Mandatory payment in statutory auctions prevents confirmation of sale when the bidder misses the prescribed balance deposit deadline.

In a statutory revenue auction, timely payment of the full purchase money was treated as mandatory, so failure to deposit the balance 85% within 30 days prevented a concluded sale and left the bidder without any enforceable right to confirmation. The Government memo directing confirmation could not override this statutory consequence and was treated as ineffective after the default. A belated challenge to the auction and sale notice, raised nearly nine years later, was not examined on merits and was treated as academic in light of the failed auction. The text also notes that forfeiture or refund of the initial deposit was left for administrative decision.

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Issues: (i) Whether the auction purchaser's failure to deposit the balance 85% of the bid amount within 30 days rendered the auction sale failed and exposed the 15% deposit to forfeiture under the revenue recovery procedure; (ii) whether the Government memo directing confirmation of sale in favour of the auction purchaser could survive after such default; (iii) whether the belated challenge to the auction and sale notice by the defaulter company could be examined at that stage.

Issue (i): Whether the auction purchaser's failure to deposit the balance 85% of the bid amount within 30 days rendered the auction sale failed and exposed the 15% deposit to forfeiture under the revenue recovery procedure?

Analysis: The sale notice required 15% of the purchase price to be paid at the time of sale and the balance within 30 days, failing which the deposit would be liable to forfeiture. The statutory scheme under Section 36 of the Revenue Recovery Act similarly made timely payment of the full purchase money mandatory. Although a stay order had been passed by BIFR, the Court found that there was no legal restraint preventing the bidder from seeking or making the balance payment within time, and no application was made to secure acceptance of the amount subject to the pending proceedings. The full consideration was never paid within the prescribed period.

Conclusion: The auction sale failed and the bidder did not acquire a concluded right to confirmation of sale; the question of forfeiture or refund of the 15% deposit was left for decision by the Commissioner.

Issue (ii): Whether the Government memo directing confirmation of sale in favour of the auction purchaser could survive after such default?

Analysis: Once the purchaser failed to comply with the mandatory payment condition, no enforceable right accrued to insist on confirmation of sale. The memo issued by the Government, though directing confirmation after collection of the balance amount with interest, could not override the statutory consequence flowing from non-payment within the stipulated period. The State's stand that the auction had failed was accepted, and the memo was treated as having no legal consequence.

Conclusion: The Government memo could not be acted upon and did not confer any right to confirmation of sale.

Issue (iii): Whether the belated challenge to the auction and sale notice by the defaulter company could be examined at that stage?

Analysis: The challenge to the auction sale and the sale notice was raised nearly nine years after the auction. In view of the long delay and the Court's conclusion that the auction itself had failed for non-payment of the balance amount, the challenge to the notice and auction proceedings did not warrant adjudication on merits at that stage.

Conclusion: The belated challenge was not examined on merits and was rendered academic.

Final Conclusion: The writ petitions by the auction purchaser were dismissed, while the connected writ petition was disposed of with directions to the Commissioner of Commercial Taxes to decide forfeiture and refund of the deposit and to consider the defaulter company's proposal to clear the tax arrears with interest.

Ratio Decidendi: In a statutory auction, payment of the full purchase money within the prescribed time is mandatory, and failure to comply prevents a concluded sale and deprives the bidder of any enforceable right to confirmation.

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