TaxTMI 
TaxTMI 
2026 (3) TMI 734
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....ecovery Appellate Tribunal ["the DRAT"], Chennai, while remitting the case to the DRT for reconsideration of the valuation of Schedule A to E properties in the recovery proceedings, and accordingly disposed of the writ petition. The High Court further observed that in the event the properties were found to have been sold for a lower value than their actual worth, the appellant herein may be directed to make good the difference. 3. This Court by order dated 18.02.2022 granted an order of stay on implementation of the directions issued in paragraph no.166 of the impugned judgment. 4. During the pendency of this appeal, Respondent No. 9 who was Respondent No. 4 in the writ petition died and his legal representatives were brought on record as 9.1 to 9.4 vide order dated 04.03.2024 and cause title was accordingly amended. Despite service of notice, none appeared on behalf of Respondent Nos.9.1 to 9.4, 10 to 13 and 15 to 17. 5. The necessary facts leading to the filing of the present appeal are as follows: 5.1. The appellant is the purchaser of Schedule A to E properties sold through an auction conducted by the Recovery Officer on 29.10.2010 pursuant to the order dated 27.01.....
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....interest from 10.02.1998 till realisation along with costs. Thereafter, the DRT, Chennai passed an order of attachment on 20.08.2010 and issued the letter of Proclamation of Sale on 21.09.2010 as DRC No. 68/2010. Subsequently, auction was held and the appellant was the successful bidder and an amount of Rs. 55,00,000/- was paid as advance payment for the total sale consideration of Rs. 2,10,98,765/- by the appellant towards the purchase of the aforementioned properties. Pursuant thereto, the DRT, Chennai, confirmed the sale of the schedule A to E mentioned properties and a sale certificate dated 01.02.2011 was duly executed in favour of the appellant by the Recovery Officer, and the same was registered as Document No. 413 of 2011 dated 02.02.2011 on the file of SRO, Oulgaret. 5.6. Aggrieved by the order dated 12.01.2010 passed by the DRT, Chennai, in O.A. No. 536 of 1998, Respondent Nos. 1 to 5 filed an appeal before the DRAT, Chennai in R.A. No. 59 of 2012. The DRAT after contest, passed an order dated 12.11.2010 restraining the Recovery Officer in DRC No.68 of 2010 from confirming the auction sale that had taken place on 29.10.2010 and by order dated 11.11.2014, disposed R.A. ....
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....ssful auction purchaser, remanded the matter to the DRT for revaluation of the properties nearly ten years after the auction sale had been concluded. It was contended that while the High Court affirmed the orders of the DRT and DRAT insofar as they recognized the Bank's right to recover its dues from Respondent No. 7 by sale of Schedule A to E properties mortgaged by Respondent Nos. 1 to 5 and upheld the legality of the auction proceedings, it erred in directing revaluation without assigning any cogent reasons. 6.1. It was submitted that the Engineers' Valuation Report Summary dated 08.09.2010, pertaining to Schedule A to E properties, was prepared in accordance with law and reflected prevailing market rates in the year 2010. The DRT, Chennai, acting on the said valuation of Rs. 4,34,45,400/-, issued the proclamation of sale and conducted the auction. The valuation report was placed on record and was never challenged by the respondents. 6.2. The learned senior counsel further submitted that pursuant to recovery proceedings initiated by the bank, the mortgaged properties were brought to sale in DRC No. 68 of 2010. The public auction was conducted on 29.10.2010 at Indian Bank, ....
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....extended, court sales would not fetch market value or fair price of the property. 6.5. Reliance was also placed on Valji Khimji and Co. v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. (2008) 9 SCC 299 to contend that once a sale is confirmed by the authority, certain rights accrue in favour of the auction purchaser which cannot be lightly disturbed except in exceptional cases such as fraud. In the present case, there has been concurrent factual determination by the DRT and DRAT upholding the validity of the auction, and no finding of fraud has been returned. The High Court itself upheld the auction, and therefore remanding the matter for revaluation without disturbing the sale was legally untenable. 6.6. Reference was made to the decisions in Shaeb Khan v. Mohd. Yosufuddin and others (2006) 4 SCC 476 and Central Bank of India v. C.L. Vimala and others (2015) 7 SCC 337, wherein, this Court observed that if every confirmed auction sale were to be reopened on the basis of a higher offer or speculative revaluation, no court sale would ever attain finality. It was emphasised that particularly where the auction was conducted with due publicity and no irregularity i....
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.... of law. It was contended that the appellant / auction purchaser failed to comply with the mandatory requirements governing auction sales, inasmuch as he neither paid 25% of the bid amount on the date of auction nor remitted the balance 75% within 15 days. Consequently, no valid sale ever came into existence and the appellant acquired no right, title, or interest in the subject properties. 7.1. It was further submitted that the validity of the final order passed by the DRT, Chennai in O.A. No. 536 of 1998 itself is not admitted by the respondents. Even assuming the said order to be valid for the sake of argument, the Recovery Certificate in DRC No. 68 of 2010 was withdrawn on 22.12.2014. As on date, there is no subsisting Recovery Certificate in force. Therefore, the final amount allegedly due in O.A. No. 536 of 1998 must first be determined afresh through a valid Recovery Certificate. 7.2. The learned senior counsel emphasised that the jurisdiction of the Recovery Officer commences only after the issuance of a Recovery Certificate by the DRT and upon its transmission to the Recovery Officer. In the absence of a subsisting Recovery Certificate, all consequential proceedings, ....
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....he Recovery Officer. It was submitted that the sale process was conducted in a transparent and lawful manner strictly in accordance with the statutory procedure. 8.1. It was submitted that the DRT had ordered attachment of the borrower's properties on 20.08.2010 on account of default in repayment of a sum of Rs.1,03,42,523.91 due to the Bank, in compliance with Debts Recovery Certificate No. 68/2010 dated 29.06.2010 issued in O.A. No. 536 of 1998. Thereafter, while issuing the proclamation of sale on 21.09.2010, the Recovery Officer took into consideration the valuation report dated 08.09.2010 in respect of the secured assets. 8.2. It was further submitted that the auction of the scheduled properties was conducted on 29.10.2010 at 2.00 PM with an upset price of Rs. 2 crores, which had been fixed by the Recovery Officer of the DRT against the assessed market value of Rs. 1,24,60,000/-. Sixteen bidders had expressed interest and participated in the auction proceedings. Against the upset price of Rs. 2 crores, the appellant submitted the highest bid of Rs. 2,10,98,765/- which was accepted, and the appellant was declared the successful bidder. The appellant deposited Earnest Mone....
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....s submitted that the allegations raised by the borrowers in their counter affidavit are merely a reiteration of the contentions urged before the forums below. After due consideration of these submissions, the DRT, DRAT and the High Court have all upheld the validity of the auction proceedings, and no ground has been shown to warrant interference with those concurrent findings. 8.9. The learned counsel clarified that the Bank does not wish to independently oppose the present petition, as no substantive relief has been sought against the Bank. 8.10. It was submitted that the Bank shall abide by any direction that may be passed by this Court in the interest of justice. However, it was pointed out that continued litigation in respect of the recovery proceedings may result in accrual of further interest in accordance with banking norms, which would ultimately increase the financial burden upon the borrowers / mortgagors. 8.11. Accordingly, it was submitted that the Bank has acted strictly in accordance with law and the recovery already effected pursuant to the auction proceedings ought not to be disturbed. 9. We have heard the learned Senior Counsel for the appellant, the le....
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....29.8.1997. The outstanding amount that was due in the said facility was allowed to be repaid as a "Temporary Overdraft Facility" after obtaining additional securities in the form of letters of guarantee from Dr V. Sambhasivam, the 2nd defendant, 3rd and the 4th respondent herein. Since the amounts were not repaid, the 1st respondent Bank was entitled to recover the due from the petitioners along with others jointly and severally and liquidate the asset to satisfy the dues. 166. We however leave the issue regarding the valuation adopted for the Schedule A to E properties in the Recovery Proceedings to be decided by the DRT afresh. In case, the properties have been sold for a lower value, the 9th respondent may be directed to pay for the same. 167. In the light of the above discussion, we are constrained to uphold the ultimate conclusion arrived by the DRT and the DRAT while remitting the case back to the DRT as far as valuation of Schedule A to E properties in the recovery proceedings..." 12. At the outset, it is pertinent to note that the appellant does not assail the impugned judgment of the High Court in its entirety. The challenge in the present appeal is co....
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...., the supervisory jurisdiction of the Court may be invoked to ensure that the recovery proceedings have been conducted in a manner that secures the best possible value of the property. The objective of recovery proceedings is not merely to complete the sale but to realise the maximum value of the secured asset so as to balance the interests of the creditor and the borrower. In this regard, reference may be made to the decision of this Court in Rajiv Kumar Jindal v. BCI Staff Welfare Association (2023) 238 Comp Cas 227 : 2023 SCC OnLine SC 507, wherein, it was observed that the purpose of an auction is to obtain the most remunerative price for the property by affording an opportunity to intending purchasers to participate in a process of competitive bidding, thereby ensuring transparency and fairness in the sale. The Court further emphasized that if the process of competitive bidding is curtailed or compromised, the possibility of underbidding or securing an inadequate price cannot be ruled out. In such circumstances, the court is required to exercise its discretion with circumspection so as to safeguard the legitimate interests involved in the sale process. The following paragraphs....
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....n relating to valuation of the property and the fixation of the reserve price warranted closer scrutiny. Significantly, the High Court has neither set aside the auction sale nor questioned the participation of the auction purchaser; rather, it has confined its direction to a reconsideration of the issue of valuation by the DRT. 17. Moreover, the direction issued by the High Court merely remits the matter to the DRT for examination of the valuation with reference to the relevant materials on record including the valuation report and the circumstances in which the reserve price came to be fixed. Such a limited remand does not prejudge the rights of the auction purchaser, but enables the DRT to assess whether the valuation and fixation of the reserve price were in accordance with law. Further, the remand does not disturb the recovery already effected by the bank nor does it render the auction proceedings void. Therefore, such a limited remand for fresh consideration by the DRT cannot be said to be legally untenable. 18. The contention of the learned senior counsel for the appellant that the confirmation of the sale renders the matter entirely immune from further scrutiny cannot ....