2010 (5) TMI 793

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....e borrower/respondent No.3 being C-4/2 & C-4/1, MIDC, situated at Gondia Industrial Area, Village Mundipur, Taluk Gondia, Maharashtra, Tehsil and District Gondia. The auction was conducted pursuant to the final judgment/decree in the O.A.721/1996 filed by the Industrial Financial Institution (for short IFCI) respondent No.1 herein. The Recovery Officer accepted the bid of the present petitioners for the bid of amount Rs. 39,20,000/- plus Rs. 23,30,000/-for both the properties totaling to Rs. 62,50,000/- and thereafter confirmed the auction sale. On an appeal by the respondent No.2 herein to the Debt Recovery Tribunal (DRT) the order of confirmation of sale by the Recovery Officer, inspite of the respondent No.2 offering a sum of Rs. 68 lacs....

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....be taken note of that the purpose of an open auction is to get the most remunerative price and it is the duty of the court to keep openness of the auction so that the intending bidders would be free to participate and offer higher value if that part is cut down or closed, the possibility of fraud or to secure inadequate price of under-bidding would loom large. In the case of M/s Divya Manufacturing Co. (P) Ltd. Vs. Union of India and others (AIR 2000 Supreme Court 2346), it has been held that it is the duty of the court to see that the price fetched at auction is adequate price even though there is no suggestion of irregularity or fraud. Even the confirmation of sale by a court at grossly inadequate price whether or not it is a consequence ....

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.... case has been reiterated that even confirmed sale can be set aside in appropriate case and that it is the duty of the court to see that the suggestion of irregularity or fraud. In that case, confirmed sale in favour of the appellant was set aside which met the approval of the Supreme Court. 9. It should also be pointed out that an auction purchaser does not have an indefeasible right for the confirmation of sale in the eventuality of non-filing of objections under Rule 60 or 61 of the Second Schedule to the Income-tax Act. The confirmation of sale is not inevitable in each and every case. In suitable situation, sale may be refused to be confirmed and even on confirmation, sale may be set aside. The auction purchaser cannot insist that t....

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....vi Data, counsel for the auction purchaser (appellants herein). The order, inter alia, records as under:- "xxxxxxxxxxxx The officer for CHFI submitted that the auction was held smoothly and no irregularity in the conduct of auction had taken place. She informed that an offer has been received by CHFI from one of the concern offering more amount than what is offered by the Auction Purchasers. She did not offer any comments/views in the matter and merely submitted that confirmation be done as per procedure. During the proceedings one Shri Gurdeep Singh mentioned that he represents Shri Kailash Aggarwal, proprietor M/s Sun Vijay Rice Mills and prepared to pay far more that the amount offered by the Auction Purchaser. He was holding some dra....

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....self was made within a week of the auction held on 27.6.2008. Despite all that, Ms. Rashmi Sachdev did not offer any comment before the Recovery Officer when she appeared there on 6.8.2008. She admitted that an offer had been received offering more amount than what had been offered by the auction purchasers. But she did not think it proper to promote the interest of CHFI by making a request to the Recovery Officer to accept the higher offer. Instead, she backed the confirmation of sale in favour of the auction purchasers (appellants) for a lesser amount. The way Ms. Rashmi Sachdev, officer of CHFI conducted herself cannot at all be justified. Rather, her posture was deprecatory that she did not serve the best interest of CHFI-her employer. ....

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.... officer of the respondent No.1 that a substantial amount of Rs. 5 ½ lacs was not taken into consideration before confirmation of the auction sale. To this we may only add that who benefits from this difference of Rs. 5 ½ lacs less to the Financial Institution, is not understood to say the least. (iii). In fact, the bid of Rs. 68 lacs given by the respondent No.2 herein was enhanced by it to Rs. 75 lacs in the appeal before DRT against the order of the Recovery Officer and which amount of Rs. 75 lacs was deposited by the respondent No.2 before the DRT. We may further add that no attempt at any stage was made by the present petitioners to match the increased offer of the respondent No.2 herein. 5. Before us, the learned c....