The court concluded that, under the relevant rules, once an application for setting aside the sale is dismissed, the court must confirm the sale, provided the process complies with legal provisions.
Final Decision: The civil revision petition was dismissed without prejudice to ongoing appeals.
ORDER
Dated this the 28th day of March, 2022 The revision petitioner Bank is the 7th judgment debtor in E.P.No.30 of 2013 in O.S.No.99 of 2009 of the Subordinate Judge's Court, Muvattupuzha. The revision petition is filed aggrieved by the order confirming the sale of one item of the decree schedule property in favour of the decree holder/first respondent.
2. The essential facts are as under;
The Nirmalgram Vanitha Dairy Central Society/second respondent had availed credit facilities from the revision petitioner Bank on 23.01.1995 by executing loan agreements and hypothecation deeds. On 04.12.1996, the second respondent furnished further security by mortgaging 1.14 Acres of land and building owned by the Society, comprised in Sy.No.447/1 of Keerampara Village. While so, the first respondent, a Co-operative Financial Institution functioning out of Netherlands and offering loans for investment capital for micro financial institutions, co-operatives and other small and medium size enterprises in the developing countries, granted loan to the tune of US Dollars 4,28,571 equivalent to Rs.2.520 Crores to the second respondent. The loan was granted on 14.12.2000 based on an agreement dated 10.12.2000 and on the security of the machinery and other assets of the second respondent Society. The second respondent Society defaulted in repayment of the financial facility availed from the revision petitioner Bank, compelling the Bank to take over possession of the secured assets on 26.02.2008 through its Authorised Officer appointed in accordance with the provisions of the SARFAESI Act. The second respondent Society approached the DRT challenging the action of the Authorised Officer. The Securitisation Application filed by the second respondent was allowed by the DRT. Even though the Bank challenged the order of the DRT before the Debts Recovery Appellate Tribunal, the DRAT did not interfere with the order, but granted liberty to initiate fresh proceedings. Thereupon, the Bank filed O.A.No.343 of 2008 before the Debts Recovery Tribunal. In the meanwhile, the first respondent challenged the Bank's authority to initiate recovery proceedings against the assets of the second respondent by filing W.P.(C) No.10836 of 2008. The Single Bench and the Division Bench refused to interfere with the proceedings initiated by the Bank and relegated the first respondent to the DRT. Thereafter, the first respondent filed O.S.No.99 of 2009 before the Subordinate Judge's Court, Muvattupuzha arraying the Bank as the 7th defendant. By Ext.R1(a) judgment dated 09.11.2012, the suit was decreed as under;
“(a) Defendants are directed to pay an amount of Rs.3,32,60,000/- (Rupees three crores thirty two lakhs sixty thousand only) with 6% interest per annum from the date of suit till realisation.
(b) Directing sale of plaint schedule item number 1 to 7 properties and the plaintiff is allowed to appropriate the sale proceeds towards the decree debt.
(c) The plaintiff is also allowed to realise the balance amount if any after adjusting the sale proceeds from the defendants 1 and 2 personally and against their assets.
(d) Plaintiff is entitled to realise the entire costs of litigation from the defendants.”
In the meanwhile, O.A.No.343 of 2008 filed by the Bank before the DRT, was decreed on 30.06.2011, allowing the Bank to realise an amount of Rs.96,62,627/- with further interest on the sum of Rs.95,45,964/- @ 12% per annum from 17.11.2008 to till realisation and also its costs from the defendants jointly and severally and by sale of 'A' to 'E' schedule properties.
3. Based on the decree, the first respondent filed E.P.No.30 of 2013 on 04.03.2013. Pending the execution proceedings, the petitioner and the first respondent entered into Annexure R1(e) compromise dated 28.02.2015, with respect to the sale of item No.5 of the decree scheduled property, on the following terms and conditions;
“1. It is agreed by both parties that out of the sale consideration obtained in the above execut
