TaxTMI 
TaxTMI 
2012 (5) TMI 569
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....appellants stood guarantor. Ganga Prasad, debtor died in 1985 and Chuni Lal died in 198 6. Chuni Lal could not pay the loan during his life time. Therefore, the bank initiated the proceedings for recovery and ultimately sent the matter to the District Collector, Banda for realisation of the loan amount as an arrear of land revenue. B. The Collector issued citation/recovery certificate on 13.1.1986 for an amount of Rs. 10,574.45 plus 10% collection charges against Ganga Prasad. C. In order to make the recovery, land measuring 3 bigha 2 biswas belonging to said Ganga Prasad was put to auction and it could fetch only a sum of Rs. 6,000/ - . In order to recover the balance amount the proceedings were initiated against the appellants as their father stood guarantor. It is evident from the record that the appellants raised objections that instead of put ting their property to auction, the loan amount be recovered from legal heirs of Ganga Prasad as he had left movable/immovable properties and livestocks and other assets to meet the recovery of the bank loan. Their objections were not accepted and the land of the appellants measuring 1 bigha and 10 biswas was put to auction on 15.3.....
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....le has been confirmed and sale certificate has been issued in favour of respondent No.4. He had been put in possession more than two decades ago and since then he has made a lot of developments and improved the land. The auction was held fairly and the property had fetched a fair price. Real brother of the appellant No.1 himself had participated in the auction and given the bid for Rs. 20,000/ - , though respondent No.4 ha d purchased it for Rs. 25,000/ - . Thus, it is not permissible that the appellants should canvass that the auction has not been conducted fairly or appellants had not been given chance to bring the best buyer or a part of the property could be sold to meet the demand. The appeal lacks merit and is liable to be dismissed. 5. We have considered the rival submissions made by learned counsel for the parties and perused the record. There can be no dispute to the settled legal proposition of law that in view of the provisions of Section 128 of the Indian Contract Act, 1872 (hereinafter called the `Contract Act'), the liability of the guarantor/surety is co-extensive with that of the debtor. Therefore, the creditor has a right to obtain a decree against the suret....
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....ensure compliance of the statutory provisions. 10. In case the property is disposed of by private treaty without adopting any other mode provided under the statutory rules etc., there may be a possibility of collusion/fraud and even when public auction is held, the possibility of collusion among the bidders cannot be ruled out. In The State of Orissa & Ors. v. Harinarayan Jaiswal & Ors., AIR 1972 SC 1816, this Court held that a highest bidder in public auction cannot have a right to get the property or any privilege, unless the authority confirms the auction sale, being fully satisfied that the property has fetched the appropriate price and there has been no collusion between the bidders. 11. In Haryana Financial Corporation & Anr. v. Jagdamba Oil Mills & Anr., AIR 2002 SC 834, this Court considered this aspect and while placing reliance upon its earlier judgment in Chairman and Managing Director, SIPCOT Madras & Ors. v. Contromix Pvt. Ltd. by its Director (Finance) Seeetharaman, Madras & Anr., AIR 1995 SC 1632 held that in the matter of sale of public property, the dominant consideration is to secure the best price for the property to be sold. This can be achieved only when ....
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....d in execution of the Civil Court's decree, the Court has to apply its mind to the need for furnishing the relevant material particulars in the sale proclamation and the records must indicate that there has been application of mind and principle of natural justice had been complied with. (See also: Gajadhar Prasad & Ors. v. Babu Bhakta Ratan & Ors., AIR 1973 SC 2593; S.S. Dayananda v. K.S. Nagesh Rao & Ors., (1997) 4 SCC 451; D.S. Chohan & Anr. v. State Bank of Patiala, (1997) 10 SCC 65; and Gajraj Jain v. State of Bihar & Ors., (2004) 7 SCC 151). 17. In view of the above, it is evident that there must be an application of mind by the authority concerned while approving/accepting the report of the approved valuer and fixing the reserve price, as the failure to do so may cause substantial injury to the borrower/guarantor and that would amount to material irregularity and ultimately vitiate the subsequent proceedings. DECISION TO SELL WHOLE OR PART OF THE SECURED ASSETS: 18. In Ambati Narasayya v. M. Subba Rao & Anr., AIR 1990 SC 119, this Court dealt with a case where in execution of a money decree for Rs. 2,400/- the land was sold for Rs. 17,000/-. The Court set aside ....
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.... sale is confirmed. In Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors., (2008) 9 SCC 299, the Court held that auction sale should be set aside only if there is a fundamental error in the procedure of auction e.g. not giving wide publication or on evidence that property could have fetched more value or there is somebody to offer substantially increased amount and not only a little over the auction price. Involvement of any kind of fraud would vitiate the auction sale. 22. In FCS Software Solutions Ltd. v. La Medical Devices Ltd. & Ors., (2008) 10 SCC 440, this Court considered a case where after confirmation of auction sale it was found that valuation of movable and immovable properties, fixation of reserve price, inventory of Plant and Machineries had not been made in proclamation of sale, nor disclosed at time of sale notice. Therefore, in such a fact-situation, the sale was set aside after its confirmation. 23. In view of the above, the law can be summarised to the effect that the recovery of the public dues must be made strictly in accordance with the procedure prescribed by law. The liability of a surety is co-extensive wit....