2016 (3) TMI 121 - HC - Indian Laws

Auction sale - whether the auction was conducted in a fair and transparent manner? - introduction of a different buyer - Held that - Considering that the petitioner had defaulted in making good the offer of deposit ₹ 21 lacs within one week and he had moved the second application after more a year of the auction, the Recovery Officer rightly found that the intention of the petitioner was not bona fide and he merely intended to delay the proceedings. Tribunal has rightly held that the attempt by the petitioner to introduce a different buyer (Sh. Shivam Aggarwal), with the offer of ₹ 18 lacs after one year of the auction, and that too after his failure to make good the initial offer of ₹ 21 lacs within the stipulated period had been unfairly entertained. Resultantly, the petitioner even successfully misled the Appellate Tribunal also to urge that he had a better buyer which led to inter se bidding. Thereafter, he introduced the father of Sh. Shivam Aggarwal and still later Mr. Anand Goyal as the intending buyer. Thus, introducing a new purchaser every time. Despite many legal hurdles in the maintainability of his appeals the petitioner has been given more than a fair latitude to furnish a better buyer. Clearly this process of inter se bidding cannot be carried on ad infinitum. The auction was held on 05.02.2007. No legal or procedural infirmity having been found in the auction proceedings, it is high time that the proceedings attain finality. As against the original auction price of ₹ 12.10 lacs, the auction purchaser has now been held bound to deposit a sum of ₹ 25 lacs.

Issues:
1. Quashing of auction sale orders upheld by Recovery Officer and Debts Recovery Tribunal.
2. Challenge to auction process and price offered for the property.
3. Appeal against the orders of Recovery Officer and Debts Recovery Tribunal.
4. Introduction of new intending buyers during the appeal process.
5. Maintainability of the appeal due to lack of pre-deposit and waiver request.
6. Decision of the Appellate Tribunal regarding the introduction of a new buyer.
7. Final decision on the auction sale and deposit amount.

Analysis:
1. The petitioner filed a petition seeking to quash the auction sale orders dated 01.04.2008, 23.10.2013, and 18.12.2015, upholding the auction sale of the property. The petitioner raised objections regarding the auction process, alleging irregularities and a low sale price. The Recovery Officer and Debts Recovery Tribunal dismissed the objections and confirmed the auction sale.

2. The auction sale of the property was conducted on 05.02.2007, where the highest bidder purchased the land for Rs. 12.10 lacs. The petitioner objected to the auction, claiming it was not conducted properly and offering a higher bid of Rs. 21 lacs. Subsequently, the petitioner failed to deposit the amount within the stipulated time, leading to the dismissal of objections and confirmation of the auction sale.

3. Dissatisfied with the orders, the petitioner, guarantor, and intending purchaser filed appeals. The Debts Recovery Tribunal and the Appellate Tribunal upheld the auction sale, citing proper conduct of the auction, lack of compliance with Rule 60 of the Income Tax Act, and the introduction of new buyers during the appeal process.

4. The petitioner attempted to introduce new intending buyers during the appeal proceedings, offering varying amounts for the property. The Appellate Tribunal scrutinized these attempts, ultimately directing the auction purchaser to deposit the balance amount or face recovery by the Bank.

5. The Appellate Tribunal found the appeal not maintainable due to the lack of pre-deposit and absence of a waiver request. Despite considering the appeal on merits, the Tribunal emphasized the need for compliance with procedural requirements.

6. The Appellate Tribunal held that the petitioner's introduction of new buyers after failing to comply with the initial offer was unfair and misleading. The Tribunal emphasized the need for finality in the proceedings and rejected the petitioner's attempts to prolong the auction process.

7. The High Court upheld the decisions of the lower tribunals, finding no infirmity in the auction sale process or the subsequent orders. The Court dismissed the petition, affirming the auction sale and the directed deposit amount of Rs. 25 lacs by the auction purchaser.

In conclusion, the High Court's judgment upheld the auction sale orders, emphasizing the need for compliance with procedural requirements and finality in the auction proceedings. The Court rejected the petitioner's attempts to introduce new buyers and prolonged the process, affirming the auction sale and the directed deposit amount by the auction purchaser.

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