2007 (5) TMI 562 - SC - Indian Laws

Validity of auction sale - Auction sale took place due to default in payment of loan taken from Respondent - Held that - Under Rule 107(11)(g) of the Rules, 15% of the price of the immovable property has to be deposited by the auction purchaser at the time of the purchase, and the remaining 85% of the purchase money has to be paid within 15 days from the date of such sale. Admittedly, in the present case, the aforesaid 85% of the purchase money was not paid within 15 days from the date of the sale nor even thereafter - Following decision of Manilal Mohanlal Shah and others vs. Sardar Sayed Ahmed Sayed Mahmad and another 1954 (4) TMI 46 - SUPREME COURT and Balram vs. Ilam Singh and others 1996 (8) TMI 473 - SUPREME COURT - Auction sale of the appellants property was a nullity, and there was no valid auction sale - said property be again auction sold after advertising it in at least two well-known newspapers having wide circulation, mentioning therein the date, time and place of the auction sale and after complying with the procedure under Rule 107 of the Rules - Decided partly in favour of Appellant.

Summary

Issues:
- Validity of auction sale under Maharashtra Co-operative Societies Rules, 1961.

Analysis:
The case involves appeals against the judgment of the Bombay High Court in a writ petition related to a loan taken by the appellant from a cooperative bank. The recovery proceedings were initiated under the Maharashtra Co-operative Societies Rules, 1961 due to default in loan payment. The auction sale of the appellant's properties was conducted under Rule 107 of the Rules, where 15% of the price had to be deposited by the auction purchaser at the time of purchase, and the remaining 85% within 15 days. However, the 85% was not paid within the stipulated time.

Referring to legal precedents, the court cited the case of Manilal Mohanlal Shah and others vs. Sardar Sayed Ahmed Sayed Mahmad, where it was held that non-payment of the balance purchase money within the prescribed time renders the sale proceedings a complete nullity, not a mere irregularity. Similarly, in Balram vs. Ilam Singh and others, it was established that the obligation to deposit the full purchase money within the specified time is mandatory, and non-compliance renders the sale void.

Based on the above legal principles, the court concluded that the auction sale of the appellant's property was a nullity due to the failure to pay the remaining 85% of the purchase money within 15 days. Consequently, the appeals were allowed, the impugned judgment was set aside, and it was held that there was no valid sale of the appellant's property. The court directed that the property be auctioned again after proper advertising and compliance with Rule 107 of the Maharashtra Co-operative Societies Rules, without awarding any costs to either party.