TaxTMI 
TaxTMI 
2016 (11) TMI 1764
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....ank. That culminated with an award passed by the Joint Registrar Co-operative Societies, Mysore dated 02.01.2004 against the debtor for recovery of Rs. 13,65,899.70 with interest at 19% p.a. As the debtor failed to pay the amount in terms of the award, execution petition was filed. The debtor, however, filed an appeal being Appeal No. 419 of 2004 before the Karnataka Appellate Tribunal, Bangalore. On 21.06.2004, the Tribunal passed a conditional order of stay requiring the debtor to deposit 40% of the awarded amount within eight weeks, failing which the stay would stand vacated. The debtor failed to deposit that amount. Therefore, the bank after obtaining valuation report relating to the mortgage property, issued notice on 2.2.2005 in Form No. 6. In spite of notice, no payment was made by the debtor. As a result, the Bank issued notice of attachment in Form No. 7 on 25.02.2005. The notice of attachment was followed by a notice of auction issued on 3.3.2005, fixing the auction date as 11.04.2005. On 7.3.2005, the debtor's brother (Shri Anand Kotian) filed an objection to the said proceedings. According to him, the property was a joint family property. This objection was enquired....
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....s the debtor failed to pay the balance awarded amount as directed by the High Court, again a notice was issued on 9.10.2007 fixing the auction sale on 12.11.2007. The debtor filed memo before the High Court in Writ Petition No. 13204 of 2007 (CS-DAS), on the basis of which the said Writ Petition was dismissed as withdrawn having become infructuous. 10. As the balance awarded amount was not forthcoming, a fresh notice for auction was issued on 30.11.2007, fixing the date of auction sale as 27.2.2008. The debtor then filed a fresh Writ Petition No. 3098 of 2008 (CS-DAS) challenging the auction sale. The High Court vide order dated 25.2.2008 showed indulgence to him and stayed the auction sale scheduled for 27.2.2008 subject to the debtor depositing Rs. 10,00,000/- (Rs. Ten Lakhs only) within six weeks. It was made clear that if the debtor failed to pay the amount as directed, the protection as given shall stand vacated and then it would be open to the bank to proceed with the sale of mortgage property. 11. The debtor once again failed to pay the amount as directed by the High Court vide order dated 25.2.2008. As a result, a fresh notice for auction sale was issued on 28.7.2008 ....
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....on sale be considered in accordance with law. 14. The Sales Officer on 17.2.2009, after due consideration of the matter recommended confirmation of the sale in favour of the auction purchaser. On the basis of the said recommendation, ARCS passed a detailed order on 2.3.2009, confirming the sale in favour of the auction purchaser. Thereafter, Sale Deed in Form No. 10 was executed in favour of the auction purchaser on 5.3.2009; and sale certificate was also issued in his favour. 15. The debtor, however, chose to file appeal before the Deputy Registrar of Co-operative Societies, Udupi District (DRCS) against the order of confirmation of sale dated 02.03.2009, being appeal No. 07/08-09. The DRCS entertained the said appeal and by his order dated 18.7.2009 held that the sale was in accordance with the Rules but it was a case of under valuation of the property. On that ground, the confirmation of sale was set aside on condition that the debtor shall deposit Rs. 59,46,965/- with interest at 6% p.a. from 13.2.2009 till payment. The operative order passed by Deputy Registrar Co-operative Societies reads thus: ORDER The confirmation order passed by the Asst. Registrar....
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.... that the Appropriate Authority concerned was competent to set aside the sale even if there was no application for setting aside the sale or factually such application has already been rejected. It noted that from the orders of DRCS and the learned Single Judge, it was evident that the debtor did not fulfill his obligation in spite of repeated opportunity given to him to pay the awarded amount. Even after noting this fact, the Division Bench opined that as the property in question was undervalued at the time of auction sale, no fault could be found with the discretion exercised to set aside the sale under proviso to Sub-rule 6(a) of Rule 38. On that finding, the Division Bench rejected the plea of the debtor and the Bank that without a pre deposit of the awarded amount as required under Rule 38 and that too within the time prescribed under the said Rule, the Appropriate Authority could not have set aside the sale. The Division Bench then adverted to the memo of calculation filed by the debtor and proceeded to pass order, which in its opinion was just and proper so as to adjust equities between the parties. The relevant extract of the impugned judgment, reads thus: 11. A me....
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....d on 6.3.2009 : Rs. 4,84,465/- 15. As per the orders of the DRCS, he has to receive Rs. 59,46,965/- including solatium with interest at 6% per annum from 13.2.2009. Till date so far as auction purchaser is concerned not even a single pie is paid back to him. In case, the auction purchaser were to have the confirmation of sale in his favour, this calculation would not be of any relevance. The fact remains the concerned authority has exercised the discretion and there is prima facie material to indicate there was under-valuation of the property as well. But this does not mean the auction purchaser who has parted with different amount by selling his own property should be put to financial loss apart from hardship. So far as the bank is concerned, the amount was lying with the Recovery Officer and only on 13.3.2009 they got the claim amount. However, this claim amount includes interest only upto the date of auction and not the subsequent interest payable. If the Respondent-borrower intends to retain his property for the reasons best known to him, either for emotional attachment or other reason, he has to compensate the purchaser for causing the loss to him. The amount of....
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....on being IA No. 1/2012 in disposed of writ appeal No. 1006/2010 (CS-DAS) and writ appeal No. 2433/2010 (CS-DAS), for clarification of the order dated 24.8.2011. On 8.6.2012, the Division Bench passed the following order on the said IA No. 1/2012, which reads thus: ORDER ON I.A. No. 1/2012 Heard the learned Counsel for the applicant, who is 5th Respondent in W.A. No. 2433/2010 (CS) on I.A. No. 1/2012 filed seeking clarification of judgment dated 24.8.2011. It is seen that by judgment dated 24.8.2011 this Court allowed W.A. Nos. 1006/2010 c/w 2433/2010 with certain directions. As could be seen, in paragraph 16 of the judgment the intent of this Court is very clear, that is, the auction purchaser Appellant in W.A. No. 1006/2010 should get back his money with solatium, interest damages, etc. as specified therein and the same was required to be paid by 3rd Respondent. No mode for payment was specified in the said judgment. However, it is seen that ARCS, 3rd Respondent in the appeals has taken his own time in trying to interpret the said order by his order which was initially passed on 21.11.2011 and thereafter corrected as 21.12.2011 to say that entir....
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....amount deposited by the auction purchaser and also the amount due to the Bank. Though sufficient amount was available with the 3rd Respondent-ARCS, he tried to interpret the order of this Court differently and caused some delay in making payment to the parties. Though strictly there is no mistake on the part of the 5th Respondent-original owner in making available the requisite fund in terms of the order for refund of money due to the auction purchaser and to clear the dues to the Bank, it is because of ARCS trying to interpret the order of this Court differently, confusion has arisen in disbursement of the amount due to the auction purchaser and the Bank for which the auction purchaser and the Bank should not be made to suffer. Insofar as the money that they were required to receive on or before 24.9.2011 which they have not received, they are entitled to interest for the difference period i.e., from 24.9.2011 till they receive the said amount. In that behalf, the ARCS is required to pay the interest for the difference period from out of the excess amount which is available with him. If the said amount is short of interest to be paid for the different period, he is direct....
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....g the clarification, made, the impugned order at Annexure-A is passed calling upon the Petitioner to deposit the short-fall on calculation. 3. When the matter is taken-up, Mr. S.R. Hegde Hudlamane, learned Counsel for the 3rd Respondent auction purchaser submits that as against the clarificatory order, the auction purchaser has filed Special Leave Petition, which is yet to come-up before the Apex Court. 4. In the circumstances, I am of the view that no useful purpose will be served by keeping this writ petition pending in as much as the decision to be rendered by the Apex Court in the Special Leave Petition filed by Respondent No. 3 would regulate the present proceedings. Till such time, the matter is required to be kept pending by the 2nd Respondent. Hence the following order: The petition is allowed. The impugned order is set aside. The proceedings are remanded to 2nd Respondent, who shall keep pending adjudication. The proceedings shall be regulated by the decision to be rendered by the Apex Court. 21. In the present appeals filed by the Appellant-auction purchaser before this Court, he has challenged the judgment rendered in writ appeal dated 24.8.....
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....rant of a certificate of sale and execution of a Sale Deed in the prescribed Form. The sale of the subject property thus, became final. 24. The debtor, however, was ill advised to prefer an appeal before the Deputy Registrar (CS) of Cooperative Societies, against the decision of the Competent Authority confirming the auction sale. For, remedy of appeal before that Authority could be availed only in terms of Section 106 of the Act, against an order passed by the Authority (Registrar) in exercise of powers ascribable to the provisions referred to therein. The order of confirmation of sale is ascribable to Section 89A of the Act read with Rule 38 of the Rules. No remedy of appeal against that decision is provided. Section 106 of the Act does not provide for an appeal against the order confirming an auction sale, passed Under Section 89A read with Rule 38. Section 89A of the Act read with Rule 38 of the Rules provide for a special dispensation. Thus understood, the order passed by the Deputy Registrar (CS) on the appeal preferred by the debtor being Appeal No. 7/2008-2009, is without jurisdiction. The learned Single Judge as well as the Division Bench has completely glossed over thi....
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....ioner, Commercial Tax vide letter dated 20th September 2010, cannot be countenanced. In the first place, the communication dated September 2010 was tendered across the Bar for the first time before this Court during the argument. It was not made part of the record before the High Court nor was pressed into service before the High Court. Moreover, the said communication is in respect of the effect of exemption of 90% of the interest under Tax Settlement Scheme. Thirdly, the matter on hand arises out of the order passed by the Deputy Registrar (CS) setting aside the sale confirmed in favour of the auction purchaser. 29. As aforesaid, the debtor unsuccessfully challenged the auction sale and prayed for setting aside the same by filing writ petitions. That relief has been rejected. In that, a formal application for setting aside the sale filed by the debtor was rejected by the ARCS on 14.10.2008. The appeal preferred by the debtor before the Deputy Registrar (CS) was against the decision of the Competent Authority confirming the auction sale on 02.03.2009. That it was not maintainable Under Section 106 of the Act. The Deputy Registrar (CS) had no jurisdiction. 30. Further, once t....
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....in sixty days from the date of sale along with,- (a) A sum equal to five per cent of the purchase money for payment to Government; and (b) Fifty per cent of the amount due under the decree for payment to the decree holder; and (ii) Pay the balance within thirty days thereafter i.e., within ninety days from the date of sale.] (c) If a person applies Under Sub-rule (5) to set aside the sale of an immoveable property, he shall not be entitled to make an application under this sub-rule. (5) (a) At any time within 30 days from the date of the sale of an immoveable property, the decree-holder or any person entitled to share in a rateable distribution of the assets or whose interests are affected by the sale, may apply to the Recovery Officer to set aside the sale on the ground of a material irregularity or mistake or fraud in publishing or conducting it: Provided that no sale shall be set aside on the ground of irregularity or mistake or fraud unless the said Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of such irregularity, mistake or fraud: [Provided further where the purchaser....
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....strar (CS) dated 21st December 2011 cannot extricate the debtor from the consequences of auction sale having become final on issuance of sale certificate and execution of the agreement in favour of the auction purchaser. Similarly, the fact that the debtor deposited certain amounts after the decision of the Division Bench cannot come to his aid. For, he ought to have deposited the awarded amount along with interest accrued thereon and that must be accepted by the auction purchaser as satisfaction of the order of the Division Bench of the High Court. Admittedly, the debtor had failed to pay the entire awarded amount. Significantly, the auction purchaser did not acquiesce of the order of the Deputy Registrar or that of the High Court, but has challenged the same in the present appeals. 33. We are also of the considered opinion that the writ appeal having been disposed of, in the guise of clarification, the Division Bench could not have passed any order at the instance of the debtor who had failed to challenge the decision of the Deputy Registrar. The writ appeals were filed by the auction purchaser and the Bank assailing the wrongful rejection of their Writ Petitions by the learne....
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....ormal application to be filed for setting aside the sale, as per the statutory provisions (Rule 38). That contention is not relevant to answer the matters in issue, in the present case. Reliance was then placed on the dictum in paragraphs 23 and 25 in the case of Shetty (supra) to contend that inaction or intentional conduct of the debtor does not extricate the Bank from following mandatory conditions including proper valuation of the property. We fail to understand as to how this decision will come to the aid of the debtor who has failed to pursue statutory remedy for setting aside the sale as per Rule 38; and moreso after the sale has already been confirmed in favour of the auction purchaser. Notably, even after the confirmation of sale, the Deputy Registrar showed indulgence to the debtor to deposit Rs. 59,46,965/- with interest only at 6% from 13th February 2009 till the date of payment. The debtor, however, remitted the amount firstly on 6th February 2010 a sum of Rs. 41,69,200/- and thereafter on 22nd September 2011 Rs. 20,19,925/-. It was not in conformity with the order passed by the Deputy Registrar dated 18th July 2009. 36. Taking any view of the matter, therefore, we ....