Allowed

Kp Ridge Through Pratik Shah (Director) v. Union Bank of India

DRAT10 Mar 2025MISC APPEAL/115/2024

Case brief

AI extract

What is this about?

The DRAT confirmed the DRT's order quashing an auction sale of an industrial property where the Bank falsely informed the Tribunal of no bids, received a winning bid hours later, and completed registration on the same day. The Tribunal held this demonstrated fraud and collusion.

What did the court decide?

Order of Learned Presiding Officer confirming the quashed sale was; Appeals dismissed as Appellant's interest satisfied; fresh auction directed; Interlocutory Application for criminal complaint transm

Kp Ridge Through Pratik Shah (Director) versus Union Bank of… — Company and Corporate | DRAT (2025)

¶1

IN THE DEBTS RECOVERY APPELLATE TRIBUNAL AT CHENNAI

¶2

Dated the 10^th of March, 2025

¶3

PRESENT: Hon’ble Mr. Justice G. Chandrasekharan

¶4

CHAIRPERSON

¶5

(in charge, DRAT, Mumbai)

¶6

Misc. Appeal No. 135/2023

¶7

(IA 2666/2023 in SA 92/2021on the file of DRT-I, Mumbai),

¶8

¶9

& IA 854/2024, IA 855/2024 and IA 856/2024

¶10

Misc. Appeal No. 146/2023

¶11

(IA 2666/2023 in SA 92/2021on the file of DRT-I, Mumbai),

¶12

¶13

IA No. 42/2024 and IA No. 43/2025

¶14

AND

¶15

Misc. Appeal No. MA 115/2024

¶16

(Proceedings dated 11.06.2024 on the file of DRT-I, Mumbai)

¶17

Misc. Appeal No. 135/2023

¶18

Between

¶19

Mrs. Juana Sanjeev Uppal An adult, Indian Inhabitant residing at Flat No. 1501/1502, Delphi Building, Raheja Garden Teen Hath Naka, L.B.S. Marg, Thane 400604.

¶20

…Appellant

¶21

And

¶22

Indus Mechanical Eng. Co. Pvt. Ltd. & Anr. Through Director Abhay Mehta 504, loha Bhavan, P. D’mello Road, Masjid, Mumbai-9.

¶23

¶24

Union Bank of India A body corporate constituted under the banking Companies (Acquisitions and Transfer of Undertakings Act, 1970 having its office at 104, Ground floor, Bharat House, Mumbai Samachar Marg, Mumbai-1.

¶25

IA 41/2024 in Misc. Appeal No. 135/2023

¶26

Urmila & Co. Ltd. Through John Gomes (Director) Machinnon Markenzie Building, 4^th Shoorji Vallabhadas Marg, Ballard Estate, Mumbai 400038

¶27

….Applicant/Intervener

¶28

In the matter between

¶29

Juana Sanjeev Uppal, An Adult, Indian Inhabitant residing at Flat No.1501,1502, Delphi Building, Raheja Gardens Teen Hath Naka, LBS Marg, Thane (W) 400 604.

¶30

…Appellant

¶31

Vs.

¶32

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504-Loha Bhava, P. D’ Mello Road, Majid, Mumbai- 400 0009.

¶33

¶34

Union Bank of India, 104, Bharat House, Ground Floor, Mumbai Samachar Marg, Fort, Mumbai 4000 001. IA 42/2025 In Misc. Appeal No. 135/2023 KP Ridge Pvt. Ltd., Through Pratik Shah (Director) Kanchan Pharma, Building Bo. G-3, Gala No.3, Bhumi World, Pimplas Village, Chimbipada Bhiwandi, Thane

¶35

.….Applicant/Intervener

¶36

In the matter between

¶37

Mrs. Juana Sanjeev Uppal, An Adult, Indian Inhabitant residing at Flat No. 1501,1502, Delphi, Raheja Gardens Teen Hath Naka, LBS Marg, Thane (W) 400 604.

¶38

…Appellant

¶39

Vs.

¶40

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504, Loadha Bhavan P. D’ Mello Road, Masjid, Mumbai- 400 0009.

¶41

2. Union Bank of India

¶42

104, Ground Floor, Bharat House, Ground Floor, Mumbai Samachar Marg, Fort, Mumbai 4000 001.

¶43

¶44

Misc. Appeal No. 146/2023

¶45

Between

¶46

Union Bank of India A body corporate constituted under the Banking Companies (Acquisitions and Transfer of Undertakings Act, 1970 having its Stressed Asset Management Branch at 104, Ground floor, Bharat House, Mumbai Samachar Marg, Mumbai-400023

¶47

And

¶48

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504, Loha Bhavan, P. D’mello Road, Masjid, Mumbai-9 2. Mrs. Juana Sanjeev Uppal An adult, Indian Inhabitant residing at Flat No. 1501/1502, Delphi Building, Raheja Garden Teen Hath Naka, L.B.S. Marg, Thane 400604

¶49

…Respondents

¶50

IA 42/2024 in Misc. Appeal No. 146/2023

¶51

Urmila & Co. Ltd. Through John Gomes (Director) Mackinnon Markenzie Building, 4^th Shoorji Vallabhadas Marg, Ballard Estate, Mumbai 400038

¶52

….Applicant/Intervener

¶53

In the matter between

¶54

¶55

Union Bank of India 104, Bharat House, Ground Floor, Mumbai Samachar Marg, Mumbai 4000 001.

¶56

…Appellant

¶57

Vs.

¶58

Indus Mechanical Eng. Co. Pvt. Ltd. Through Dirctor Abhay Mehta 540-Loadha Bhava P. Demello Road Mumbai- 400 0009.

¶59

….Respondent

¶60

IA 43/2025 In Misc. Appeal No. 146/2023

¶61

KP Ridge Pvt. Ltd., Through Pratik Shah (Director) Kanchan Pharma, Building Bo. G-3, Gala No.3, Bhumi World, Pimplas Village, Chimbipada Bhiwandi, Thane. Maharashtra 421 302.

¶62

.….Applicant/Intervener

¶63

In the matter between

¶64

Union Bank of India 104, Ground Floor, Bharat House, Mumbai Samachar Marg, Fort, Mumbai 4000 023.

¶65

…Appellant

¶66

Vs.

¶67

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504-Loha Bhavan P. D’ Mello Road, Masjid, Mumbai- 400 0009.

¶68

¶69

Mrs. Juana Sanjeev Uppal, An Adult, Indian Inhabitant residing at Flat No.1501,1502, Delphi Building, Raheja Gardens Teen Hath Naka, LBS Marg, Thane (W) 400 604.

¶70

….Respondents

¶71

IA 854/2024 In

¶72

Misc. Appeal No. 135/2023

¶73

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504-Loha Bhavan P. D’ mello Road Masjid, Mumbai- 400 0009.

¶74

…Applicant /Original Respondent No.1

¶75

In the matter between

¶76

Mrs. Juana Sanjeev Uppal, An Adult, Indian Inhabitant residing at Flat No.1501/1502, Delphi Building, Raheja Gardens Teen Hath Naka, LBS Marg, Thane (W) 400 604.

¶77

…Appellant/Original Respondent

¶78

Vs.

¶79

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504-Loha Bhavan, P. D’ mello Road, Majid, Mumbai- 400 0009.

¶80

Union Bank of India, 104, Ground Floor, Bharat House, Mumbai Samachar Marg, Fort, Mumbai 4000 001.

¶81

….Respondents/Original Applicant & Respondent

¶82

¶83

IA 855/2024 In

¶84

Misc. Appeal No. 135/2023

¶85

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504-Loha Bhavan P. D’ mello Road Masjid, Mumbai- 400 0009.

¶86

…Complainant /Original Respondent No.1

¶87

Vs.

¶88

Union Bank of India, Stressed Assets Management Branch, 104, Ground Floor, Bharat House, Mumbai Samachar Marg, Fort, Mumbai 4000 001.

¶89

….Original Respondent No.2

¶90

2A. Mr. Amardeep Garje, Authorised Officer of Union Bank of India, Regional Office-Mumbai South at 66/80 Mumbai Samachar Marg, 6^th Floor, Fort, Mumbai-400 001.

¶91

2B. Mr. Siddharth S. Mhade, Authorised Officer of Union Bank of India, 104, Ground Floor, Bharat House, Mumbai Samachar Marg, Fort, Mumbai – 400 001.

¶92

2C. Deputy General Manager, Union Bank of India, 104, Ground Floor, Bharat House, Mumbai Samachar Marg, Flort Mumbai – 400 001.

¶93

….Accused

¶94

¶95

In the matter between

¶96

Mrs. Juana Sanjeev Uppal, An Adult, Indian Inhabitant residing at Flat No.1501/1502, Delphi Building, Raheja Gardens Teen Hath Naka, LBS Marg, Thane (W) 400 604.

¶97

…Appellant

¶98

Vs.

¶99

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504-Loha Bhavan, P. D’ mello Road, Majid, Mumbai- 400 0009. …Original Applicant

¶100

Union Bank of India, 104, Ground Floor, Bharat House, Mumbai Samachar Marg, Fort, Mumbai 4000 001.

¶101

….Respondent

¶102

IA 856/2024 in

¶103

Misc. Appeal No. 135/2023

¶104

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504-Loha Bhavan P. D’ mello Road Masjid, Mumbai- 400 0009.

¶105

…Applicant

¶106

¶107

In the matter between

¶108

Mrs. Juana Sanjeev Uppal, An Adult, Indian Inhabitant residing at Flat No.1501/1502, Delphi Building, Raheja Gardens Teen Hath Naka, LBS Marg, Thane (W) 400 604.

¶109

…Appellant/Original Respondent

¶110

Vs.

¶111

Indus Mechanical Eng. Co. Pvt. Ltd. Through Director Abhay Mehta 504-Loha Bhavan, P. D’ mello Road, Majid, Mumbai- 400 0009.

¶112

Union Bank of India, 104, Ground Floor, Bharat House, Mumbai Samachar Marg, Fort, Mumbai 4000 001.

¶113

….Respondents/Original Applicant & Respondent

¶114

Misc. Appeal No. MA 115/2024

¶115

Between

¶116

1 KP Ridge Pvt. Ltd., Through Pratik Shah (Director) Kanchan Pharma, Building Bo. G-3, Gala No.3, Bhumi World, Pimplas Village, Chimbipada Bhiwandi, Thane.

¶117

2 Urmila & Co. Ltd. Through John Gomes (Director) Machinnon Markenzie Building, 4^th Shoorji Vallabhadas Marg, Ballard Estate, Mumbai 400038. …. Appellants

¶118

¶119

Versus

¶120

1 Union Bank of INdia Stressed Assets Management Branch 104, Bharat House, Ground Floor, Mumbai Samachar Marg, Fort, Mumbai 4000 001.

¶121

2 Juana Sanjeev Uppal 1501/1502, Delphi, Raheja Gardens, Teen Hath Naka, LBS Marg, Thane (W) 400 604.

¶122

3 Indus Mechanical Eng. Co. Pvt. Ltd. 540-Loadha Bhava P. Demello Road Mumbai- 400 0009. AND

¶123

27, Duplex Apartment, Judu Tara Road, Juhu Mumbai- 400 009.

¶124

4 Indus Projects Limited 504, Loha Bhavan, P.D’mello Road, Masjid, Mumbai 400 009

¶125

5 Kishor H Mehta

¶126

Duplex Appt, 27, Juhu Tara Road Behind Union Bank of India Juhu, Mumbai 400 049.

¶127

6 Abhay Kishor Mehta

¶128

27, Jitendra Lane, Judu Tara Road, Behind Union Bank of India,

¶129

Mumbai 400 049.

¶130

7 Mahavir Kishor Mehta 53, Nutan Laxmi Co-op Housing Society 9^th Road, JVPD Scheme, Vile Parle West 1709 356 Maharashtra 400 056.

¶131

¶132

8 Madhur Kishor Mehta

¶133

540-Loadha Bhavan P. Demello Road Carnac Bunder Mumbai 400 009. And

¶134

53, Rajgrahi Road No.9, Nutan Laxmi Society Juhu Mumbai 400 049.

¶135

….. Respondents

¶136

Counsel for Auction Purchaser : Learned Sr. Counsel Mr. Srinath Sridevan for Mr Puneet Gogad, Counsel for Bank : Mr. Charles De Souza for M/s Orbit Law Services, Counsel for Borrower : Mr. Yeshwanth Shenoy and Ms. Pooja Singh for Mr Virendra Mishra, Counter for Intervener : Mr Rishabh Shah for M/s Raval-Shah & Co.,

¶137

¶138

COMMON ORDER

¶139

Challenging the order of Learned Presiding Officer,

¶140

DRT-I, Mumbai in IA 2666/2023 in SA 92/2021, the Appeal in MA 135/2023 is filed by the Auction Purchaser and Appeal in MA No. 146/2023 is filed by the Union Bank of India.

¶141

In MA 135/2023, Urmila & Co. Ltd., filed IA 41/2024

¶142

to implead it as an Intervener/Respondent. In the same Appeal, i.e., MA 135/2023, KP Ridge Pvt. Ltd., filed IA 42/2025 to implead it as an Intervener/Respondent and to pass the final order in the Appeal only after hearing the Applicants.

¶143

In MA 146/2023, Urmila & Co. Ltd. filed IA 42/2024,

¶144

to implead it as an Intervener/Respondent and in the same Appeal, i.e., MA 146/2023, KP Ridge Pvt. Ltd., filed IA 43/2025 to implead it as an Intervener/Respondent and to

¶145

¶146

pass final orders in the Appeal only after hearing the Applicants.

¶147

SA 92/2021 was filed by 1^st Respondent, Indus Mechanical Eng. Co., Pvt. Ltd., as Applicant, against Union Bank of India, seeking the following reliefs:-

¶148

a. To declare the Demand Notice dated 18.07.2019 and 19.07.2019 issued by Corporation Bank and Union Bank India under Section 13(2) of SARFAESI Act, 2002, are not valid;

¶149

b. To declare that the Securitisation Application bearing No. 426/2021 filed by Defendant Bank before Learned CMM, Esplanade, Mumbai, is in violation of the statutory provisions under SARFAESI Act, 2002, and in violation of principles of natural justice and as such illegal;

¶150

¶151

c. Direction restraining and prohibiting the Defendant Bank from proceeding any further with the aforesaid Securitisation Application bearing No.

¶152

427/2021;

¶153

d. To set aside the order passed under Securitisation Application bearing No. 427/2021;

¶154

e. To set aside the Sale Notice dated

¶155

18.09.2021;

¶156

f. To declare that the equitable mortgage by way of deposit of leasehold right with respect to the property, i.e. Duplex Bungalow at 27, Juhu Tara Road, Jitendra Lane, Santacruz (W), Mumbai – 400 054, is not valid;

¶157

g. To declare that purported equitable mortgage created pertaining to the flat No. 401 on 4^th Floor of the Everest Chambers Co-Operative Housing Society situated on plot CHS No. 332 (part) of Malabar Hill and

¶158

¶159

Colaba Hill division, Mount Pleasant Road, Mumbai – 400 006, is not valid; and

¶160

h. To restrain the Defendant Bank from

¶161

creating any 3^rd party right into the properties or to interfere with the right, title and interest of the Applicant.

¶162

When SA 92/2021 was pending, the first Respondent filed IA 1957/2023 and IA 1960/2023, to set aside the Sale Notice dated 11.04.2023 and for certain amendments in the SA pertaining to the Sale Notice and auction of the property in question as per Schedule annexed with the said IA No. 1960/2023. Both these IAs were listed for hearing on 11.05.2023 and they were dismissed by the Tribunal as infructuous on the basis of the alleged false statement made by Learned Counsel for Bank that no bid had been received for the auction dated 11.05.2023. However, it appears that, the sale was held on 11.05.2023, confirmed and also registered on the same date.

¶163

¶164

Challenging the said sale, issuance of Sale Certificate and its registration, 1^st Respondent filed IA 2666/2023 for cancellation of the Sale Certificate dated 11.05.2023 bearing Registration No. 6553/2023 dated 12.02.2023, executed between the Bank and Auction Purchaser in respect of the property, Duplex Bungalow at 27, Juhu Tara Road, Jitendra Lane, Santacruz (W), Mumbai – 400 054 and restraining the Auction Purchaser from creating any 3^rd party right over the property in question and for other reliefs.

¶165

After hearing the submissions of Learned Counsel appearing for the parties and perusing materials, Learned Presiding Officer, was pleased to hold that the auction sale held on 11.05.2023 as void and illegal, and thus, quashed the sale dated 11.05.2023. Liberty was granted to the Bank to proceed with fresh auction, in respect of the property in question, in accordance with law.

¶166

¶167

As already stated, challenging this impugned Order,

¶168

both the Appeals in MA 135/2023 and MA 146/2023 have been filed.

¶169

For easy reference, the term “Appellant” would refer to the Auction Purchaser, Mrs. Juana Sanjeev Uppal; the term “Respondent No.1” would refer to Indus Mechanical Eng. Co. Pvt. Ltd.; the term “Respondent No.2” would refer to the Union Bank of India and the term “Interveners” would refer to the Urmila & Co. Ltd., and KP Ridge Pvt. Ltd..

¶170

Learned Senior Counsel for Appellant/Auction Purchaser in MA 135/2023 submitted that the borrowers had executed valid mortgage in respect of the land and building in dispute. The Application to cancel the Sale Certificate referred above in MA 40/2023, which was converted as IA 2666/2023, had not been filed within the period of limitation. The conduct of sale, issuance of Sale Certificate and registration of Sale Certificate are all the maters to be decided in main SA after analysing the

¶171

¶172

documents produced by the parties and hearing their submissions. There is no way that the sale can be set aside in an Interlocutory Application. When there is a prayer in the impugned SA challenging the Sale Notice, no final order can be passed in an Interlocutory Application setting aside the sale. The payment of entire sale consideration on the same date of sale, is not prohibited under law, and therefore, the sale cannot be set aside on the ground of either on payment of entire sale consideration, issuance of Sale Certificate, its registration with registering authority on the same date. There was no allegation of collusion or fraud between the Bank and Auction Purchaser, in the matter of sale. Where there is no specific allegation of fraud or collusion is made, there is no possibility of setting aside the sale on any other ground.

¶173

It is further submitted by Learned Senior Counsel for the Auction Purchaser that only after failure of six previous sale attempts, the seventh sale had taken place. It is the

¶174

¶175

duty of the Bank to take adequate measures to recover the public money which was lent to the borrowers. Therefore, the Bank cannot be found fault with for confirming the sale, issuing the Sale Certificate and registering the Sale Certificate on the same date. Whatever may be the discrepancy in the description of the property that can only be canvassed in the main Application, and not in an Interlocutory Application. The Auction Purchaser had taken

¶176

the risk of purchasing the stamp papers prior to sale on the fond hope of succeeding in the auction.

¶177

The Application was filed under Section 19(25) of RDB Act, 1993, but if it is filed under Section 17(1) of SARFAESI Act, 2002, it would have been barred by limitation. The Sale Notice dated 11.04.2023 was not challenged in the main SA. An Interlocutory Application filed for amending the prayer for inclusion of challenge the Sale Notice dated 11.04.2023, was dismissed. In the said circumstances, it is submitted by Learned Senior Counsel for the Appellant that the issues

¶178

¶179

agitated in IA 2666/2023 have to be decided only in the main Application, and when that be the case, allowing the Application and setting aside the sale is against the law, and thus, this Appeal is filed.

¶180

Learned Counsel for the Union Bank of India, Appellant in MA 146/2023, who sails with the Auction Purchaser, submitted that, unless a plea is raised with regard to fraud in the conduct of sale, no finding regarding fraud given and sale can be set aside on the ground of fraud. There is a reference in MA 40/2023 about the private treaty. No discussion about the private treaty in the order impugned. Even otherwise, the issue of private treaty cannot be decided without any amendment. Six auctions held earlier had not fructified into sale, and therefore, the sale was confirmed,

¶181

Sale Certificate was issued and registered on the same day. No ill-motive can be attributed against the Bank. Thus submitting, Learned Counsel for the Bank prayed for setting aside the impugned order.

¶182

¶183

Learned Counsel for 1^st Respondent borrower submitted that it is the borrower. By creating mortgage of security interest, 1^st Respondent obtained the loan. First Respondent was trying to save its property from auction by defending the measures taken against it. Too many things had happened behind the back of the borrower, between the Bank and Auction Purchaser. First Sale Notice was issued on 18.09.2021 and that was challenged by filing SA 92/2021. No sale had taken place in pursuance of the Sale Notice dated 18.09.2021. Impugned Sale Notice was issued on 11.04.2023. In the Sale Notice dated 18.09.2021, there was no mention about the land. Only the building was referred. In the impugned Sale Notice dated 11.04.2023, the land and building was referred. In both the Sale Notices, different contact persons’ details were given. Even in the Demand Notice dated 19.07.2019, there was no mention about the land. When the sale was fixed on 11.05.2023, Learned Counsel appearing for the Bank informed that no bid was received, and therefore, the Interlocutory Application filed in IA 1957/2023 and IA 1960/2023, to set aside the Sale

¶184

¶185

Notice dated 11.04.2023 and for certain amendments in prayer had been dismissed primarily for the reason that there was no sale.

¶186

14.1 On 22.05.2023, the borrower received SMS stating that some amount has been credited in its loan account. Therefore, the 1^st Respondent filed MA 40/2023 on 29.05.2023. First Respondent bonafidely believed, in view of the report made to the Tribunal on 11.05.2023 that there was no bidder, the property might have been sold by the Bank by a private treaty. Therefore, this plea was taken in this regard. When it was informed to the Tribunal that there was no bidder, and thereafter, the property was sold, there is no reason given as to why the Bank’s Advocate or the Authorised Officer did not take any step either to inform the Tribunal or to stop further proceedings on the basis of the sale. On the other hand, the Bank had proceeded to issue Sale Certificate on the same day and registered the Sale Certificate as well.

¶187

¶188

14.2 The sale intimation letter was sent at 1.05 p.m. on

¶189

11.05.2023. Only at 4.35 p.m. the sale confirmation was informed. Something had happened in between 1.00 p.m. to 4.35 p.m. on 11.05.2023, between the Bank officials and the

¶190

Auction Purchaser. At 2.42 p.m., stamp duty and registration charges were deposited. At 2.52 p.m., the Auction Purchaser deposited the entire sale amount. No account detail was given for deposit of balance consideration in the sale intimation mail sent at 1.05 p.m. The account

¶191

detail was given only in the mail sent at 4.36 p.m. The Authorised Officer in Sale Notice and sale confirmation are totally different persons. The data entry form dated 10.03.2023, shows that the name of the person submitting the document is the Authorised Officer of the Bank namely Mr. Amardeep Garje. It was done prior to sale on 11.05.2023. His name suddenly emerged without any previous role played by him in sale proceedings. He signed the Sale Certificate. How is it possible for the Auction Purchaser to apply for a token on 10.03.2023 itself, for registering the sale in favour of Auction Purchaser by

¶192

¶193

naming the Authorised Officer? The sequence of events clearly demonstrates the fraud and collusion between the Bank officials and the Auction Purchaser, in cheating the Tribunal, borrower and the entire judicial proceedings. Fraud can be challenged at any time, even in collateral proceedings.

¶194

In continuation of his submission, Learned Counsel for 1^st Respondent submitted that he filed three Applications IA 856/2024, to receive additional documents; IA 855/2024 to initiate criminal proceedings against the Bank officials for filing false Affidavit under Section 379 of the Bharatiya Nagarik Suraksha Sanhita ; and IA 854/2024 vacating the order of this Tribunal dated 09.11.2023 and order of status quo ante dated 12.10.2023 and for other reliefs. As submitted by him already, even before the auction sale on 11.05.2023, the Auction Purchaser filed an application on 10.05.2023, before the concerned registering authority for registering of the Sale Certificate on 11.05.2023. It is seen

¶195

¶196

from the receipt cum acknowledgement given that the Authorized Officer of the Bank, Mr. A mardeep Garje, was shown as the person who would submit document for registration on 11.05.2023. This can be proved only by production of the concerned document, and therefore, IA 856/2024 was filed. This document was not available with the 1^st Respondent prior to passing the impugned order. Therefore, this Application is now filed. He further submitted that there are corrections made in this document with regard to date and number of pages. Sale Certificate with connected documents runs into 343 pages. All these have to be scanned by the Registration Department for registration. All these circumstances indicate active connivance, collusion between the Bank officials and the Auction Purchaser in fraudulently conducting the sale.

¶197

He further submitted that on 30.05.2023, Learned Presiding Officer, DRT-I, Mumbai recorded, on coming to know about the sale on 11.05.2023 that, the Bank’s action

¶198

¶199

was highly deplorable. In the Counter Affidavit filed in IA 2666/2023, it was stated in para 15 that Mr. Amardeep Garje was monitoring the progress of the auction on the MSTC portal through his login ID. Sometime prior to 1.00 p.m. on 11.05.2023, Mr. Amardeep Garje, visited MSTC portal and realised that a bid had been received in respect of the ongoing auction. He immediately instructed the Bank’s Advocate, Ms. Sushila Vichare to inform the Tribunal about the development. It was not done. If the bid had been received on 11.05.2023, it should have been brought to the notice of the Tribunal immediately on the same day or next day. But, no such information was given to the Tribunal immediately.

¶200

16.1 An e-mail was sent at 1.05 by the Auction

¶201

Purchaser informing about his quote in the auction. There is no indication in this e-mail that he was the highest bidder in the auction and account details of the Bank for deposit of money for the confirmation of sale. The Learned Presiding

¶202

¶203

Officer had extracted the time of events that had taken place on 11.05.2023. It is seen from this extract that stamp and registration charges were paid at 2.42 p.m. Before 2.52 p.m., entire sale price was paid. As per e-mail addressed, the Auction Purchaser, at 4.35 p.m. on 11.05.2023, was informed about the confirmation of sale in his favour. Only through this e-mail, the account detail of the Bank was given. However, prior to this e-mail, the Auction Purchaser had paid the entire sale consideration.

¶204

It is his submission that in the Affidavit filed before this Tribunal, the Authorised Officer, Mr. Amardeep Garje stated that he was present at DRT-I, Mumbai on 11.05.2023 and witnessed the proceedings in SA 92/2023. At around 11.30 a.m., he was informed by Mr. Sidhartha S. Mhade, that no

¶205

bid had been received till that point of time. He communicated this information to the Bank’s Advocate. He returned to his office at around 11.45 a.m. At about 12.50 p.m. Mr. Sidhartha S. Mhade, informed him about the bid

¶206

¶207

received. He promptly communicated this information to Bank’s Advocate with instruction to inform the Tribunal. He was informed by Mr. Sidhartha S. Mhade, that the Branch Manager approved confirmation of sale in favour of the highest bidder and he proceeded to issue the sale confirmation letter. As the highest bidder called officials of the Bank multiple times on 11.05.2023 and on being informed about the confirmation of sale at about 4.00 p.m., he proceeded to prepare the Sale Certificate. He left office at around 4.30 p.m. with an unsigned copy of Sale Certificate to Sub-Registrar Office, Andheri, for registration, at the request of the Auction Purchaser.

¶208

17.1 There is variance in this Affidavit and the Counter Affidavit filed by the Bank in IA 2666/2023 as to whether Mr. Amardeep Garje, knew about the bid received, only through Mr. Sidhartha S. Mhade or he knows it by himself. The fact that the undue urgency was shown in confirming the sale, issuing the Sale Certificate and registering the Sale

¶209

¶210

Certificate on the same date, clearly established the collusive act between the Auction Purchaser and the Bank officials.

¶211

17.2 Taking advantage of vacation of stay order of this Tribunal on 09.11.2023, the Auction Purchaser has entered into lease agreement with third parties and borrowed loan from Punjab National Bank. As per Rule 9(2) of Security Interest (Enforcement) Rules, 2002, the sale confirmation

¶212

has to be done only by the Secured Creditor. However, in this case, the confirmation of the sale was done by Authorised Officer and it is not valid. The reason for not permitting the Authorised Officer to confirm the sale, is that, if permitted, it will give room for corruption, and therefore, the sale confirmation has to be done only by Secured Creditor. In this case, the Secured Creditor has not confirmed the sale.

¶213

18. He further submitted that as per the direction of this Tribunal, both Mr. Sidhartha S. Mhade and Mr. Amardeep

¶214

¶215

Garje filed Affidavits. The Affidavits show that they made contradictory and false statement before this Tribunal and before the Tribunal below. That is the reason why the Application in IA 855/2024 was filed for initiating criminal proceedings against the Bank officials. In conclusion, he submitted that fraud committed by Bank officials and the Auction Purchaser, in connivance and collusion with each other, by misleading the Tribunal on 11.05.2023, for concluding the sale, issuance of Sale Certificate and registration of Sale Certificate on the same day, are clearly established by 1^st Respondent beyond reasonable double, and thus, he prayed to confirm the order passed by Learned Presiding Officer by dismissing these Appeals. He relied on the following judgements for the proposition that fraudulent act can be set aside at any time:-

¶216

i) Indian Bank Vs. M/s. Satyam Fibres (India) Pvt. Ltd. and

¶217

ii) A. V. Papayya Sastry and Ors. Vs.

¶218

Government of A.P. and Ors. ,

¶219

¶220

Learned Counsel for the Intervener in both the Appeals, submitted that the Applicant, M/s. Urmila & Co. Ltd., was the erstwhile Lessee of the land situated at Plot No. B of Plot No.27, Town Planning Scheme, Santacruz II (Juhu Sector) village of Juhu Tara Road, in the Registration Sub District of Bandra, District Mumbai Suburban in Greater Mumbai, Part of CTS No. 1033/1, Jitendra Lane, Santacruz West, Mumbai.

¶221

19.1 Leasehold rights of Urmila & Co. Ltd., have been sold to K.P. Ridge Pvt. Ltd., vide the Deed of Assignment dated 01.12.2023. Therefore, Urmila & Co. Ltd., and K.P. Ridge Pvt. Ltd., are proper and necessary parties, as aggrieved parties, to be impleaded in these Appeals to protect their rights.

¶222

19.2 Through an Indenture of Lease dated 16.12.1972, the property was transferred from Mrs. Dinbai K. Dubash to the Urmila & Co. Ltd., on lease for 98 years, vide Article of

¶223

¶224

Agreement date 08.09.1973. Urmila & Co. Ltd., sold the duplex apartment admeasuring 4700 sq. ft. which was to be constructed by Urmila & Co. Ltd., to first Respondent. It was clearly stated in this agreement that the 1^st Respondent was entitled to the duplex apartment only. At the request of 1^st Respondent to construct the duplex apartment, Urmila & Co Ltd., through Supplemental Agreement for construction dated 22.03.1974, permitted the Respondent No.1 to construct the duplex structure by reducing the construction cost from the sale price agreed in the Agreement dated 08.09.1973. Only the right in respect of construction of the duplex apartment was alone transferred to 1^st Respondent. Since these Agreements were not registered, a 3^rd Agreement namely Declaratory Agreement dated 21.01.1978 was executed as self-declaratory agreement. Even in this agreement, only the possession and ownership of duplex apartment admeasuring 4700 sq. ft. on the leasehold land was transferred to the Respondent No.1.

¶225

¶226

He further submitted that the 1^st Respondent, approached the State Bank of India and Consortium of Banks to avail loans. Prior to granting loan, State Bank of India through M Dhruva & Co., being the solicitors of the Bank obtained a legal opinion. This legal opinion refers the ownership of the Duplex Apartment only. Thereafter, the 1^st Respondent mortgaged the duplex apartment along with land of 838 sq. meter standing in the name of Urmila & Co. Ltd., by mortgage dated 11.07.2008 and obtained a renewal of loan of Rs.120 Crores by including the value of the land. This is illegal. This mortgage created by 1^st Respondent in respect of land admeasuring 838 sq. meters, is illegal. It could have mortgaged only the structure in the land and not the structure and the land. Even prior to the Sale Notice, the Auction Purchaser approached society of Maneek Mahal CHS Ltd. and director of Urmila & Co. Ltd., requesting a copy of Lease Deed executed between Urmila & Co. Ltd., and Mrs. Dubash along with other relevant documents. Urmila & Co. Ltd., vide letter dated 06.04.2023, informed Union Bank of India about the agreements executed with 1^st

¶227

¶228

Respondent in respect of the duplex apartment. The Union Bank of India in collusion with the Auction Purchaser maliciously issued E-auction Sale Notice dated 11.04.2023 and conducted the sale on 11.05.2023. The Appellant/Auction Purchaser was declared as successful bidder. Sale Certificate was issued and sale was registered on the same date of auction. In the said circumstances, IA 2666/2023 was filed to cancel the sale. Learned Presiding Officer found that there is a big smell of fraud in the auction process, and thus, set aside the sale. He further submitted that after the Sale Certificate was quashed, the Auction Purchaser approached Punjab National Bank for the loan. The Punjab National Bank vide Sanction Letter on 31.01.2024, approved a loan of Rs.22 Crores subject to terms and conditions and execution of a fresh mortgage on the said property on 27.02.2024. The Auction Purchaser had misled the Punjab National Bank by suppressing the ongoing litigation with respect to the property mortgaged and obtained loan.

¶229

¶230

It is the further submission of Learned Counsel for Interveners and the Appellant in MA 115/2024 that after expiry of the lease for the period of 98 years, the Lessor can purchase the structure or Lessee can remove the structure. There is a specific clause in the agreement in this regard. Learned Counsel for the Interveners produced the Plan showing the leased property in blue colour. In the Sale Notice dated 18.09.2021, only the Duplex Bungalow is referred and there is no mention about the land. Only in the impugned Sale Notice dated 11.04.2023, the land was included for the first time. There were e-mail communications between the Directors of Urmila & Co. Ltd., and Sanjeev Uppal. All along the building alone was the subject matter and suddenly the land was included and sold by suppressing the lease. It is clear exhibition of fraud and collusion between the Bank officials and the Auction Purchaser.

¶231

¶232

It is the further submission of Learned Counsel for the Interveners that the Intervener has given a complaint and it was registered in crime No.1040/2024, in Santacruz West Police Station for the offences committed under Sections 409, 406, 420, 465, 467, 468 and 120B of the Indian Penal Code, 1860 against Amardeep Garje, Auction Purchaser and her husband Sanjeev Uppal, Kishor H. Mehta, Abhay K. Mehta, Mahaveer K. Mehta and Madhur K. Mehta, Directors of Respondent No.1. In the said circumstances, Learned Counsel for the Interveners submitted that they be impleaded as Respondents in the Appeals, and their submissions may be considered for the disposal of these Appeals and the Interveners’ right in the property sold illegally be protected.

¶233

In reply to the submissions of Learned Counsel for 1^st Respondent Borrower, Learned Senior Counsel for Appellant Auction Purchaser in Misc. Appeal No. 135/2023 submitted that it is not as though the land and building was suddenly surfaced in the description of the property in the Sale Notice.

¶234

¶235

Even in the earlier Possession Notice and Sale Notice, it was specifically referred as land and building. The first Demand Notice was issued by Corporation Bank, which later merged with the Union Bank of India. That Demand Notice reflects the property as land and building. The equitable mortgage created by the borrower by executing MODT refers the property mortgaged as land and building. This was communicated to the concerned registering authority by borrower. The alleged land owner, who filed the impleading Applications had filed TSA 151/2023 challenging the measures and it is still pending. When it wanted to be impleaded in the Appeals filed by the Auction Purchaser and the Bank and when DRAT refused to entertain, it filed Writ Petition in WP No. 23076/2024 and that Writ Petition was dismissed. Thereafter, it filed the Appeal against the adjudication proceedings with a prayer to expedite the disposal in TSA 151/2023.

¶236

¶237

There is no effort made early disposal of TSA 151/2023.

¶238

It got adjourned for the reason that there was no response from the Applicants in TSA 151/2023.

¶239

24.1 Whatever be the action done by the Auction Purchaser, was done, in the best interest of her purchase.

¶240

She wanted to buy this property, made enquiries prior to purchase with land owner, participated in auction, and deposited the entire bid amount, on receiving sale confirmation through mail, on the fond hope that she was the successful bidder. In case there was another bidder who bid more than the bid amount of the Auction Purchaser, she had nothing to lose. She would get back her amount deposited by her. In her over enthusiasm to buy this property, she made all these efforts. At no stretch of imagination, this conduct can be considered as fraudulent or illegal.

¶241

Learned Senior Counsel for Auction Purchaser further submitted that the prayer in IA 2666/2023 was for

¶242

¶243

cancellation of the Sale Certificate till the disposal of the Interlocutory Application. No prayer has been asked to set aside the sale. However, in this Interlocutory Application, Learned Presiding Officer had set aside the sale and that is against the scope of the prayer in the Application. There is no specific plea of fraud in this Application. Without a specific plea of the fraud, Learned Presiding Officer found that the fraud had been taken place in the matter of sale. In Demand Notice, the Bank account detail was already given and therefore, the sale amount was paid using that account number. Paying the entire sale consideration, issuance of Sale Certificate and registration of Sale Certificate on the same day are not legally barred.

¶244

25.1 As per Section 13(12) of SARFAESI Act, 2002, and Rule 2(a) of the Security Interest (Enforcement) Rules, 2002, the confirmation of sale by the Authorised Officer was perfectly

¶245

in order. After dismissal of the Application filed for amending the prayer, to challenge the impugned Sale Notice, so far the 1^st Respondent had not taken any steps for

¶246

¶247

challenging the dismissal order or restoring the dismissed the Applications. Various documents are introduced only in Appellate Tribunal. Unless the parties are given an opportunity to study the documents and lead evidence, if necessary, the issue involved in this case with regard to conduct of sale, conduct of Bank officials, the Borrower, the Auction Purchaser and the 3^rd party, cannot be decided effectively.

¶248

It is submitted further that it was recorded in the order passed on 19.06.2023 that it was agreed by the parties to keep open the issue regarding the date and time of receipt of bid to be decided it in the final hearing. Instead of doing that, the sale was set aside in an Interlocutory Application. An issue that has to be decided in the main SA, has been decided in an Interlocutory Application, that is illegal. Without a detailed enquiry, an allegation of fraud cannot be decided on the first impression in an Interlocutory Application.

¶249

¶250

Learned Senior Counsel for Appellant further submitted that the judgements relied by the 1^st Respondent Borrower with regard to fraud had been decided in the final disposal of the cases. The facts in those cases are totally different and those judgements are not applicable to this case on hand. He relied on the judgement reported in 1941 SSC online PC 16, 1998 SSC online Mad1069 and (2017) 2 SSC 797 , as to how the allegation of fraud in a judicial proceedings has to be decided. He also relied on the orders of this Tribunal reported in 2019 SCC OnLine drat 48, 2022 SCC OnLine DRAT 63, 2023 SCC OnLine DRAT 154 and order passed in RA (SA) 152/2019, for the proposition that without challenging the sale, Sale Certificate cannot be challenged.

¶251

Learned Counsel for R2 Bank submitted that when the Intervener had stated much about illegal mortgage of land by the Borrower, the Borrower had not stated anything about the mortgage of the land and building. The Intervener had taken steps for termination of lease in favour of Borrower in 2023, but had not taken any action against the Borrower for

¶252

¶253

mortgaging the land. Earlier Possession Notices and Sale Notices have been published in English and vernacular language, wherein the description of the property was shown as land and building. It is seen from the statement given by Intervener that the borrower had defaulted in payments of lease amount and tax from 1997 onwards till 2023. Despite that, the Intervener had not taken any steps against the Borrower to safeguard the property till 2023. Only in 2023, he filed TSA 151/2023. If the Intervener has to challenge the impugned order, mandatory pre deposit has to be made. To avoid making pre deposit, these Intervening Applications are filed. Therefore, these Applications have to be necessarily dismissed.

¶254

He further submitted that the Auction Purchaser invested Rs.38 Crores, and therefore, he made enquiries with land owner and Bank about the nature of the property and its encumbrance etc. That cannot be considered as illegal. The sale had taken place in May, 2023 and physical possession was taken in June, 2023. The impugned order

¶255

¶256

was passed in October, 2023. Only then, TSA 151/2023 was filed and thereafter, in 2024, Intervening Applications were filed. When the Auction Purchaser made enquiries with land owner/Intervener, the land owner knows about the interest shown by the Auction Purchaser in purchasing the property. Even there after no effort had been taken to challenge the sale by Intervener. TSA 151/2023 is still pending and the issues raised before this Tribunal can be adjudicated only in pending TSA 151/2023. Despite knowing the alleged fraud, there is no specific pleading in IA 2666/2023 about fraud. Unless fraud is pleaded and proved in the manner known to law, it cannot be decided in an Interlocutory Applications. The Auction Purchaser paid the amount in four instalments on the same date, taking a risk on the hope that the sale would be confirmed in his favour. That is not illegal.

¶257

Learned Counsel for Interveners replied stating that there is a finding by Learned Presiding Officer that there had

¶258

been a fraud committed by informing that there was no bid

¶259

¶260

received, and after dismissal of the Interlocutory Applications filed for challenging the impugned Sale Notice and amendment, the property had been sold. Sale was set aside for committing fraud. He pressed into the judgement of Hon’ble Supreme Court in the case of State of Maharashtra Vs. Ramdas Shrinivas Nayak and Anr., reported in (1982) 2SCC 463, for the proposition that recording made by the Court with regard to the proceedings cannot be questioned.

¶261

Considered the rival submissions and perused the records.

¶262

Indus Mechanical Engineering Company Private Limited, 1^st Respondent in the Appeals filed by Auction Purchaser and Bank, filed SA 92/2021 against the Union Bank of India for reliefs narrated supra . When this Application was pending, the Applicant filed IA 1957/2023 to set aside the Sale Notice dated 11.04.2023 and to grant Interim Order protecting possession of the Applicant and

¶263

¶264

from selling, encumbering the property. He has also filed IA 1960/2023, for amending the SA 92/2023 as detailed in the Schedule. Filing of these Applications were necessitated for the reason that the Bank had issued a fresh Sale Notice dated 11.04.2023 fixing the sale on 11.05.2023. On the 11.05.2023, both these Applications were listed before the Tribunal for hearing. When these Applications were taken up for hearing, at 11.15 a.m. at on 11.05.2023, Learned Counsel appearing the Bank informed the Tribunal that no bid has been received. Therefore, the Tribunal kept the matter, to wait for the result of the auction. The matter was again taken up for hearing at around 12.15 p.m. When this matter was taken up, Learned Counsel for Respondent was not present. Therefore, the Tribunal dismissed both the Interlocutory Applications at 12.15 p.m., on 11.05.2023 as infructuous , on the basis of the earlier submission made by Learned Counsel for the Bank.

¶265

¶266

Thereafter, the Applicant filed MA 40/2023 to cancel the Sale Certificate dated 11.05.2023 bearing registration No.6553/2023 dated 12.05.2023, executed between the

¶267

Bank and Auction Purchaser and all other reliefs. This MA was subsequently converted into IA 2666/2023. After

¶268

hearing the parties, Learned Presiding Officer, DRT-I, Mumbai, found illegality in the conduct of the Sale and thus quashed the sale. The relevant portion of the impugned order dated 12.10.2023 is extracted for better

¶269

understanding.

¶270

“20. This is an interesting case where the bidder who participated in the auction already knew that the auction would be completed in his favour prior to the declaration of confirmation of sale by the secured creditor.

¶271

21. In the present case the auction took place on 11/05/2023 however the same was fraught with various illegalities, therefore, the sequence of the event of auction is very important in the present matter thus, the same is narrated herein below:-

¶272

(i) The auction notice was issued on 11/04/2023.

¶273

(ii) The date of auction was fixed for 11/05/2023 and the Earnest Money Deposit

¶274

¶275

(EMD) required to be paid within 3 days, after generating the Challan for NEFT/RTGS.

¶276

(iii) The bid commenced at 11 a.m. and continued till 1.00 p.m. on 11/05/2023.

¶277

(iv) During the proceedings of the said date 11/05/2023, before this Tribunal, Ld. Counsel for the Bank informed that no bid was received, the Interim Application challenging the impugned auction was dismissed being infructuous.

¶278

(v) At around 12:50 p.m. the auction purchaser gave the bid.

¶279

(vi) According to the case of the Bank since a bid was received therefore, authorised officer rushed to the Tribunal to inform that a bid was received but could not inform as board was discharged.

¶280

(vii) At 2:42 p.m. stamp duty of Rs.92,97,500/and registration charges of Rs.30,000/-deposited with the sub registrar office at Bandra and also Rs.92,97,500/- towards Stamp Duty at 2.52 p.m.

¶281

(viii) At 2:52 p.m. the successful bidder deposited the entire amount of the bid.

¶282

(ix) At 4:36 p.m. the authorized officer of the Respondent Bank confirmed the auction purchaser as a successful bidder.

¶283

¶284

(x) At around 5:00 p.m. to 5:30 p.m. the sale certificate was issued by the Authorized Officer at his office situated at Fort, Mumbai.

¶285

(xi) At 5:46 p.m. the sale certificate was registered at the sub-registrar office at Bandra, Mumbai in favour of the successful bidder.

¶286

22. All the events which have taken place on 11/05/2023 and the actions taken in the present matter itself speak louder than the words. The authorized officer of the Respondent Bank as well as the auction purchaser was well aware that the auction would complete in favour of the auction purchaser in any case.

¶287

23 It is very surprising that the sale was not confirmed, however, the amount for registration of the sale certificate had already been deposited by the auction purchaser. The relevant provision pertaining to the sale confirmation i.e. Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 (for short "the Rules, 2002") is extracted herein below for reference:

¶288

"9 ...................

¶289

(1) ...................

¶290

(2) The sale shall be confirmed in favour of the purchaser who has offered the highest sale price in his bid or tender or quotation or offer to the authorized officer and shall be subject to confirmation by the secured creditor:

¶291

¶292

24. As per Rule 9(2) of the Rules, 2002, the sale shall be confirmed in favour of the purchaser who has offered the highest sale price.

¶293

25. There are incidents where the sale confirmation was declined by the authorized officer/secured creditor on various grounds however, in the present matter the auction purchaser was so sure that the bid would certainly be confirmed in his favour.

¶294

26. It is important to note here that in the present matter at around 4:36 p.m., the authorized officer of the Bank confirmed the sale in favour of the auction purchaser however, before the said confirmation, the amount for registration of sale certificate was already been deposited by the auction purchaser at around 2.42 p.m. though the auction purchaser has not been informed that sale has been confirmed in his favour.

¶295

27. Insofar as the balance amount of the auction is concerned, after issuance of the confirmation by the authorized officer, the auction purchaser is required to deposit the remaining amount of his bid. The relevant provision of Rule 9(4) of the Rules, 2002 is extracted as under:-

¶296

"9 ...................

¶297

(1) ...................

¶298

(2) ...................

¶299

(3) ...................

¶300

(4) The balance amount of purchase price payable shall be paid by the purchaser to the authorised officer on or before the

¶301

¶302

fifteenth day of confirmation of sale of the immovable property or such extended period as may be agreed upon in writing between the parties."

¶303

28. Thus, as per Rule 9(4) of the Rules, 2002, the auction purchaser is required to deposit the remaining amount within 15 days however, in the present matter the Auction Purchaser deposited the remaining amount of the bid prior to confirmation of sale in his favour by the secured creditor. The auction purchaser deposited amount in following manner:

¶304

(i) 1ˢᵗ payment of Rs.9,00,00,000/on 11/05/2023 at 2:49 p.m.

¶305

(ii) 2ⁿᵈ payment of Rs.9,00,00,000/on 11/05/2023 at 2:49 p.m.

¶306

iii) 3ʳᵈ payment of Rs.9,00,00,000/on 11/05/2023 at 2:50 p.m.

¶307

(iv) 4ᵗʰ payment of Rs.6,10,01,000/on 11/05/2023 at 2:52 p.m.

¶308

29. It is unexpected that, when the sale was confirmed by the authorized officer at 4:36 p.m., then how and why the auction purchaser deposited the entire bid amount, why paid the stamp duty with the sub-registrar office prior to the confirmation of the said sale.

¶309

¶310

30. According to the auction purchaser, he obtained a loan to purchase the property in question on 11/05/2023 at Coimbatore as the Auction Purchaser was not having sufficient funds.

¶311

31. It is also important to note here that in the sale certificate the time was not provided by any party thus, on enquiry by this Tribunal, the Authorized Officer of the Respondent Bank has informed that the sale certificate was issued at around 5:00 p.m. to 5:30 p.m. from his office situated at 104, Bharat House, Ground Floor, Mumbai Samachar Marg, Fort, Mumbai-400001. According to the record, the sale certificate was registered at 5:46 p.m. on the same day with the sub-registrar office at Bandra, District Mumbai Suburban in Greater Mumbai.It is surprising that after issuance of the sale certificate at around 5:00 p.m. - 5.30 p.m. at Fort, Mumbai, how the authorized officer of the Respondent Bank reached the Sub-Registrar office situated at Bandra, Mumbai at 5:46 p.m. that too, on a working day and in busy hours of Mumbai and it is also unanswerable by the authorized officer that as to why there was so hurry for registration of sale certificate.

¶312

32. It is also a case of the Respondent Bank that though the Ld. Counsel for the Respondent Bank informed this Tribunal that no bid was received but subsequently bid was received on 11.05.2023 therefore, the officer of the Bank rushed to the Tribunal to inform regarding the receipt of the bid. But could not inform, as the board was already discharged. The said conduct of the authorized officer further creates doubt that when he was well aware that it is wrongly informed to this Tribunal that no bid was received and thus, the IA No.1957/2023 and IA No.1960/2023 was dismissed,

¶313

¶314

still he was in hurry for registration of sale certificate. The said conduct confirmed the doubt and suspicion of the Applicant.

¶315

33. All the events conducted in the present matter raised suspicion about the event which has taken place. There are multiple reasons in the present auction which not only indicate the suspicion on the auction process between the auction purchaser and the authorized officer of the Respondent Bank but also there is a big smell of fraud in the said auction process thus, the auction purchaser can not be termed as a bonafide purchaser.

¶316

34. …………….”.

¶317

From the submissions of the Learned Counsel

¶318

appearing for the parties and records produced, it is seen that the Respondent No.2, Union Bank of India sanctioned

¶319

loan of Rs.49.50 Crores and the other member of consortium, Corporation Bank sanctioned Rs.29.70 Crores to the 1st Respondent. Demand Notice under Section 13(2) of SARFAESI Act, 2002 dated 18.07.2019 was issued claiming a sum of Rs.41,98,24,808/- to the 1^st Respondent. Another Demand Notice under Section 13(2) of SARFAESI Act, 2002 dated 19.07.2019 was issued claiming a sum of Rs.26,70,95,532.51p. The Authorised Officer of Respondent

¶320

¶321

No.2, took symbolic possession of the property on 27.01.2020. On 08.06.2021, Respondent No.2 applied under Section 14 of the SARFAESI Act, 2002, before Chief Metropolitan Magistrate, for taking physical possession. First Sale Notice dated 18.09.2021 was issued for selling the property. Since no sale had taken place for want of bidders, subsequent Sale Notices dated 11.03.2021, 02.05.2022, 05.12.2022, 31.12.2022 and 17.02.2023 had been issued. All these sale attempts had failed. The impugned Sale Notice

¶322

dated 11.04.2023 was issued fixing the sale on 11.05.2023. On 08.05.2023, 1^st Respondent filed Interlocutory Applications in IA 1957/2023 and IA 1960/2023 challenging the Sale Notice dated 11.04.2023 and amendment to SA 92/2023 and other reliefs.

¶323

One of the contentions raised by Learned Counsel for the Interveners is that in the impugned Sale Notice dated 11.04.2023, there is no mention about the land. To refute this contention, Learned Counsel for the Bank produced a

¶324

¶325

copy of Memorandum of Deposit of Title Deeds dated 22.06.2015, Notice of intimation of mortgage by way of deposit of title deeds sent by the 1^st Respondent, Notices for taking possession of the secured asset and previous Sale Notices to show that the property intended for sale was inclusive of Duplex Bungalow having building area of 4700 sq. ft. and land measuring 9025.86 sq. ft. The Demand Notice issued by the Corporation Bank is also produced to show that the description of the property is inclusive of the land. Now from the documents produced, it is made clear that the Bank intended to sell the building with land on the basis of mortgage executed by 1^st Respondent. The issue as to whether the 1^st Respondent is entitled to mortgage the land with building is a serious issue touching upon the merits of sale of property.

¶326

The reason for setting aside the sale in favour of the Appellant is the alleged fraudulent acts of omission and commission by the Respondent No.2 Bank with collusion with the Appellant. What had happened on 11.05.2023 is

¶327

¶328

narrated earlier by referring to the order of the Learned Presiding Officer, DRT-I, Mumbai dated 12.10.2023. When the Interlocutory Applications in IA 1957/2023 and IA 1960/2023 in SA 92/2021 had been taken up at 11.15 a.m., on 11.05.2023, Learned Counsel for Bank informed the Tribunal that no bid has been received, therefore, the matter was kept back to know the result of the auction. When the matter was taken up again at 12.15 p.m., Learned Counsel for Bank was not present, and therefore, taking into consideration the earlier submissions of Learned Counsel for Bank that no bid had been received, both the Interlocutory Applications in IA 1957/2023 and IA 1960/2023 in SA 92/2021 had been dismissed as infructuous by the DRT. The order dated 11.05.2023 reads “ Learned Counsel for Respondent informed that no bid has been received in the auction impugned. In view of the submissions of Learned Counsel for Respondent, IA 1957/2023 and IA 1960/2023 are hereby dismissed as infructuous .”

¶329

¶330

The case of the 2^nd Respondent Bank is that the Bank received the bid at 12.50 p.m. from the Appellant. It appears that the Appellant was the sole bidder and she was declared as the successful bidder followed by confirmation and registration of the sale on the same date on 11.05.2023. No material is produced either before the Tribunal or before this Tribunal as to whether the Bank officials or Counsel appearing for the Bank had taken any effort to inform the Learned Presiding Officer about the receipt of the bid at 12.50 p.m., on 11.05.2023 on the same date or immediately thereafter.

¶331

Prior to 30.05.2023, it was the submission of Learned Counsel for 1^st Respondent that, the 1^st Respondent received a message from the Bank about deposit of certain amounts with information about sale of the property. First Respondent genuinely believed that the property was sold in a private treaty for the reason that it was reported by Respondent Bank on 11.05.2023 that no bid had been

¶332

¶333

received. From the adjudication dated 30.05.2023, it is seen that Learned Counsel for Respondent Bank informed Learned Presiding Officer that after the order was passed on 11.05.2023, a bid was received in auction, and therefore, the Bank proceeded with auction and declared the same as successful. Learned Presiding Officer proceeded to record that “since on 11/05/2023 on the submission of the Ld. Counsel for Respondent, this Tribunal dismissed the IAs in which the auction was impugned, however now Ld. Counsel for Respondent inform the auction is successful. The said action of the bank is highly deplorable and thus, the Respondent bank is hereby directed not to proceed further in auction till next date. ”

¶334

When the matter was taken up again on 19.06.2023, it is seen that, Learned Counsel appearing for the parties requested the Tribunal to keep the issue concerning the last date and time of receiving the bid open to be agitated by the parties during the final hearing of Securitisation Application.

¶335

¶336

Prior to that, on 29.05.2023, 1^st Respondent filed MA 40/2023, which was subsequently converted as IA 2666/2023. From the impugned order and proceedings referred above, it is evident that Learned Presiding Officer had dismissed on 11.05.2023 the Interlocutory Applications in IA 1957/2023 and IA 1960/2023 mainly based on the submission of Learned Counsel for the Respondent Bank that no bid had been received.

¶337

Had the information relating to receipt of bid been informed to the Learned Presiding Officer, she would have entertained both the Applications and could have granted stay of sale or confirmation of sale, subject, of course, on making some payments towards the debt due. No records have been produced to show that there were some other bidders participated in the E-auction held on 11.05.2023. The Appellant was the only bidder. Why the Bank officials or Learned Counsel appearing for the Bank were not present when the matter was taken up by Learned Presiding Officer again at 12.15 p.m., and why the receipt of bid at 12.50

¶338

¶339

p.m., was not reported to the Learned Presiding Officer on

¶340

the same date or immediate succeeding dates, raises a serious doubt in the manner of conduct of e-auction sale.

¶341

From the e-mail communication produced by Learned Counsel appearing for the Interveners, it is seen that the Auction Purchaser had been making enquiries with regard to the mortgage of the property with Urmila & Co. Ltd. We cannot find fault with the Appellant for making enquiries in respect of the property she intended to purchase in e- auction sale. But, what happened on 10.05.2023, and thereafter, on 11.05.2023, are not in tune with the established procedure for conducting a proper and fair E- auction sale.

¶342

First Respondent filed IA 856/2024 to receive additional documents. According to Learned Counsel for 1^st Respondent, the auction was fixed on 11.05.2023. Husband of the Auction Purchaser, Mr. Sanjeev Uppal, filled a form on

¶343

¶344

10.05.2023 and submitted it to the concerned registration department for registration of Sale Certificate, on 11.05.2023. Not only that, Mr. Sanjeev Uppal, had specifically named Mr. Amardeep Garje, as the Authorised Officer of Union Bank of India, as the person, who would submit the Sale Certificate for registration. Submission of this registration Form would clearly indicate an active collusion and connivance between the Auction Purchaser and the Bank officials to ensure that the property mortgaged was sold to the Appellant, confirmed and registered on the same date. Since this document could not be procured when the matter was pending before DRT, this Application is now filed.

¶345

Learned Senior Counsel for Appellant and Counsel for Respondent No.2 objected to this Application on the ground that this is new document, and they should be given an opportunity to contest the document before the Tribunal. This Tribunal, on going through the records, found that, this document is a public document, and this document is

¶346

¶347

necessary to find out whether the fraud alleged by the 1^st Respondent and found correct by the Learned Presiding Officer, is true. The proceedings before DRT and DRAT in Original Applications or SARFAESI Applications have to be disposed within a time frame. Oral evidence is necessary only when it is absolutely required and when it will not delay the disposal of the proceedings. The document now sought to be produced is a public document and concerning the parties. They cannot deny the genuineness of this document. Therefore, this Application is allowed and the document is received in evidence.

¶348

The perusal of this document shows that the Appellant’s husband, Mr. Sanjeev Uppal, filled this Form on 10.05.2023, for registration of the mortgage property to be auctioned on 11.05.2023. He had also shown that Mr. Amardeep Garje, the Authorised Officer of the Union Bank of India, as the person submitting the document. How is that possible? How is that a bidder, is so confident of becoming a successful bidder in a public E-auction sale, its

¶349

¶350

confirmation, issuance of Sale Certificate on the same date for its registration. This Tribunal is clueless.

¶351

It is also not out of place to mention that the Appellant had paid the entire sale consideration on the same date. She made a bid amount of Rs.37.19 Crores at 12.29 p.m. She paid Rs.9 Crores at 14.49 p.m.; Rs.9 Crores at 14.49 p.m; Rs.9 Crores at 14.50.24 p.m. and Rs.6,10,01,000/- at 14.52.07 p.m, on 11.05.2023. It is to be borne in mind that Appellant was intimated about her participation in the auction sale and quoting Rs.37.19 Crores as her bid amount at 1.05 p.m., on 11.05.2023. This is not actual confirmation of sale. Only at 4.35 p.m., she was informed that her bid amount of Rs.37.19 Crores was accepted as highest amount and she was declared as the successful bidder in the auction. Appellant was directed to deposit 25% of the bid amount of Rs.9,29,75,000/- immediately, but not later than

¶352

12.05.2023 and balance 75% of Rs.27,89,25,000/- on or before 26.05.2023. The Authorised Officer Mr. Sidhartha

¶353

S. Mhade communicated this information to the Appellant

¶354

¶355

on 11.05.2023. However, as detailed above, even before confirmation of sale in her favour, she had made the entire payment before 3.00 p.m., on 11.05.2023. Prior to 3.00 p.m.

¶356

on 11.05.2023, Appellant was not informed that her bid was the highest, and she was the highest bidder. Despite that, she proceeded to pay the entire bid amount.

¶357

Learned Senior Counsel for Appellant and Learned Counsel for Bank submitted that the Appellant and her husband are proactive and over enthusiastic persons. They decided to purchase the property in the e-auction sale, therefore, made arrangement for registration of the Sale Certificate by getting token on 10.03.2023. Appellant paid the entire sale consideration even prior to receiving sale confirmation from the Bank. She had taken a risk. Even if the sale is not confirmed in her favour, she would get back her money, and therefore, she had taken the risk of payment prior to confirmation of sale in her favour.

¶358

¶359

Appellant has not invested a small amount. She invested nearly Rs.38 Crores. Even a person with utmost over confidence, would not invest this much of huge amount unless he/she knows that he/she would succeed in the auction sale. Who gave Appellant this confidence that she would succeed in the E-auction sale and thus divulged the name of Mr. Amardeep Garje, as the person deputed for registering the Sale Certificate? Most probably, the Bank officials, in their eagerness that the property be sold and its dues are recovered after so many failures of earlier attempts for sale or for some other consideration. But, the fact remains that the sale was not conducted in a manner known

¶360

to law, starting from reporting before Learned Presiding Officer that there was no bid received prompting Learned Presiding Officer to dismiss the Interlocutory Applications in IA 1957/2023 and IA 1960/2023, receipt of bid after dismissal of IA 1957/2023 and IA 1960/2023 at 12.50 p.m., receipt of entire sale consideration even prior to confirmation that the Appellant is the successful bidder, confirmation of

¶361

sale, issuance of Sale Certificate and registration of Sale

¶362

¶363

Certificate on the same date within a short duration. To top it all, the Appellant was able to know the name of Authorised Officer of the Bank, Mr. Amardeep Garje, as the person presenting the Sale Certificate for registration on 11.05.2023, on 10.05.2023 itself. Without the active aid, support and collusion between the Auction Purchaser and the Bank officials, this would not have been possible at all.

¶364

In the Counter filed in IA 2666/2023, Dhurandar Ram, Chief Manager of Union Bank of India, in para 15 stated as follows:

¶365

“15. It would not be out of place to mention that the authorised officer was also monitoring the progress of the Auction on the MSTC portal through his Login ID. Some time prior to 1:00 p.m. on 11.05.2023 the Authorised Officer ( i.e., Mr. Amardeep Garje) visited the MSTC portal and realised that a bid had been received in respect of the ongoing auction. The authorised officer immediately instructed the

¶366

¶367

Respondent’s advocate i.e. Ms. Sushila Vichare to inform the Hon’ble Tribunal about the development. The Advocate for the Respondent rushed to the Hon’ble Tribunal to bring the development to the knowledge of the Hon’ble Tribunal. However, as hearing of matters scheduled for the day had been completed, this Hon’ble Tribunal had risen for the day.”

¶368

From this statement, it is clear that Mr. Amardeep Garje knew from MSTC portal that the bid has been received sometime prior to 1.00 p.m. He instructed the Bank’s Counsel to inform this development to the Tribunal. Counsel could not inform the Learned Presiding Officer for the reason that the work for the day was over. The reason that the work for the day was over, does not mean that Learned Presiding Officer was not available in the premises of the DRT. After getting permission from Learned Presiding Officer for a meeting, the matter could have been intimated to the Learned Presiding Officer. That exercise was not done

¶369

on the same day or immediately thereafter.

¶370

¶371

When the matter was pending before this Tribunal, this Tribunal directed the Authorised Officers mentioned in the Sale Notice i.e. Mr. Sidhartha S. Mhade and Mr. Amardeep Garje, who issued and registered the Sale Certificate, to file an Affidavit. The Affidavit of Mr. Sidhartha S. Mhade, Authorised Officer, reads that he informed about the fact of not receiving the bid to Mr. Amardeep Garje at about 11.15 a.m. Then, after receiving the bid at 12.50 p.m., he informed

¶372

this fact to Mr. Amardeep Garje around 12.50 p.m. Mr. Amardeep Garje, Authorised Officer, filed an Affidavit similar to this fact i.e., he was informed by Mr. Sidhartha S. Mhade about receipt of bid at 12.50 p.m. These statements are in direct contrast with the statement made in Counter filed by Bank in IA 2666/2023, wherein it is stated that Mr. Amardeep Garje, was monitoring the MSTC portal sometime prior to receipt of the bid. Thus, it is clear that the Bank officials are not telling the true facts as to their knowledge about the receipt of the bid, either it was by Mr. Amardeep Garje or by Mr. Sidhartha S. Mhade. In view of this false

¶373

and contradictory statements filed by Mr. Amardeep Garje

¶374

¶375

and Mr. Sidhartha S. Mhade, 1^st Respondent filed IA 855/2024 under Section 379 of the Bharatiya Nagarik Suraksha Sanhita, 2023, for initiating criminal proceedings against Authorized Officers.

¶376

50. From the aforesaid Counter Affidavit and the Affidavits filed, and from the discussion held above, it is very clear that the Authorised Officers, in this case, had actively colluded with the Auction Purchaser in ensuring that the bid be received after the dismissal of the Interlocutory Applications in IA 1957/2023 and IA 1960/2023. Then confirmed the

¶377

sale, issued Sale Certificate and registered on the same date.

¶378

51. From the mortgage document produced, it is seen that the 1^st Respondent had mortgaged the land with building named “Beach View” situated at Juhu Tara Road, Jitendra Lane, Santacruz (West), Mumbai. Learned Counsel for KP Ridge Pvt. Ltd. and Urmila & Co. Ltd., the Interveners, produced certain documents to show that what was sold to

¶379

¶380

Appellant was only building and not the land underneath. It is his submission that the land originally belonged to one Mrs. Dinbai Kaikhushroo Dubash. She executed a Lease Deed in favour of Urmila & Co. Ltd., for leasing the land described in the Lease Deed. Urmila & Co. Ltd., entered into an Agreement of Sale dated 08.09.1973 with 1^st Respondent for selling the building to be constructed. On 22.03.1974, Urmila & Co. Ltd., entered into a construction agreement with 1^st Respondent wherein the 1^st Respondent was given permission for constructing building. This was followed by a Declaratory Agreement dated 21.01.1978. These documents clearly show what was sold to the 1^st Respondent, was only the building and not the land and building.

¶381

State Bank of India sought legal opinion when M/s. Indus Mechanical Engineering Company Pvt. Ltd. borrowed loan. In the legal opinion dated 07.03.2006, given by m. dhruva & co. Advocates & Solicitors that the legal opinion

¶382

¶383

was given only in respect of 4000 sq. ft. of building for creation of mortgage. It was not indicated that 1^st Respondent had right over the land as well. Urmila & Co. Ltd., cancelled the lease in favour of 1^st Respondent and sent a communication in this regard. Auction Purchaser and Union Bank of India knew well that the land was not sold to the 1^st Respondent. In fact without verifying the title deed of the land properly, the Bank advanced the loan and sold the property. Therefore, KP Ridge Pvt. Ltd., who stepped into the shoes of Urmila & Co. Ltd., is greatly prejudiced. After purchasing the property, Auction Purchaser borrowed a loan of Rs.22 Crores from Punjab National Bank vide sanction letter dated 31.10.2024 subject to creation of fresh mortgage deed in respect of subject property.

¶384

Learned Counsel for Intervener relied on the judgement of Hon’ble Supreme Court in the case of State of Maharashtra Vs. Ramdas Shrinivas Nayak and Anr., reported in (1982) 2SCC 463 for the proposition that matter of judicial record are unquestionable and they not open to

¶385

¶386

doubt. We are bound to accept the statement of the judges recorded in their judgement, as to what transpired in court. We cannot allow the statement of judges to be contradicted by statements at the Bar or by Affidavit or by other evidence.

¶387

Urmila & Co. Ltd., had already filed TSA 151/2023 challenging the Sale Certificate dated 11.05.2023 and other reliefs, and it is pending before DRT. Against the order of adjudication dated 11.05.2024 by Learned Presiding Officer,

¶388

“list this matter on 06.08.2024”, KP Ridge Pvt. Ltd., who stepped into the shoes of Urmila & Co. Ltd., filed MA 115/2024. Since, already Urmila & Co. Ltd., and now KP Ridge Pvt. Ltd., is prosecuting Securitisation Application in TSA 151/2023, this Tribunal finds that the impleadment of Urmila & Co. Ltd. and KP Ridge Pvt. Ltd. in Appeal filed by the Auction Purchaser in MA 135/2023 and in the Appeal filed by the Bank in MA 146/2023, is not necessary. Suffice it is to state that the Interveners had made out a prima facie case that whatever was sold to 1^st Respondent,

¶389

was only building, and not the land and building.

¶390

¶391

It is seen from the documents produced that the 1^st Respondent had not paid the lease amount and taxes for long time. Only just prior to filing of TSA 151/2023, the lease of land was sought to be cancelled. Therefore, the Intervening Applications in IA 41/2024 and IA 42/2024 filed by Urmila & Co. Ltd. to implead it in Appeal filed by the Auction Purchaser in MA 135/2023 and in the Appeal filed by the Bank in MA 146/2023 and Intervening Applications in IA 42/2025 and IA 43/2025 filed by KP Ridge Pvt. Ltd. to implead it in Appeal filed by the Auction Purchaser in MA 135/2023 and in the Appeal filed by the Bank in MA 146/2023, are dismissed, giving them liberty to agitate the issues raised herein, before the Tribunal in TSA 151/2023.

¶392

Learned Senior Counsel for Appellant and Counsel for Respondent Bank submitted that in IA 2666/2023, there is no prayer challenging the Sale Notice and the sale. Without proper pleadings and prayer challenging the sale, Sale Certificate cannot be challenged. In support of this submission, Learned Counsel for Appellant produced the

¶393

¶394

judgement of Hon’ble Supreme Court reported in (1988) SCC 81 in the case of Banarsi Dass Vs. Brig. Maharaja Sukjit Singh and Anr . He also relied on the orders of this Tribunal in RA (SA) 152/2018 and RA (SA) 83/2019 for the proposition that the Sale Certificate cannot be independently challenged without the challenge to the sale, because issuance of Sale Certificate is not a “measure” but only consequential step in pursuance of sale. Sale is a measure and that can alone be challenged and not issuance of Sale Certificate.

¶395

From the facts narrated above, it is seen that 1^st Respondent had already filed the Applications in IA 1957/2023 and IA 1960/2023, challenging the Sale Notice dated 11.04.2023 and for suitable amendment in SA 92/2021. Those Applications came to be dismissed on the basis of representation made by the Counsel for the Bank, therefore, it cannot be said that there was no challenge to the impugned Sale Notice on the basis of which the sale was conducted. Similarly, the reading of the Affidavit filed in IA

¶396

¶397

2666/2023 shows that enough averment was made with regard to fraud committed by the Auction Purchaser and the Bank in the conduct of sale etc. It is true that it is referred

¶398

in the Affidavit that the 1^st Respondent believed that there was a private sale in a private treaty. This belief is a bonafide belief, for the reason that, on 11.05.2023, the Advocate for Bank reported that no bid was received, and on that submission, the Applications filed challenging the Sale Notice and amendment to SA, had been disposed of. In the said circumstances, 1^st Respondent’s belief that the property might have been sold in a private sale, is understandable. Therefore, this Tribunal does not subscribe to the view of the Learned Senior Counsel for the Appellant and the Respondent Bank that there is no pleadings and no prayer, and therefore, the issuance of Sale Certificate cannot be challenged.

¶399

A bald attempt was made to state that IA 2666/2023 was not filed within the period of limitation. As already stated, the 1^st Respondent filed MA 40/2023 initially, and on

¶400

¶401

objection, it was later converted as IA 2666/2023, and therefore, there is no question that this Application being barred by limitation.

¶402

Learned Senior Counsel for Appellant relied on the judgment of Hon’ble Supreme Court reported in (2004) 11 SCC 168 in the case of Shipping Corporation of India Ltd.

¶403

Vs. Machado Brothers and Ors. and A.L.N. Narayanan Chettyar and Anr. Vs Official Assignee of the High Court,

¶404

Rangoon and Anr., for the proposition that fraud must be established beyond reasonable doubt and the allegation of fraud cannot be decided in an interlocutory stage, and it can only be considered during the final disposal of the case. He reiterated that in view of the agreement reached between the parties that the issue regarding the date and time of receiving the bid open to be agitated by the parties during the final hearing of Securitisation Application, it is appropriate that this issue should not be decided in IA 2666/2023, but should be decided in the main SA. True

¶405

that, it is held in the Privy Council judgement that fraud in

¶406

¶407

civil or criminal proceedings must be established beyond the reasonable doubt.

¶408

In the judgement reported in (2004) 11 SCC 168 , the issue was filing of IA under Section 151 of CPC for the disposal of suit in OS No.4212/1995 on the ground that the suit had become infructuous . The suit in IA No. 20651/2001 was rejected by trial court on the ground that it lacked in bonafides and allowing it would cause prejudice to the Respondent therein. When this order was challenged before Hon’ble High Court, the High Court concurred with the order

¶409

of trial court and dismissed the Civil Revision Petition. The matter was taken to Hon’ble Supreme Court. Hon’ble Supreme Court held that the Interlocutory Orders are made in aid of final orders and not vice versa . No Interlocutory Order will survive after the original proceedings come to an end. However, proceeded to hold that the Court below erred in continuing an infructuous suit just to keep the Interlocutory Order alive, which amounts to putting the cart before the dead horse. It was observed as follows:-

¶410

¶411

“30.We have already noticed that the courts below have also held that the application of the appellant lacks in bona fide. We fail to understand how this is so. If a party has a legal right to ask for dismissal of an infructuous suit, and pursuant to the said right it makes an application for dismissal of said suit, the same cannot be termed as an act in malice.

¶412

31. For the reasons stated above, we are of the opinion that continuation of a suit which has become infructuous by disappearance of the cause of action would amount to an abuse of the process of the court and interest of justice requires such suit should be disposed of as having become infructuous. The application under Section 151 of CPC in this regard is maintainable.

¶413

32. For the reasons stated above, this appeal succeeds. I.A.No.20651 of 2001 filed by the appellant in O.S.No.4212/95 is allowed. Consequentially suit O.S.No.4212/95 pending in the court of City Civil Court at Chennai is dismissed as having become infructuous. The appellant shall be entitled to cost throughout.”

¶414

¶415

Thus, it is seen from this judgement that if a party has a legal right to ask for dismissal of an infructuous suit, it cannot be termed as an act in malice. What is to be noted here is that dismissal of suit as infructuous was the result of Interlocutory Application.

¶416

Two other judgements on proof of facts, reported in 1998 SCC OnLine Mad 1069, in the case of Commissioner of Income-Tax Vs Inden Bislers and reported in (2017) 2 SCC 797 in the case of Harjas Rai Makhija (dead) Through LRs Vs. Pushparani Jain and Anr ., are produced. These judgements are also relied for the proposition that fraud cannot be established without proper pleadings and evidence.

¶417

Learned Counsel for 1^st Respondent had pressed into service judgements of Indian Bank Vs. M/s. Satyam Fibres

¶418

( India) Pvt. Ltd. and A. V. Papayya Sastry and Ors. Vs. Government of A.P. and Ors. , for the proposition that the

¶419

¶420

fraud avoids all judicial acts, ecclesiastical or temporal and it can be challenged at any stage, even in collateral proceedings. Learned Counsel for 1^st Respondent also relied

¶421

on the judgement of Hon’ble High Court of Jammu & Kashmir and Ladakh at Jammu, in CR No. 44/2016 in the

¶422

case of Veena Gurtoo and Anr. Vs. Rajesh Kumar Gupta , for the proposition that when fraud is established, the aggrieved party is entitled for restitution.

¶423

Some of the important observations with regard to fraud are relevant. In Indian Bank Vs. M/s. Satyam Fibres ( India) Pvt. Ltd. , it was observed in para 21 as follows:

¶424

“21. In Smith v. East Elloe Rural District Council

¶425

(1956) AC 736, the House of Lords held that the effect of fraud would normally be to vitiate any act or order. In another case, Lazarus Estate Ltd. V. Beasley,

¶426

(1956) 1 QB 702 at 712, Denning LJ said:

¶427

“No judgement of a court, no order of a Minister, can be allowed to stand if it has been

¶428

¶429

obtained by fraud. Fraud unravels

¶430

everything.”

¶431

In the case of A. V. Papayya Sastry and Ors. Vs.

¶432

Government of A.P. and Ors., it is observed as follows:-

¶433

“16. Now, it is well settled principle of law that if any judgment or order is obtained by fraud, it cannot be said to be a judgment or order in law. Before three centuries, Chief Justice Edward Coke proclaimed;

¶434

"Fraud avoids all judicial acts, ecclesiastical or temporal".

¶435

It is thus settled proposition of law that a judgment, decree or order obtained by playing fraud on the Court, Tribunal or Authority is a nullity and non est in the eye of law. Such a judgment, decree or order by the first Court or by the final Court has to be treated as nullity by every Court, superior or inferior. It can be challenged in any Court, at any time, in appeal, revision, writ or even in collateral proceedings.

¶436

¶437

17. In the leading case of Lazarus Estates Ltd. v. Beasley, (1956) 1 All ER 341 : (1956) 1 QB 702 : (1956) 2 WLR 502, Lord Denning observed:-

¶438

"No judgment of a court, no order of a Minister, can be allowed to stand, if it has been obtained by fraud."

¶439

18. In Duchess of Kingstone, Smith's Leading Cases, 13th Edn., p.644, explaining the nature of fraud, de Grey, C.J. stated that though a judgment would be res judicata and not impeachable from within, it might be impeachable from without. In other words, though it is not permissible to show that the court was 'mistaken', it might be shown that it was 'misled'. There is an essential distinction between mistake and trickery. The clear implication of the distinction is that an action to set aside a judgment cannot be brought on the ground that it has been decided wrongly, namely, that on the merits, the decision was one which should not have been rendered, but it can be set aside, if the court was imposed upon or tricked into giving the judgment. It has been said; Fraud and justice never dwell together (fraus et jus nunquam cohabitant); or fraud and deceit ought to benefit none (fraus et dolus nemini patrocinari debent).

¶440

¶441

19. Fraud may be defined as an act of deliberate deception with the design of securing some unfair or undeserved benefit by taking undue advantage of another. In fraud one gains at the loss of another. Even most solemn proceedings stand vitiated if they are actuated by fraud. Fraud is thus an extrinsic collateral act which vitiates all judicial acts, whether in rem or in personam. The principle of 'finality of litigation' cannot be stretched to the extent of an absurdity that it can be utilized as an engine of oppression by dishonest and fraudulent litigants.

¶442

20. In S.P. Chengalvaraya Naidu (dead) by LRs. V. Jagannath (dead) by LRs. & Ors. (1994) 1 SCC 1 : JT 1994 (6) SC 331, this Court had an occasion to consider the doctrine of fraud and the effect thereof on the judgment obtained by a party. In that case, one A by a registered deed, relinquished all his rights in the suit property in favour of C who sold the property to B. Without disclosing that fact, A filed a suit for possession against B and obtained preliminary decree. During the pendency of an application for final decree, B came to know about the fact of release deed by A in favour of C. He, therefore, contended that the decree was obtained by playing fraud on the court and was a nullity. The trial court upheld the contention and dismissed the

¶443

¶444

application. The High Court, however, set aside the order of the trial court, observing that "there was no legal duty cast upon the plaintiff to come to court with a true case and prove it by true evidence". B approached this Court. Allowing the appeal, setting aside the judgment of the High Court and describing the observations of the High Court as 'wholly perverse', Kuldip Singh, J. stated:

¶445

"The courts of law are meant for imparting justice between the parties. One who comes to the court, must come with clean-hands. We are constrained to say that more often than not, process of the court is being abused. Property-grabbers, tax- evaders, bank-loandodgers and other unscrupulous persons from all walks of life find the court - process a convenient lever to retain the illegal-gains indefinitely. We have no hesitation to say that a person, who's case is based on falsehood, has no right to approach the court. He can be summarily thrown out at any stage of the litigation".

¶446

These judgements make it clear that fraud avoids all judicial acts, ecclesiastical or temporal and it can be challenged in any Court, at any time, in appeal, revision, writ or even in collateral proceedings and no judgement of a court, no order

¶447

¶448

of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything.

¶449

The word ‘fraud’ means wrongful or criminal deception intended to result in financial or personal gain. The word ‘collusion’ means secret or illegal cooperation or conspiracy in order to deceive others. As discussed in detail, the sequence of events that had taken place on 10.05.2023 and 11.05.2023, very clearly establishes active collusion, connivance and collaboration between the Auction Purchaser and the Bank officials. Naming Mr. Amardeep Garje, as the person presenting the document for registration on 11.05.2023, on 10.05.2023 itself; receiving the bid at 12.50 p.m., after misleading Learned Presiding Officer that there was no bid received; receiving of entire sale consideration prior to confirmation of sale; issuance of Sale Certificate and its registration on the same day within a short span of time, exhibits, nothing short of fraud and collusion between the Auction Purchaser and Bank officials. In the light of the evidence, which cannot be controverted, available there is no

¶450

¶451

elaborate enquiry through oral evidence is required to record a finding on the fraudulent act committed by Auction Purchaser and Bank officials. Result of fraud can be undone in an order passed in an Interlocutory Application. Other issues like challenge to proceedings before CMM can be decided in the main Application. In the said circumstances, this Tribunal concurs with the findings of Learned Presiding Officer, DRT-I, Mumbai that the sale has to be set aside on the ground of fraud and illegality. Therefore, this Tribunal confirms the order of Learned Presiding Officer, DRT-I, Mumbai, and dismisses the Appeals filed by the Auction Purchaser in MA 135/2023 and the Appeal filed by the Bank

¶452

in MA 146/2023.

¶453

As already stated, 1^st Respondent filed IA 855/2024 for taking action against the Authorised Officers under Section 379 of the Bharatiya Nagarik Suraksha Sanhita, 2023. This Application is closed with a direction to the Learned Presiding Officer, DRT-I, Mumbai, to take up this Application on file, and give a fresh number and dispose of this

¶454

¶455

Application on merits and in accordance with law along with main Securitisation Application. In view of dismissal of these Appeals, IA 854/2024 stands closed.

¶456

67. MA 115/2024 is filed only against the proceedings dated 11.06.2024 “to list the matter on 06.08.2024” . It is neither an Interlocutory Order nor final order, therefore, no Appeal will lie against this proceeding. Thus, the Appeal in MA 115/2024 , is dismissed.

¶457

The Appellant is entitled for refund of sale

¶458

consideration paid by her with interest rate as applicable to Fixed Deposits. The Bank may proceed with a fresh auction in respect of the property, in accordance with law.

¶459

¶460

In the result, the following orders are passed:-

¶461

i. Order of Learned Presiding Officer, DRT-I, Mumbai, in IA No. 2666/2023 is confirmed. Appeals in MA 135/2023 filed by Auction Purchaser and MA 146/2023 filed by Bank are dismissed with the costs of 1^st Respondent. MA 115/2024 filed by the Intervener is dismissed with no order as to costs.

¶462

ii. The Appellant, Auction Purchaser is entitled for refund of sale consideration paid by her with interest rate as applicable to Fixed Deposits.

¶463

iii. The Bank is directed to proceed with a fresh auction in respect of the property, in accordance with law.

¶464

iv. Interlocutory Application in IA 854/2024 filed by

¶465

1^st Respondent borrower to vacate the order dated

¶466

¶467

09.11.2023 and to order status quo ante as on 12.10.2023, stands closed.

¶468

v. Interlocutory Application in IA 855/2024 filed by

¶469

1^st Respondent borrower under Section 379 of

¶470

the Bharatiya Nagarik Suraksha Sanhita, 2023, stands closed with a direction to Learned Presiding Officer, DRT-I, Mumbai, to take up this Application on file, by giving a fresh number and dispose of this Application, on merits and in accordance with law, along with main Securitisation Application.

¶471

vi. Interlocutory Application in IA 856/2024 filed by 1^st Respondent borrower to receive additional

¶472

documents, is allowed.

¶473

vii. Interlocutory Applications in IA 41/2024 and IA 42/2024 filed by Intervener, Urmila & Co. Ltd. to implead it in Appeals MA 135/2023 and MA 146/2023 and Interlocutory Applications in IA 42/2025 and IA

¶474

¶475

43/2025 filed by KP Ridge Pvt. Ltd. to implead it in Appeals MA 135/2023 and MA 146/2023 are

¶476

dismissed, with liberty to agitate the issues raised herein, before the Tribunal in TSA 151/2023.

¶477

viii. Learned Presiding Officer, DRT-I, Mumbai is directed to dispose of the Securitisation Applications in SA 92/2021 and TSA 151/2023, after giving opportunity to both parties, on merits and in accordance with law, as expeditiously as possible.

¶478

All pending IAs, if any, stand closed.

¶479

[Dictated to Athistamani, PS, transcribed by her, corrected and signed by me this 10^th of March, 2025]

¶480

Sd/ -

¶481

[ Justice G. Chandrasekharan] CHAIRPERSON

¶482

Kp Ridge Through Pratik Shah (Director) v. Union Bank of India

Case brief

What is this about?

What did the court decide?

Kp Ridge Through Pratik Shah (Director) v. Union Bank of India

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Mahatma Gandhi Vidyamandir versus Religare Finvest Limited

Harshlok Motors India Pvt. Limited versus kotak mahindra prime limited

Harshlok Motors India Pvt. Limited versus kotak mahindra prime limited

Union Bank of India versus Indus Mechanical Eng Co. Pvt. Ltd.

Mrs Juana Sanjeev Uppal versus Indus Mechanical Eng Co. Pvt. Ltd.

Ms Peak Agritech through it partner Deepak Eknath Mole versus Canara Bank