The Debts Recovery Tribunal dismissed an appeal filed by a disqualified auction purchaser challenging the confirmation of a property sale at the reserve price, upholding the validity of the auction and directing the payment of the Appellant's voluntary deposit.
Appeal dismissed; Appellant entitled to receive voluntarily deposited amount with interest.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
DEBTS RECOVERY TRIBUNAL No.2, MUMBAI
PRESIDING OFFICER: HARISH KUMAR KAUSHIK
APPEAL NO.16 OF 2022
Date of Institution: 23.06.2023 Date of Decision: 29.04.2025
Mrs Aarti S.Gunjikar B-407, Murli Govind, 33rd Road, Khar West, Mumbai- 400054.
… Appellant
Versus
Mumbai-16
| APPEARANCES | |||
|---|---|---|---|
| For the Applicant | : Ms Aarti person |
S. Gun | jikar – in |
| For Respondent No.1 | : Ms Ridhi Jh | averi – | Advocate |
| For Respondent No.7 | : Mr Puneet | Gogad, | Mr Nilesh |
| Bamne and | Ms K | ajal Sawant | |
| i/b M/s. Advocates |
Sarika | Kamble - |
|
| For other Respondents | : None |
Final Order
Certificate in Original Application No.106 of 2012 for recovery of ₹41,55,870.04 with interest from the Certificate Debtors and a sum of ₹4,39,18,717/- is recoverable with further interest and charges as per the Recovery Certificate/ Decree.
(3) The Appellant is a third party unsuccessful auction purchaser in the auctions held on 27.10.2022 of the property namely Flat No.A/3, 1st floor, opp. T.H. Kataria Marg, Mahim, Mumbai 400 016 referred as (hereinafter ‘subject property’).
(4) The Appellant submits that she participated in the auction vide Advertisement dated 08.09.2022 in newspaper named Free Press Journal for which Reserve Price was fixed for an amount of ₹1,29,00,000/- on 27.10.2022 and EMD had to be submitted on or before 21.10.2022 4.30 pm in DD form of ₹13,00,000/-. The Appellant further submits that she had been disqualified in the auction process by the Recovery Officer twice i.e. on 09.09.2022 in Recovery Proceeding No.421 of 2016 for property in Mira Road and 27.10.2022 in
Recovery Proceeding No.34 of 2013 for property in Mahim.
(5) The Appellant submits that she has made earnest attempt for participating in the auction held and has submitted all the relevant documents but it was rejected by the Recovery Officer as her application was not approved. On receipt of this information, she approached DRT to gain correct reason for her disqualification but claims to be humiliated by the DRT staffs where the Registrar had called Police to take action against her for trespassing. The Appellant claims to be a regular auction purchaser in different forums and have never faced such humiliation from any other forum.
(6) The Appellant submits that there were 4 bidders and only bidder namely Ms Shailvi Shailesh Shah was declared as successful bidder at reserve price of ₹1,29,00,000/- whereas the Appellant’s bid was of ₹1,30,00,000/- which is higher than the reserve price. The Appellant further states that the Bank and the Recovery Officer were in collusion with each other and have committed injustice with the
Appellant and no fair competition has been encouraged by the Recover Officer.
(8) The Appellant through this present Appeal prays for a re-auction for the same property and to stay the process of auction dated 27.10.2022 during pendency of this Appeal and not to confirm the sale.
(9) The Respondent No.1, Bank in reply has followed the footsteps of the Appellant and has submitted that the Certificate Holder i.e. the bank had done valuation of the property through a Government Valuer namely M/s. Laxmi Engineering and Valuers on 10.02.2022 and further submits that
the Recovery Officer has erred in not letting the Appellant to participate in the auction conducted
on 27.10.2022 and prays to conduct a re-auction of the same property for a fair chance to be given to all the participants and that the total outstanding amount is ₹ 4,39,18,717.00/- and the amount fetch through auction is meagre which is not acceptable.
(10) The Respondent No.1, Bank further state that Mrs Sejal Gala, one of the auction bidders was not allowed to bid at the auction even though she had paid Earnest Money Deposit for which she has filed a Complaint letter dated 02.11.2022.
(11) The Respondent No.7 in reply submits that they came to know about the auction through newspaper dated 08.09.2022 and participated in the auction and submitted her bid as per the sale proclamation issued by the Recovery Officer and was declared as the successful bidder and was directed to deposit 25% (minus EMD) amount of ₹20,00,000/- for the sale consideration in favour of the Recovery Officer, DRT-II, Mumbai.
₹1,30,000/- by way of pay order in the name of the Registrar DRT-II, Mumbai. After the completion of all the formalities the Recovery Officer has neither transferred any right, title and interest nor issued the sale certificate in her favour and it was only vide order dated 28.11.2023 passed by the DRT-II, she was brought on record and that she has not been served with any documents of the Appeal.
(13) Lastly, the Respondent No.7 submits that she has shown her bonafide by depositing the requisite amount and has no ill intentions towards the Appellant and denies all the allegation of the Appellants and prays peaceful possession of the said subject property.
(14) In rejoinder, the Appellant denies all the contentions of the Respondents and states that she has deposited ₹1,40,00,000/with the Registrar DRT-II for purchasing the said property which is much higher than the bid placed by the Respondent No.7 and alleges presence of a nexus between the Bank officials and the Recovery Officer, DRT-II, Mumbai which has created a
mental agony to the Appellant.
(15) The question raised herein is whether the sale is vitiated because of the alleged violation of the ‘second proviso’ to Rule 9(2) of the Security Interest (Enforcement) Rules, 2002, when the property has not been caused to be sold for a price ‘higher than the reserve price’, but for the reserve price itself. The relevant provision i.e. 2nd proviso of Rule 9(2) of the Security Interest Rule, 2002 can be reiterated as below:
“Provided further that if the Authorised Officer of the bank fails to obtain the prices higher than the reserve price, he may, with the consent of the borrower and the secured creditor effect the sale at such the price.”
Thus, in view of ‘second proviso’ of Rule 9(2) of the Security Interest Rules, 2002, in case the bid is received for reserve price only then the consent of the borrower is also required before giving any effect to the sale.
But as it is rightly laid down in the judgement passed on 24.01.2022 by the Hon’ble Delhi High Court in Mahipal Sigh Yadav Vs. UBI & Anr that
where the highest bid received during the public auction/tender is equal to the Reserve Price, no consent of the borrower is required under Rule 9 of the Secured Interest (Enforcement) Rule, 2002. Thus, it can be concluded that the bid amount can be at reserve price and no consent of the borrower is required when the bid is received at reserve price.
(16) In the present case, no objection was raised during the fixation of the auction and the auction was concluded. Thus, as it was rightly laid down in Vedica Procon ( supra), the right to purchase cannot be taken away based on subsequent higher offers.
(17) The question for determination is whether the procedure for auction adopted by Recovery Officer suffers from any infirmity and requires any interference from this Tribunal.
(18) The Appellant herself has argued before the Tribunal that the auction took place on the reserve price which is in violation of ‘second proviso’ of Rule 9(2) of the Security Interest (Enforcement) Rules, 2002. However, it is clear
that Recovery Officer performed his duty in accordance with the provisions of RDDBFI Act, 1993 and SARFAESI Act and its Rule are not applicable in the present matter. Hence, the above argument is not of any substance on merit.
(19) The Appellant has challenged the proceeding dated 27.10.2022 in Recovery Proceeding No.34 of 2013 but, the Appellant has not challenged the order dated 25.10.2022 by which she was disqualified and not allowed to participate in e- auction. The Appellant was disqualified because bid submitted by her was not in compliance with term no.4 of the sale notice. The bid was not submitted in sealed envelope, date of demand draft did not match with the intimation filed up on the bid form and branch name column was not filed up.
(21) The Appellant further argued that to show her
bonafide she deposited a sum of Rs.1.27 crores as per direction of the Tribunal and still ready and willing to pay the higher amount for the said flat. However, according to Order-sheet dated 28.11.2022 of this Appeal No.16 of 2022 reveals that she submitted on that day that to show her bonafide she will voluntarily deposit a sum of Rs.1.27 crores with the learned Registrar on or before 30.11.2022 and there was not any kind of direction from this Tribunal to do so. Resultantly, her statement regarding so-called direction of the Tribunal is neither reliable nor believable.
(22) It is also clear from the proceedings of R.P. No.34 of 2023 that the Appellant deposited a sum of Rs.1.40 crores in the account of Recovery Officer in violation of the Order dated 28.11.2022 of Appeal No.16 of 2022. However, the learned Presiding Officer by Order dated 08.05.2023 directed to transfer that amount from the account of Recovery Officer to learned Registrar and compliance was done as per letter of I/c Registrar dated 29.05.2023.
(23) The Appellant is further argued that there is a
collusion between the Recovery Officer and Respondent No.1, Bank. However, in the present matter, the Respondent Bank is supporting the Appellant, so, in these circumstances, that arguments is also baseless.
(24) The Hon’ble Apex Court in the case of Vedica Procon Private Limited Vs. Balleshwar Greens Private Limited and Others (2015) 10 SCC 94 laid down the principle that once Court comes to the conclusion that the price offered is adequate, no subsequent higher offer can constitute a valid ground for refusing confirmation of the sale or offer already received. Similarly, the Hon’ble Supreme Court in the case of Navalkha & Sons Vs. Ramanya Das, (1969) 3 SCC 537 laid down the legal position very clearly that the subsequent higher offer is no valid ground for refusing confirmation of a sale or offer already made. (25) In the present case, it is significant that as per Order-sheet dated 07.04.2022 of Recovery Proceeding No.34 of 2013, it is clear that the auction of the property held on 01.07.2019 was failed due to non-receipt of any bids at the reserve
price of Rs.1,51,80,000/- and there was direction to certificate holder bank to bring the above facts to the notice of the valuer carrying out fresh valuation of the mortgaged property. The valuer was also directed to indicate three valuations of the property i.e., fair market value, realisable sale value and distress sale value. So, in these circumstances, it cannot be inferred that the Recovery Officer was not performing his duty as per provisions of the Law.
(26) In the above facts and circumstances of the case, it is clear that the auctioning procedure adopted by the Recovery Officer from 27.10.2022 was absolutely in accordance with the provisions of Law. So, there is no need of interference in that Order. Hence, this Tribunal confirms the order on Recovery Officer dated 27.10.2022 passed in Recovery Proceeding No.34 of 2013 in Original Application No.1036 of 2012.
Rs.1.27 crores with interest, if any, voluntarily deposited by her with the learned Registrar of this Tribunal as per Rules and EMD, if any, as per Rules.
Sd/(Harish Kumar Kaushik) Presiding Officer, DRT-2, Mumbai
Radhika/Adv.akhila-16
| 29.04.2025 | Exh. | Roznama-MDRT-II Appeal No.16 of 2022 |
Next date |
|---|---|---|---|
| Ms Aarti S. Gunjikar, Appellant present in person. |
|||
| Ms Ridhi Jhaveri, Advocate for Respondent No.1. Mr Puneet Gogad, Mr Nilesh Bamne and Ms Kajal Sawant i/b M/s. Sarika Kamble, Advocates for Respondent No.7. None for other Respondents. Final Order in Appeal No.16 of 2022 passed separately. |
|||
| rst - 15 | The record of the Recovery Proceeding No.34 of 2013 be sent to Recovery Officer and this Appeal No.16 of 2022 be consigned to the Record Room after due compliance. Sd/- P.O. DRT-II |
Closed |
3 issues framed by the court
Whether the sale is vitiated due to alleged violation of the second proviso to Rule 9(2) of the Security Interest (Enforcement) Rules, 2002 when property was sold at reserve price.
Whether the auction procedure adopted by the Recovery Officer suffers from any infirmity requiring interference from the Tribunal.
Whether the Appellant complied with the terms of the sale notice regarding the submission of the bid form.
Colour shows how this judgement treated each authority
Mahipal Sigh Yadav Vs. UBI & AnrReferred¶45
Mahipal Sigh Yadav Vs. UBI & Anr (24.01.2022, Delhi High Court)
Vedica Procon Private Limited Vs. Balleshwar Greens Private Limited and OthersApplied¶24
Vedica Procon Private Limited Vs. Balleshwar Greens Private Limited and Others (2015) 10 SCC 94 · Who else cites this
Navalkha & Sons Vs. Ramanya DasApplied¶24
Navalkha & Sons Vs. Ramanya Das, (1969) 3 SCC 537 · Who else cites this
3 provisions across 3 enactments
Aarti S. Gunjikar
IDBI Bank Limited
M/s. Saikrupa Exports
Suresh H. Patil
Aparna A. Parab
Neeta Dame
HARISH KUMAR KAUSHIK
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
