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TMI Blog2012 (5) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... n among the bidders cannot be ruled out. In The State of Orissa Ors. v. Harinarayan Jaiswal Ors., AIR 1972 SC 1816, this Court held that a highest bidder in public auction cannot have a right to get the property or any privilege, unless the authority confirms the auction sale, being fully satisfied that the property has fetched the appropriate price and there has been no collusion between the bidders. Therefore, it becomes a legal obligation on the part of the authority that property be sold in such a manner that it may fetch the best price. Thus essential ingredients of such sale remain a correct valuation report and fixing the reserve price. In case proper valuation has not been made and the reserve price is fixed taking into consideration the inaccurate valuation report, the intending buyers may not come forward treating the property as not worth purchase by them, as a moneyed person or a big businessman may not like to involve himself in smallsales/deals. - there must be an application of mind by the authority concerned while approving/accepting the report of the approved valuer and fixing the reserve price, as the failure to do so may cause substantial injury to the borrower/g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dhanjay Garg, Adv. For the Respondent : Mr. T.N. Singh,Adv. Mr. V.K. Singh,Adv. Mr. Umang Tripathi,Adv. M/S. Janendra Lal & Co. ,Adv, Mr. Vikrant Yadav,Adv., Mr. Vinay Garg, Adv. Dr. B.S. CHAUHAN, J. 1. This appeal has been preferred against the judgment and order dated 20.1.2004 in C.M.W.P. No. 22420 of 2001 passed by the High Court of Judicature at Allahabad, by which it has affirmed the judgment and orders passed by the Board of Revenue and other revenue officials in respect of the recovery of bank due s from the appellants as their predecessor - in - interest was the guarantor of bank loan. 2. Facts and circumstances giving rise to this case are that: A. One Ganga Prasad had taken an agricultural loan to the tune of ₹ 8,425/ - from the Union Bank of India (Banda Branch) on 20.3.1982 and Chuni Lal, father of the appellants stood guarantor. Ganga Prasad, debtor died in 1985 and Chuni Lal died in 198 6. Chuni Lal could not pay the loan during his life time. Therefore, the bank initiated the proceedings for recovery and ultimately sent the matter to the District Collector, Banda for realisation of the loan amount as an arrear of land revenue. B. The Collector issued cita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lants were worth rupees two lakhs which had been sold in auction at a throw - away price of ₹ 25,000/ - only, that too, without following procedure prescribed by law. For recovery of the balance amount of loan, only a p art of the suit land could be sold. The objections filed by the appellants had been rejected by all the authorities/courts below on the ground of delay without considering the same on merit. Hence, the said orders are liable to be set aside and appeal deserves to be allowed. 4. Per contra, Mr. T.N. Singh, learned counsel appearing for respondent No.4 has submitted that the grievance of the appellants that they could not be fastened with the total liability of unpaid loan amount had not been raised before the courts below. The liability of the guarantor is co - extensive with that of debtor. The auction sale has been confirmed and sale certificate has been issued in favour of respondent No.4. He had been put in possession more than two decades ago and since then he has made a lot of developments and improved the land. The auction was held fairly and the property had fetched a fair price. Real brother of the appellant No.1 himself had participated in the auctio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... public money should be recovered and recovery should be made expeditiously. But It does not mean that the financial institutions which are concerned only with the recovery of their loans, may be permitted to behave like property dealers and be permitted further to dispose of the secured assets in any unreasonable or arbitrary manner in flagrant violation of statutory provisions. 9. A right to hold property is a constitutional right as well as a human right. A person cannot be deprived of his property except in accordance with the provisions of statute. (Vide: Lachhman Dass v. Jagat Ram & Ors., (2007) 10 SCC 448; and Narmada Bachao Andolan v. State of Madhya Pradesh & Anr., AIR 2011 SC 1589). Thus, the condition precedent for taking away someone's property or disposing of the secured assets, is that the authority must ensure compliance of the statutory provisions. 10. In case the property is disposed of by private treaty without adopting any other mode provided under the statutory rules etc., there may be a possibility of collusion/fraud and even when public auction is held, the possibility of collusion among the bidders cannot be ruled out. In The State of Orissa & Ors. v. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mits the authority of the auctioneer. The concept of the reserve price is not synonymous with valuation of the property. These two terms operate in different spheres. An invitation to tender is not an offer. It is an attempt to ascertain whether an offer can be obtained with a margin. The valuation is a question of fact, it should be fixed on relevant material. The difference between the `valuation' and `reserve price' is that, fixation of an upset price may be an indication of the probable price which the property may fetch from the point of view of intending bidders. Fixation of the reserve price does not preclude the claimant from adducing proof that the land had been sold for a low price. 16. In Desh Bandhu Gupta v. N. L. Anand & Rajinder Singh, (1994) 1 SCC 131, this Court held that in an auction sale and in execution of the Civil Court's decree, the Court has to apply its mind to the need for furnishing the relevant material particulars in the sale proclamation and the records must indicate that there has been application of mind and principle of natural justice had been complied with. (See also: Gajadhar Prasad & Ors. v. Babu Bhakta Ratan & Ors., AIR 1973 SC 259 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e variation should be within limit. Such estimate should be done carefully. The Court further held that unless the Court is satisfied about the adequacy of the price the act of confirmation of the sale would not be a proper exercise of judicial discretion. (See also: M/s. Kayjay Industries (P) Ltd. v. M/s. As new Drums (P) Ltd. & Ors., AIR 1974 SC 1331; Union Bank of India v. Official Liquidator High Court of Calcutta & Ors., AIR 2000 SC 3642; B. Arvind Kumar v. Govt. of India & Ors., (2007) 5 SCC 745; and M/s. Transcore v. Union of India & Anr., AIR 2007 SC 712). 21. In Divya Manufacturing Co. (P) Ltd. & Anr. v. Union Bank of India & Ors., AIR 2000 SC 2346, this Court held that a confirmed sale can be set aside on the ground of material irregularity or fraud. The court does not become functus officio after the sale is confirmed. In Valji Khimji and Company v. Official Liquidator of Hindustan Nitro Product (Gujarat) Ltd. & Ors., (2008) 9 SCC 299, the Court held that auction sale should be set aside only if there is a fundamental error in the procedure of auction e.g. not giving wide publication or on evidence that property could have fetched more value or there is somebody to offe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction and given the bid of ₹ 20,000/- for the land in dispute. In view of the above, the submission made by Shri Garg that property worth ₹ 2,00,000/- had been sold at a throw away price of ₹ 25,000/- is not worth acceptance. 25. No fundamental procedural error had been pointed out which would vitiate the order of confirmation of sale and issuance of sale certificate. 26. The total amount of loan sanctioned in favour of Ganga Prasad was ₹ 8,425/-. The Collector issued citation for recovery of ₹ 10,574/- on 13.1.1986 and the total amount to be recovered including principal amount, interest, collection charges etc. came to ₹ 14,483.15P. The property of Ganga Prasad had been sold for a sum of ₹ 6,000/-. So, the total amount to be recovered remained about ₹ 8,500/-. The appellants' land had been sold for ₹ 25,000/- i.e., three times the amount which was to be recovered. In the facts and circumstances of this case, instead of putting this whole land admeasuring 1 bigha and 10 biswas, the sale of 1/3rd of this land could have served the purpose. Therefore, there had been material irregularity in putting the entire property to au ..... X X X X Extracts X X X X X X X X Extracts X X X X
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