Statutory recovery sale challenge fails where Rule 61 conditions, including deposit and substantial injury, are not satisfied.

In recovery proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 executed through the Second Schedule to the Income-tax Act, a challenge to a confirmed auction sale was rejected because the petitioners had notice of the debt, recovery steps and sale proclamations, and the property was mortgaged by deposit of title deeds. The Court held that Rule 68-B did not apply to such recoveries and that Rule 61 required proof of non-service, material irregularity and substantial injury, with deposit of the recoverable amount by the defaulter where required. As no deposit was made, no substantial injury was shown, and the writ remedy was pursued belatedly, interference under Article 226 was declined.

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Issues: Whether the writ petition challenging the recovery auction and confirmed sale was maintainable in view of the statutory remedy and the requirements of Rule 61 of the Second Schedule to the Income-tax Act, 1961; and whether the sale could be set aside on the grounds of non-service of notice, irregularity, alleged absence of attachment, limitation under Rule 68-B, or inadequacy of price.

Analysis: The recovery was being executed under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 through the machinery of the Second Schedule to the Income-tax Act, 1961. The petitioners had notice of the debt, the recovery process, and the sale proclamations, and the Court found that the subject property stood mortgaged by deposit of title deeds. The challenge based on Rule 68-B was rejected on the view that the time restriction in that provision was not attracted to recoveries under the 1993 Act. The Court further held that, even assuming procedural objections, Rule 61 required the applicant to show non-service of notice or material irregularity, substantial injury, and, in the case of the defaulter, deposit of the amount recoverable in execution of the certificate. No such deposit was made, no substantial injury was established, and the petitioners delayed their challenge and approached the Court without availing the available remedy. The valuation objections and the criticism of the auction process were found insufficient to warrant interference under Article 226 of the Constitution of India.

Conclusion: The challenge to the auction sale failed and the writ petition was not fit for interference.

Final Conclusion: The Court declined to unsettle the confirmed recovery sale and left the statutory recovery process undisturbed.

Ratio Decidendi: In a recovery under the 1993 Act governed by the Second Schedule to the Income-tax Act, 1961, a defaulter seeking to set aside a sale must satisfy the statutory conditions of Rule 61, including deposit where required and proof of substantial injury, and belated writ interference will not be granted where the statutory scheme has not been complied with.

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