Mandatory auction deposit rules under Rule 57 govern debt recovery sales; non-compliance voids the sale and defeats possession rights.

In recovery proceedings under Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Second Schedule to the Income Tax Act, 1961 applies unless modified, so the auction purchaser must make an immediate 25% cash deposit on being declared the purchaser and pay the balance within 15 days. The text treats these requirements in Rule 57 as mandatory, not directory, and states that payment by cheque does not satisfy the immediate deposit condition. It further notes that late payment of the balance cannot validate the sale, with non-compliance rendering the auction sale void and leaving the purchaser without an enforceable right to possession.

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Issues: Whether, in recovery proceedings under Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Rule 57 of the Second Schedule to the Income Tax Act, 1961 is mandatory so as to require immediate cash deposit of 25% of the bid amount and payment of the balance within 15 days, and whether non-compliance renders the auction sale void and deprives the purchasers of any enforceable right to possession.

Analysis: Section 29 makes the Second and Third Schedules to the Income Tax Act applicable to debt recovery proceedings, and in the absence of any modifying rule the Recovery Officer is bound by the procedure prescribed therein. Rule 57 requires the purchaser to deposit 25% of the purchase money immediately on being declared the purchaser and to pay the balance within 15 days. The Court treated these requirements as mandatory, following the settled principle that failure to comply with the prescribed deposit and payment conditions makes the sale a nullity and obliges resale of the property. It was held that payment by cheque did not satisfy the requirement of an immediate cash deposit, and that payment of the balance beyond the stipulated period could not validate the sale. The Court declined to accept the view that Rule 57 was merely directory in the absence of a specific modification under the Act.

Conclusion: Non-compliance with Rule 57 invalidated the auction sale, forfeited the purchasers' claim to the property, and justified refusal of possession.

Ratio Decidendi: Where recovery proceedings adopt the Second Schedule to the Income Tax Act, 1961, compliance with the requirements of immediate 25% deposit and payment of the balance within 15 days under Rule 57 is mandatory, and default renders the sale a nullity with no rights accruing to the auction purchaser.

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