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TMI Blog2016 (11) TMI 1764X X X X Extracts X X X X X X X X Extracts X X X X ..... ies, 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 into and rejected on 22.3.2005. 4. The debtor submitted letters dated 6.4.2005 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice 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High Court in Writ Petition No. 13204 of 2007 (CS-DAS), on the basis of which the said Writ Petition was dismissed as withdrawn having become infructuous. 10.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 fixing the date for auction as 10.9.2008. The Respondent-Bank had obtained valuation report which es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 Co-operative Societies also Recovery Officer's Court in case No. AR38/case/83/Executive/82/08-09 dated 02-03-2009 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 memo of calculation filed by the advocate for Respondent No. 5 on 11.8.2011 indicating the different amounts deposited by the Appellant is as under: Memo of Calculation (a) Amount deposited by the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le 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 Rs. 59,46,965/- includes solatium of Rs. 2,57,500/-, but it does not spell out the interest he would have got on this amount or the profit he could have got on the property which he sold in order to pay the auction price. 16. In order to meet the ends of justice, it would be just and proper to order payment of interest at 12% per annum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 entire amount should have been deposited by the 5th Respondent to comply with the judgment of this Court which we are not agreeable. With the available money, the 3rd Respondent -ARCS should have first cleared off the amount to the auction purchaser with interest, solatium, damages and whatever he is entitled to from out of the amount that was available with 3rd Respondent. Thereafter, 3r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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 directed to call upon the owner to deposit the said amount within ten days therefrom or if the amount is sufficient, to pay the interest from out of the amount available and to return the remaining amount to the original owner of the property. With this observation, the clarification sought to the judgment dated 24.8.2011 is clarified. It is made clear that the ARCS shall see that the clarificatory order dated 8.6.2012 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seful 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 24.8.2011 as well as both the orders passed on clarification application dated 8.6.2012 and 29.6.2012 respectively. The debtor, on the other hand, has filed appeal against the judgment of the Division Bench dated 24.8.2011 in Writ Appeal No. 1006/2010. 22. We have heard the learned Counsel for the parties at length. From the indisputable facts mentioned in the preceding paragraphs, it is evident that the Award passed by the Competent Authority on 02.01.2004 became final after the dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 this crucial aspect. 25. The order passed by the Deputy Registrar (CS) dated 18th July 2009, assuming that it is ascribable to Rule 38(6)(a) as held by the High Court, the fact remains that the debtor failed to comply with the said order requiring him to pay an amount of Rs. 59,46,965/- along with interest thereon within the specified time. On account of non-compliance of that direction, the relief granted by the Deputy Registrar (CS) in terms of order dated 18th July 2009 of setting asid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the auction sale is confirmed by the Competent Authority, it is not open to the Authority to exercise power under Rule 38(6), to set aside the sale. That would be against the spirit of legislative intent of giving finality to the auction sale process upon passing of an order of confirmation of sale. 31. It is only the Authority referred to in Rule 38, who could have set aside the sale by recording reasons in writing in exercise of powers under Rule 38 of the Rules, albeit before passing an order co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, 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 is Government the sale will be confirmed,- (a) After the expiration of sixty days where no application to have sale set aside is made Under Sub-rule (4); or (b) After the expiration of ninety days where an application to set aside Under Sub-rule (4) is made but the balance of the amount due under the decree is not deposited within ninety days from the date of sale.] (c) If the application be allowed, the said Recovery Officer shall set aside the sale and may direct a fresh one. (6) (a) On the expiration of thirty days from the date of sale, if no application to have the sale set aside, either Under Sub-rule (4) or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty 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 learned Single Judge. As the decision of the Deputy Registrar deserves to be set aside, the debtor cannot succeed on the basis of some observations made in the impugned judgments of the Division Bench or for that matter by the learned Single Judge and including some infirmity in the letter of the Assistant Registrar (CS) dated 21st December 2011. 34. That takes us to the decision of this Court in the case of Annapurna v. Mallikarjun and Anr. (2014) 6 SCC 397. That decision is in respect of provisions of Order 21 Rule 89 of Code of Civil Procedure The question decided in this case is whether the time limit prescribed in Article 127 of the Limitation Act, 1963 would come into play even in respect of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, 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 must hold that the High Court committed manifest error in dismissing the Writ Petitions filed by the Appellant-auction purchaser challenging the decision of the Deputy Registrar (CS) dated 18th July 2009. The High Court ought to have allowed the Writ Petition as the Deputy Registrar had no jurisdiction to entertain appeal against the order of confirmation of sale issued Under Section 89A read with Rule 38 of the Rules; and also because, admittedly, the debtor failed to pay the awarded amount in spite of repeated opportunities given to him from time to time. Moreover, the debtor cannot succeed in the Writ Petition filed by the auction purchaser and the Bank against the decision of the Deputy Registrar a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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