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2009 SCC OnLine Ori 3 : AIR 2009 Ori 147 : (2009) 6 AIR Kant R (NOC 1052)
366 : (2009) 107 CLT 250
BEFORE DR. B.S. CHAUHAN, C.J. AND B.N. MAHAPATRA, J.
Swastik Agency and others

Versus
State Bank of India, Bhubaneswar and others.
W.P. (C) No. 7361 of 2008
Decided on January 8, 2009
Page: 150
DR. B.S. CHAUHAN, C.J.:— This writ petition has been filed for quashing the judgment
and order of the Debts Recovery Tribunal, Cuttack (hereinafter called ‘the Tribunal’) in
O.A. No. 29 of 2006 and for quashing of the auction sale by opposite party No. 1-Bank
in pursuance of publication of notice dated 10-11-2005.
FACTUAL MATRIX:
2. The facts and circumstances giving rise to this case are that petitioner No. 1 had
availed a cash credit loan to the tune of Rs. 2,00,000/- (two lakhs) in the year 1997
from the opposite party-Bank to run its business. Petitioners Nos. 2 and 3 stood as
guarantors by scrutinizing their assets pertaining to Sabak Plot No. 2, Sabak Khata No.
94 corresponding to Hal Plot No. 2, Khata No. 100 of Mouza, Baramunda.
3. Petitioner No. 1 could not repay the loan as per the terms incorporated in the
agreement. Therefore, opposite party-Bank issued a notice dated 24-5-2004 under
Section 13(2) of the Securitisation and Reconstruction of the Financial Assets and
Enforcement of Security Interest Act, 2002 (hereinafter called “the Act, 2002”). The
Bank issued another notice dated 8-10-2004 under Section 13(4) of the Act, 2002 and
appointed M/s. Lalita Chambers and Constructions as Bank's Enforcement Agency to
assist the Bank to take all necessary steps for exercise of right under the Act, 2002.
The notice under Section 13(4) was published in daily newspaper. The ‘Sambad’ on 10
-11-2005 for auction of the property in question fixing 17-12-2005, the date of sale.
Petitioner, approached the Bank immediately thereafter, for entering into One Time
Settlement (OTS) offering a sum of Rs. 2,20,000/- and deposited a sum of Rs.
20.000/- in September, 2005 and further deposited a sum of Rs. 20,000/- on 10th
November, 2005 to show its bona fide to make payment of the outstanding dues and
to get the matter settled. The Bank in its letter dated 21st November, 2005, asked the
petitioner to apply for settlement afresh giving specific amount as offer and terms of
OTS. Petitioner again offered a sum of Rs. 2,20,000/- towards full and final settlement
of its loan dues subject to deduction of the amount already deposited. The petitioner
also expressed its willingness to pay another sum of Rs. 1,00,000/- within six weeks
by selling some of its belongings if the proposal for OTS was accepted. Opposite party
No. 2 vide letter dated 1st December, 2005 intimated the petitioner that an amount of
Rs. 4,96,369.66 was due to the bank which included principal amount of Rs.
1,91,058.66; interest to the tune of Rs. 2,85,180; and the balance amount towards
legal and recovery expenses. Petitioned was asked to deposit 25% of the offered
amount by 5th December, 2005 as the auction sale was fixed for 17th December,
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2005. Petitioner deposited a sum of Rs. 30,000/- on 14-12-2005; Rs. 20,000/- on 16-
12-2005 and Rs. 29,000/- on 17-12-2005. In spite of acceptance of the money to the
tune of Rs. 79,000/-, as per the instruction of the bank, which was more than 25% of
the offered amount, opposite party-Bank proceeded with the auction sale and settled
the property with a sum of Rs. 13,93,000/- in favour of opposite party No. 4. Petitioner
had filed a writ petition being
Page: 151
W.P. (C) No. 16213 of 2005 for quashing the sale notice, which was disposed of by
this Court vide judgment and order dated 2nd January, 2006 giving liberty to the
petitioner to file objections before the Bank authorities and directing said authorities to
decide the same. It was further clarified that if the petitioner was aggrieved by the
order of the Bank Authorities, it may approach the Tribunal. Petitioner approached the
Bank Authority by filing objections, but the Bank authority rejected the same in view
of the fact that the property had already been sold to opposite party No. 4 for a sum of
Rs. 13,93,000/-. Being aggrieved petitioner approached the Tribunal by filing O.A. No.
29 of 2006 which was dismissed vide order dated 7-6-2006. Petitioner preferred
appeal No. 41 of 2006 against the order dated 7-6-2006 before the Debt Recovery
Appellate Tribunal at Kolkata (hereinafter called the DRAT). However, the said appeal
was also dismissed vide order dated 25th March, 2008. Hence this writ petition.
SUBMISSIONS:
4. Learned counsel for the petitioners submitted that petitioner No. 1 could not
deposit the amount as per the terms of loan agreement. When petitioner offered Rs.
2,20,000/- towards OTS, the Bank authorities intimated the petitioner to deposit 25%
of the offered amount and petitioner was asked to raise a fresh offer. Prior to the date
of auction dated 17th December, 2005 out of total outstanding dues petitioner
deposited a sum of Rs. 99,000/-. The balance amount mainly included interest,
recovery and legal expenses. It is stated that property was worth Rs. 30 lakhs and
should not have been put to auction and that too fixing the reserve price at Rs. 95
lakhs as it had been assessed at Rs. 4.12 lakhs. Proposal for OTS submitted by the
petitioner was rejected straightway without considering the same. The opposite party-
Bank did not meet the requirement of sub-rule (5) of Rule 8 of the Security Interest
(Enforcement) Rules, 2002 (hereinafter called the ‘Rules’) which provided for a
decision on the part of the Bank as to whether it was necessary to dispose of the entire
property to a part thereof for making the recovery of the outstanding dues. In case,
such statutory requirement had not been complied with the proceeding stood vitiated.
Order passed by this Court dated 2-1-2006 was simply brushed aside mentioning that
property had already been sold in auction, though the authorities were under legal
obligation not to confirm sale. The petitioner is still in actual and physical possession
of the property as interim relief has been granted to it from time to time as is evident
from the order dated 8-9-2006 (Annex.-D/4) passed by the District Collector, Khurda
and order dated 16-5-2008 passed by this Court in the present writ petition. The
property in question, has not yet vested in favour of the auction purchaser. Auction
sale has not been conducted and concluded in conformity of the statutory rules.
Petitioners are willing to deposit the entire decretal amount even today. The
proceedings of sale are liable to be quashed.
5. On the contrary, Mr. D.K. Misra, learned counsel appearing for the Bank opposed
the petition contending that the petitioner had not paid the outstanding dues therefore
recovery proceedings were initiated. Bank dues had been to the tune of Rs. 4.96 lakhs
and the petitioner could deposit only a sum of Rs. 99,000/-. The said amount of Rs.
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4.96 lakhs included the legal and recovery expenses.
Further, it has been submitted by Mr. Mishra that as the matter stood concluded by
the judgments of the Tribunal and the Appellate Tribunal and all the issues raised
herein had been examined and decided, it is not permissible for this Court to reopen
the whole case and appreciate the evidence etc. sale had been concluded giving strict
adherence to the statutory Rules. After auction sale, the Bank adjusted its dues and
sent a Banker's Cheque to the petitioner for Rs. 9,11,243/- which it did not receive.
Thus it was received back by the Bank. Hence, the petition is liable to be dismissed.
6. Mr. R.C. Das, learned counsel for opposite party No. 4 has opposed the petition
contending that once the sale has been confirmed, this Court has no business to
entertain the writ petition as it is not permissible in law to set aside the confirmed sale
after issuance of the sale certificate, particularly, when sale had been conducted in
accordance with Rules. Petitioner failed to deposit the money in time. There had been
a proper valuation of the property and the opposite party No. 4 is a bona fide
purchaser for consideration of the same. All the issues had been agitated before the
Tribunal and the appellate forum and stood decided. DRT is not a party before the writ
Court and thus,
Page: 152
its judgment cannot be set aside. Therefore, the facts of the case do no warrant any
interference by this Court in writ jurisdiction. The petition is liable to be dismissed.
7. We have considered the rival submissions made by the learned counsel for the
parties and perused the record.
ISSUES:
8. On the basis of pleadings and submissions made by the learned counsel for the
parties, mainly the following issues require determination:
(1) Whether proceedings had been conducted and concluded in accordance with the
statutory Rules, and if not, what are the consequences?; and
(2) Whether an auction sale can be quashed after it stood confirmed and sale
certificate has been issued?
STATUTORY PROVISIONS APPLICABLE:
9. It may also be necessary to refer to the relevant statutory provisions, particularly
the Rules applicable in the instant case. The relevant Rules are as under:
“8. (2) The possession notice as referred to in sub-rule (1) shall also be
published in two leading newspapers, one in vernacular language having sufficient
circulation in that locality, by the authorised officer.
xxx xxx xxx
(5) Before effecting sale of the immovable property referred to in sub-rule (1) of
Rule 9, the authorised officer shall obtain valuation of the property from an
approved valuer and in consultation with the secured creditor, fix the reserve price
of the property and may sell the whole or any part of such immovable secured asset
by any of the following methods:—
(a) by obtaining quotations from the persons dealing with similar secured assets
or otherwise interested in buying such assets; or
(b) by inviting tenders from the public;
(c) by holding public auction; or
(d) by private treaty.
(6) The authorised officer shall serve to the borrower a notice of thirty days for
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sale of the immovable secured assets, under sub-rule (5):
Provided that if the sale of such secured asset is being effected by either
inviting tenders from the public or by holding public auction, the secured creditor
shall cause a public notice in two leading newspapers one in vernacular language
having sufficient circulation in the locality by setting out the terms of sale…………
xxx xxx xxx
9. (1) No sale of immovable property under these rules shall take place before
the expiry of thirty days from the date on which the public notice of sale is
published in newspapers as referred to in the proviso to sub-rule (4) or notice of
sale has been served to the borrower.”
(Emphasis added)
10. Thus, it is evident from the aforesaid statutory provisions that “possession
notice” is mandatorily required to be published in two leading newspapers having wide
circulation in the concerned area and one of them must be in vernacular language.
After having the valuation report, the authority has to then take a decision as to
whether the property is to be sold as a whole or in part and accordingly reserve price
is to be fixed. It further provides the various modes of alienation of the property. It
includes inviting tenders, holding public auction and even by private negotiations.
Notice of sale is to be served upon the borrower. In case property is to be disposed of
by auction, “notice of auction sale” is also to be published in two leading newspapers
having wide circulation in the said locality and one of them is to be in vernacular
language.
RECOVERY OF PUBLIC DUES:
11. Undoubtedly, public money should be recovered and recovery should be made
expeditiously. But it does not mean that the financial institutions which are concerned
only with the recovery of their loans, may be permitted to behave like property dealers
and be permitted further to dispose of the secured assets in any unreasonable or
arbitrary manner in flagrant violation of statutory provisions.
12. In Lachhman Dass v. Jagat Ram, (2007) 10 SCC 448 : (AIR 2007 SC (Supp)
1169) the Hon'ble Supreme Court held that a right to hold property is a constitutional
right as well as a human right. A person cannot be deprived of his property except in
accordance, with the provisions of statute.
13. Similar view has been reiterated by the Apex Court in Chairman, Indore Vikas
Pradhikaran v. Pure Industrial Coke and Chemicals Ltd., AIR 2007 SC
Page: 153
2458 and Commissioner of Municipal Corporation, Shimla v. Prem Lata Sood, (2007)
11 SCC 40 : (AIR 2007 SC (Supp) 272).
Thus the condition precedent for taking away someone's property or disposing of
the secured assets, is that the authority must ensure compliance of the statutory
provisions.
14. In case the property is disposed of by private treaty without adopting any other
mode provided under the aforesaid rules, there may be a possibility of collusion/fraud
and even when public auction is held, the possibility of collusion among the bidders
cannot be ruled out. In State of Orissa v. Harinarayan Jaiswal, AIR 1972 SC 1816, the
Apex Court held that a highest bidder in public auction cannot have a right to get the
property or any privilege, unless the authority confirms the auction sale, being fully
satisfied that the property has fetched the appropriate price and there has been no
collusion between the bidders.
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15. Haryana Financial Corporation v. Jagdamba Oil Mills, AIR 2002 SC 834, the
Hon'ble Supreme Court consider this aspect and while placing reliance upon its earlier
judgment in Chairman and Managing Director, SPICOT v. Contromix (P) Ltd., AIR 1995
SC 1632 held as under:
“…in the matter of sale of public property, the dominant consideration is to
secure the best price for the property to be sold. This can be achieved only when
there is maximum public participation in the process of sale and everybody has an
opportunity of making an offer. Public auction after adequate publicity ensures
participation of every person who is interested in purchasing the property and
generally secures the best price. But many times it may not be possible to secure
the best price by public auction when the bidders join together so as to depress the
bid or the nature of the property to be sold is such that suitable bid may not be
received at a public auction. In that event, any other suitable mode for selling of
property can be by inviting tenders. In order to ensure that such sale by calling
tenders does not escape attention of an intending participant, it is essential that
every endeavour should be made to give wide publicity so as to get the maximum
price.”
(Emphasis added)
16. Therefore, it becomes a legal obligation on the part of the authority that
property be sold in such a manner that it may fetch the best price. Thus essential
ingredients of such sale remain a correct valuation report and fixing the reserve price.
In case proper valuation has not been made and the reserve price is fixed taking into
consideration the inaccurate valuation report the intending buyers may not come
forward treating the property as not worth purchase by them. As a moneyed person or
a big businessman may not like to invoke himself in small sales/deals.
VALUATION AND RESERVE PRICE:
17. The word ‘value’ means intrinsic worth or cost or price for sale of a
thing/property (vide Union of India v. Bombay Tyre International Ltd. (1984) 1 SCC
467 : (AIR 1984 SC 420) and Gurbachan Singh v. Shivalak Rubber Industries, AIR
1996 SC 3057).
18. In State of U.P. v. Shiv Charan Sharma, AIR 1981 SC 1722, the Supreme Court
explained the meaning of “reserve price” explaining that the price with which the
public auction starts and the auction bidders are not permitted to give bids below the
said price, i.e. the minimum bid at auction.
19. In Anil Kumar Srivastava v. State of U.P., AIR 2004 SC 4299, the Hon'ble Apex
Court considered the scope of fixing the reserve price and placing reliance on its earlier
judgment in Duncans Industries Ltd. v. State of U.P., AIR 2000 SC 355, explained that
reserve price limits the authority of the auctioneer. The concept of the reserve price is
not synonymous with valuation of the property. These two terms operate in different
spheres. An invitation to tender is not an offer. It is an attempt to ascertain whether
an offer can be obtained with a margin. The valuation is a question of fact, it should be
fixed on relevant material. The difference between the ‘valuation’ and ‘reserve price’ is
that, fixation of an upset price may be an indication of the probable price which the
property may fetch from the point of view of intending bidders. Fixation of the reserve
price does not preclude the claimant from adducing proof that the land had been sold
for a low price.
20. In view of the above, it is evident
Page: 154
that there must be application of mind by the authority concerned while

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approving/accepting the report of the approved valuer and fixing the reserve price, as
the failure to do so may cause substantial injury to the borrower/guarantor and that
would amount to material irregularity and ultimately vitiate the subsequent
proceedings.
DECISION TO SELL WHOLE OR PART OF THE SECURED ASSETS:

21. In Ambati Narasaya v. M. Subba Rao, AIR 1990 SC 119, the Apex Court dealt
with a case where in execution of a money decree for Rs. 2,400/- the land was sold for
Rs. 17,000/-. The Apex Court set aside the sale observing as under:
“……Out of 10 acres, the Court could have conveniently demarcated a portion and
sold it. Unfortunately, no such attempt was made and it was not even thought of.
The Court has blindfold sold the entire property. This is an usual feature which we
have noticed in most of the execution cases. We must deprecate this tendency.
There is a duty cast upon the Court to sell only such property or a portion thereof as
necessary to satisfy the decree….”
22. While deciding the said case a very heavy reliance had been placed by the
Supreme Court on its earlier judgment in Takkaseela Pedda Subba Reddi v. Pujari
Padmavathamma, AIR 1977 SC 1789.
23. In S. Mariyappa (dead) by LRs v. Siddappa, (2005) 10 SCC 235, the Hon'ble
Supreme Court held that it is duty of the Executing Court to consider whether sale of
only a part of the property would be sufficient to meet the decretal amount and in case
such a decision is not taken, the sale deserves to be set aside. While deciding the said
case, reference has been made to its earlier judgment in Ambati Narasaya (AIR 1990
SC 119) (supra).
24. In Desh Bandhu Gupta v. N.L. Anand and Rajinder Singh, (1994) 1 SCC 131 :
(1993 AIR SCW 3458) the Hon'ble Apex Court held that in an auction sale and in
execution of the Civil Court's decree, the Court has to apply its mind to the need for
furnishing the relevant material particulars in the sale proclamation and the records
must indicate that there has been application of judicial mind and principle of natural
justice had been complied with. The Court further held as under:
“The estimate of the value of the property is a material fact to enable the
purchaser to know its value. It must be verified as accurately and fairly as possible
so that the intending bidders are not misled or to prevent them from offering
inadequate price of to enable them to make a decision of offering adequate price.”
25. While deciding the said case, the Apex Court had placed reliance upon its
earlier judgment in Gajadhar Prasad v. Babu Bhakta Ratan, AIR 1973 SC 2593,
wherein it had been held that the estimated value of the property to be sold, must not
accept merely the ipse dixit of one side and a fair valuation has to be made. More so,
the judgment-debtor is to be given a reasonable opportunity in regard to the valuation
of the property sought to be sold, in absence thereof the sale would suffer from
material irregularity where the judgment-debtor suffers substantial injury by the sale.
26. Similar view has been reiterated by the Hon'ble Apex Court in S.S. Dayananda
v. K.S. Nagesh Rao, (1997) 4 SCC 451 and D.S. Chohan v. State Bank of Patiala,
(1997) 10 SCC 65.
27. In Gajraj Jain v. State of Bihar, (2004) 7 SCC 151 : (AIR 2004 SC 3392) the
Apex Court held that before putting the assets for sale the Financial Corporation must
ascertain the market value of the property, assets should be sold on itemized basis or
as a whole, whichever found to be more profitable, and bidders should know the
details of the assets or itemized value. Property is to be sold for obtaining the market
price and not merely for recovering the dues of the Corporation or any other
subsequent charge-holder. In such a case auction is to be held to obtain the best
possible price for the mortgaged assets and the best possible price must, in the
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context, mean the fair market price. The authority, while assessing the fair market
price, must act in accordance with the statutory rules and cannot be permitted to act
unreasonably. The reasonableness is to be tested against the dominant consideration
to secure the best price.
28. Thus, in view of the above, it is evident that law requires a proper valuation
report, its acceptance by the authority concerned by application, of mind and then
fixing the reserve price accordingly and accept the auction bid taking into
consideration
Page: 155
that there was no possibility of collusion of the bidders. The authority is duty bound to
decide as to whether sale of part of the property would meet the outstanding demand.
Valuation is a question of fact and valuation of the property is required to be
determined fairly and reasonably.
SETTING ASIDE AUCTION SALE-AFTER CONFIRMATION:

29. In Navalkha and Sons v. Sri Ramanya Das, AIR 1970 SC 2037, the Apex Court
while dealing with the confirmation of sale by Court held that there must be a proper
valuation report, which should be communicated to the judgment-debtor and he
should file his own valuation report and the sale should be conducted in accordance
with law and after confirmation of sale and issuance of sale certificate, Court cannot
interfere unless it is found that some material irregularity in the conduct of sale has
been committed. The Court further held that it should not be a forced sale. A valuer's
report should be as good as the actual offer and the variation should be within limit.
Such estimate should be done carefully and bids by the seasoned auctioneer. The
Court further held as under:
“The condition of confirmation by the Court operates as a safeguard against the
property being sold at inadequate price whether or not it is a consequence of any
irregularity or fraud in the conduct of the sale. In every case it is the duty of the
Court to satisfy itself that having regard to the market value of the property the
price offered is reasonable. Unless the Court is satisfied about the adequacy of the
price the act of confirmation of the sale would not be a proper exercise of judicial
discretion……….”
Therefore, valuer is to apply its mind to this aspect and the conduct of sale should
not amount to material irregularity.
30. A similar view has been reiterated by the Hon'ble Apex Court, following the said
judgment in Kayjay Industries (P) Ltd. v. Asnew Dru(P) Ltd., AIR 1974 SC 1331.
31. In Union Bank of India v. Official Liquidator, High Court of Calcutta and others,
AIR 2000 SC 3642, the Apex Court, while dealing with the winding up proceeding of
the company, held that in case the valuation report was not disclosed to the creditor
and reserve price was not fixed, it was tantamount to non application of mind to the
materials which are required to be considered for auction sale. Thus the auction sale
was liable to be set aside even after confirmation.
32. In B. Arvind Kumar v. Govt. of India, (2007) 5 SCC 745 : (AIR 2007 SC (Supp)
1306) the Apex Court held that when an auction-purchaser derives title on
confirmation of sale in his favour, and a sale certificate is issued to him, it does not
require any deed of transfer or registration of any document as required under Section
17 of the Registration Act, 1908.
33. In Transcore v. Union of India, AIR 2007 SC 712, the Apex Court explained the
scope of various provision of the Act, 2002 and the Rules observing that the Act
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provides for recovery of possession by non-adjudicatory process; therefore, to say that
the rights of the borrower would be defeated without adjudication would be erroneous.
Particularly Rules 8 and 9 of the Rules provides sufficient safeguards in respect of
taking possession thereof, preserving it and disposing it of in accordance with Rules.
Rule 9 thereof provides for issuance of sale certificate and delivery of possession.
34. In Dr. Rajbir Singh Dalai v. Chaudhari Devi Lal University, Sirsa and another,
(2008) 9 SCC 284 : (2008 AIR SCW 5817) and Divya Manufacturing Company (P) Ltd.
v. Union Bank of India, AIR 2000 SC 2346, the Apex Court held that a confirmed sale
can be set aside in all circumstances. However, in Valji Khimji and Company v. Official
Liquidator of Hindustan Nitro Product (Gujarat) Ltd., (2008) 9 SCC 299; (2008 AIR
SCW 5828) the Court held that auction sale should be set aside only if there is a
fundamental error in the procedure of auction e.g. not giving wide publication or on
evidence that property could have fetched more value or there is somebody to offer
substantially increased amount and not only a little over the auction price, that can by
itself suggest that any fraud has been done in holding the auction properly or
involvement of any kind of fraud.
35. In FCS Software Solutions Ltd. v. LA Medical Devices Ltd., 2008 AIR SCW
5284 : (AIR 2008 SC 3137) the Apex Court considered a case where after confirmation
of auction sale it was found that valuation of movable and immovable properties,
fixation of reserve price, inventory of Plant
Page: 156
and Machineries had not been made in proclamation of sale, nor disclosed at time of
sale notice. Therefore, in such a fact-situation, the sale was set aside after its
confirmation.
36. In Gajraj Jain (AIR 2004 SC 3392) (supra), the Apex Court held that in absence
of valuation report and reserve price the auction sale becomes a pretence and is liable
to be set aside.
37. In view of the above, law can be summarised that authority is under a legal
obligation to be satisfied itself that price fetched is reasonable and sale has been
conducted giving strict adherence to the procedure prescribed by the statute and if the
sale is confirmed without considering the issue the confirmation stands vitiated or
material irregularity in conduct of the sale would vitiate the proceedings. Therefore,
auction sale can be set aside even after confirmation.
PROCEDURE — PRESCRIBED IN LAW — TO BE FOLLOWED:
38. When the statute provides for a particular procedure, the authority has to follow
the same and cannot be permitted to act in contravention of the same. It has been
hitherto uncontroverted legal position that, where a statute requires to do a certain
thing in a certain way, the thing must be done in that way or not at all. Other methods
or mode of performance are impliedly and necessarily forbidden. The aforesaid settled
legal proposition is based on a legal maxim “Expressio unius est exclusio alterius”
meaning thereby that if a statute provides for a thing to be done in a particular
manner, then it has to be done in that manner and in no other manner and following
other course is not permissible. (Vide Taylor v. Taylor, (1876) 1 Ch D 426; Nizir
Ahmed v. King Emperor, AIR 1936 PC 253; Deep Chand v. State of Rajasthan, AIR
1961 SC 1527; Patna Improvement Trust v. Smt. Lakshmi Devi, AIR 1963 SC 1077;
State of Uttar Pradesh v. Singhara Singh, AIR 1964 SC 358; Hukam Chand Shyam Lal
v. Union of India, AIR 1976 SC 789; Chettiam Veetil Ammad v. Taluk Land Board, AIR
1979 SC 1573; State of Bihar v. J.A.C. Saldanna, AIR 1980 SC 326; State of Mizoram
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v. Biakchhawna, (1995) 1 SCC 156 : (1995 AIR SCW 1497); J.N. Ganatra v. Morvi
Municipality, Morvi, AIR 1996 SC 2520; Haresh Dayaram Thakur v. State of
Maharashtra (2000) 6 SCC 179 : (AIR 2000 SC 2281), Dhanajaya Reddy v. State of
Karnataka etc. etc., (2001) 4 SCC 9 : (AIR 2001 SC 1512), Commissioner of Income
Tax Mumbai v. Anjum M.H. Ghaswala, (2002) 1 SCC 633 : (AIR 2001 SC 3868),
Prabha Shankar Dubey v. State of Madhya Pradesh, AIR 2004 SC 486; Ram Phal
Kundu v. Kamal Sharma, AIR 2004 SC 1657; Indian Banks' Association v. Devkala
Consultancy Service, AIR 2004 SC 2615; Parle Biscuits (P) Ltd. v. State of Bihar,
(2005) 9 SCC 669; Harinarayan G. Bajaj v. Rajesh Meghani, (2005) 10 SCC 660 and
Raja Ram Pal v. Hon'ble Speaker, Lok Sabha, (2007) 3 SCC 184 : (AIR 2007 SC
(Supp) 1448).
FOUNDATION REMOVED — STRUCTURE FALLS:—
39. It is settled legal proposition that if initial action is not in consonance with law,
the subsequent proceedings would not sanctify the same. In such a fact situation, the
legal maxim “sublato fundamento cedit opus” is applicable, meaning thereby in case a
foundation is removed, the superstructure falls.
40. In Badrinath v. State of Tamil Nadu, AIR 2000 SC 3243, the Apex Court
observed that once the basis of a proceeding is gone, all consequential acts, actions,
orders would fall to the ground automatically and this principle of consequential order
which is applicable to judicial and quasi-judicial proceedings is equally applicable to
administrative orders.
Similar view has been reiterated in State of Kerala v. Puthenkavu N.S.S.
Karayogam, (2001) 10 SCC 191.
WRIT COURTS DUTY:
41. Writ Jurisdiction is discretionary in nature and must be exercised in furtherance
of justice. The Court has to keep in mind that its order should not defeat the interest
of justice nor it should permit an order to secure dishonest advantage or perpetuate an
unjust gain or approve an order which has been passed in contravention of the
statutory provisions: (vide Champalal Binani v. CIT, West Bengal, AIR 1970 SC 645;
M.P. Mittal v. State of Haryana, AIR 1984 SC 1888; State of U.P. v. U.P. State Law
Officers Association, AIR 1994 SC 1654; Dr. Arundhati A. Pargaonkar v. State of
Maharashtra, AIR 1995 SC 962; Chandra Singh v. State of Rajasthan, AIR 2003 SC
2889; ONGC Ltd. v. Sendhabhai Vastram Patel,
Page: 157
(2005) 6 SCC 454; and K.D. Sharma v. Steel Authority of India Ltd., 2008 AIR SCW
6654).
42. In Andhra Pradesh State Financial Corporation v. GAR Re-Rolling Mills, AIR
1994 SC 2151, the Apex Court held as under:
“A Court of equity, when exercising its equitable jurisdiction under Article 226 of
the Constitution must so act as to prevent perpetration of a legal fraud and the
Courts are obliged to do justice by promotion of good faith, as far as it lies within
their power. Equity is always known to defend the law from crafty evasions and new
subtleties invented to evade law.”
43. Similarly in State of Maharashtra v. Prabhu, (1994) 2 SCC 481, the Court
considered the scope of application of equity jurisdiction by the High Court and
observed as under:
“Where the Government or any authority passes an order which is contrary to
rules or law it becomes amenable to correction by the Courts in exercise of writ
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jurisdiction. But one of the principles inherent in it is that the exercise of power
should be for the sake of justice……… It is the responsibility of the High Court as
custodian of the Constitution to maintain the social balance by interfering where
necessary for sake of justice and refusing to interfere where it is against the social
interest and public good.”
(Emphasis added).
44. In Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai, AIR 2004 SC
1815, the Apex Court observed that Courts are concerned with substantial justice and
prevent to perpetuate grave injustice to parties and whenever the order is one which
shocks the conscience of the Court or suffers on account of disregard to the form of
legal process or with violation of the principles of natural justice by the statutory
provisions the Court would interfere. The Court “would never do injustice nor allow
injustice being perpetuated just in the sake of upholding technicalities”.
45. In Ashutosh v. State of Rajasthan, AIR 2005 SC 3434, the Apex Court held that
when substantial justice must be given preference over technicalities and Court must
do justice at all costs and at the same time the Court should not forget that justice
should be tempered with mercy.
STATUTORY PROVISION — TO BE ENFORCED:
46. It is settled law that when the action of the State or its instrumentalities is not
as per the rules or regulations and supported by the statute, the Court must exercise
its jurisdiction to declare such an act to be illegal and invalid.
47. In Sirsi Municipality v. Cecelia Kom Francis Tellis, AIR 1973 SC 855, the
Supreme Court observed that “the ratio is that the rules or the regulations are binding
on the authorities.”
48. Similarly, a Constitution Bench of the Supreme Court in Sukhdev Singh v.
Bhagatram Sardar Singh Raghuvanshi, AIR 1975 SC 1331, has observed as under:—
“The statutory authorities cannot deviate from the conditions of service. Any
deviation will be enforced by legal sanction of declaration by Courts to invalidate
actions in violation of rules and regulations…………In cases of statutory bodies there
is no personal element whatsoever because of the impersonal character of statutory
bodies……… This Court has repeatedly observed that whenever a man's rights are
affected by decision taken under statutory powers, the Court would presume the
existence of a duty to observe the rules of natural justice and compliance with rules
and regulations imposed by statute.”
(Emphasis added).
49. Similar view has been taken by the Supreme Court in Commissioner of Police,
Bombay v. Gordhandas Bhanji, AIR 1952 SC 16; Ambica Quarry Works etc. v. State of
Gujarat, AIR 1987 SC 1073; Shrilekha Vidyarthi etc. etc. v. State of U.P., AIR 1991 SC
537; Indra Sawhney II v. Union of India, AIR 2000 SC 498; and A.P. Aggarwal v.
Government (of N.C.T.) of Delhi, AIR 2000 SC 205).
50. In M.C. Mehta v. Union of India, AIR 2006 SC 1325, the Apex Court observed
that rule of law is the essence of democracy. “It has to be preserved. Laws have to be
enforced.”
51. In Dr. Meera Massey v. Dr. S.R. Mehrotra, AIR 1998 SC 1153, the Apex Court
observed as under:—
“If the laws and principles are eroded by such institutions, it not only pollutes its
functioning deteriorating its standard but
Page: 158
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also exhibits…………wrong channel adopted……… If there is any erosion or descending
by those who control the activities all expectations and hopes are destroyed. If the
institutions perform dedicated and sincere service with the highest morality it would
not only up-lift many but bring back even a limping society to its normalcy.”
52. The Supreme Court has taken the same view in Ram Chand v. Union of India,
(1994) 1 SCC 14 : 1993 AIR SCW 3479 and held that “the exercise of power should
not be made against the spirit of the provisions of the statute, otherwise it would tend
towards arbitrariness.”
53. A Constitution Bench of the Supreme Court in Ajit Singh (II) v. State of Punjab,
(1999) 7 SCC 209 : AIR 1999 SC 3471 held that any action being violative of Article
14 of the Constitution is arbitrary and if it is found to be dehors the statutory rules,
the same cannot be enforced.
54. Thus whenever any action of the authority is in violation of the provisions of the
statute or the action is constitutionally illegal, it cannot claim any sanctity in law, and
there is no obligation on the part of the Court to sanctify such an illegal act. Wherever
the statutory provision is ignored, the Court cannot become a silent spectator to such
an illegality, and it becomes the solemn duty of the Court to deal with the persons
violating the law with heavy hands. Vide R.N. Nanjundappa v. T. Thimmaiah, AIR 1972
SC 1767; B.N. Nagarajan v. State of Karnataka AIR 1979 SC 1676; Delhi Development
Horticulture Employees' Union v. Delhi Administration, Delhi, AIR 1992 SC 789; State
of Orissa v. Sukanti Mohapatra, AIR 1993 SC 1650; State of Himachal Pradesh v.
Nodha Ram, AIR 1997 SC 1445; Nazira Begum Lashkar v. State of Assam, AIR 2001
SC 102; Mrs. Dr. Chanchal Goyal v. State of Rajasthan, AIR 2003 SC 1713; M.D.,
State of Haryana v. Tilak Raj, AIR 2003 SC 2658; and Sultan Sadik v. Sanjay Raj
Subba, AIR 2004 SC 1377.
55. Thus, the legal position remains that every statutory provision requires strict
adherence, for the reason that the statute creates rights in favour of the citizens, and
if any order is passed dehors the same, it cannot be held to be a valid order and
cannot be enforced. As the statutory provision creates legal rights and obligations for
individuals, the statutory authorities are under a legal obligation to give strict
adherence to the same and cannot pass an order in contravention thereof, treating the
same to be merely decoration pieces.
56. The question further arises that Rule 8(6) provides for publication of auction
notice in two leading newspapers having wide circulation in the locality and one of
them must be in vernacular language. Rule 38 of the Orissa Minor Mineral Concession
Rules, 2004 contains similar provision where, upset price is more than Rs. 5 lakhs. The
purpose of such a requirement is to give notice to maximum number of intending
auctioneers so that the best possible price may be fetched. Section 4 (1) of the Land
Acquisition Act, 1894 also contains a similar provision. Such provisions have
consistently been held to be mandatory, vide Smt. Laxmi Devi v. State of Orissa, AIR
1990 Ori 196; Nutakki Sesharatanam v. Sub-Collector, Land Acquisition, Vijayawada,
AIR 1992 SC 131; and Sanjeevanagar Medical & Health Employees' Co-operative
Housing Society v. Mohd. Abdul Wahab, AIR 1996 SC 3360. Non-compliance thereof
has always been held to be fatal. Further, question does arise as to whether in a
newspaper in vernacular language it is necessary to publish a notice in vernacular
language or it could be published in English. Language used in the statute does not
specifically suggest that notice itself should also be in vernacular language. However,
if the notice is published in English language in a vernacular newspaper, it would not
serve the purpose of making publication of the notice therein.
57. In Gurdev Kaur v. Kaki, AIR 2006 SC 1975, the Apex Court held that the Courts
are bound to administer the law according to the provisions of law. It is their duty to
discern legislative intention in the process of adjudication. Justice administered
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according to individual's whim, desire, inclination and notion of justice would lead to
confusion, disorder and chaos.
58. In Dilip N. Shroff v. Joint Commissioner of Income Tax, Mumbai, (2007) 6 SCC
329 : AIR 2007 SC (Supp) 1280 the Hon'ble Supreme Court placed reliance upon its
earlier judgment in P.N. Krishna Lal v. Govt. of Kerala, 1995 Supp. (2) SCC 187 : 1995
AIR SCW 1325 and held
Page: 159
that “more stringent the law, more strict construction thereof would be necessary.”
PURPOSIVE INTERPRETATION:
59. Rules of interpretation require that construction, which carries on objectives of
the Statute, protects interest of the party and keeps the remedy alive, should be
preferred looking into the text and context of the Statute. It must be so as to further
the ends of justice and not to frustrate the same. Construction given by the Court
must promote the object of the Statute and serve the purpose, for which it had been
enacted, and should not efface its very purpose. Vide Reserve Bank of India v. Peerless
General Finance and Investment Co. Ltd., AIR 1987 SC 1023; N.K. Jain v. C.K. Shah,
AIR 1991 SC 1289; Meera Gupta v. State of West Bengal, AIR 1992 SC 1567; Food
Corporation of India v. New Delhi Assurance Co. Ltd., AIR 1994 SC 1889; S. Gopal
Reddy v. State of Andhra Pradesh, AIR 1996 SC 2184; Gayatri Devi Pansari v. State of
Orissa, AIR 2000 SC 1531; Regional Provident Fund Commissioner v. Shiv Kumar
Joshi, AIR 2000 SC 331; Gautam Paul v. Debi Rani Paul, AIR 2001 SC 61; Ambalal
Sarabhai Enterprises Ltd. v. Amrit Lal & Co., AIR 2001 SC 3580; Commissioner of
Income Tax, Mumbai v. Anjum M.H. Ghaswala, AIR 2001 SC 3868; Joseph Joseph v.
State of Kerala, AIR 2002 SC 1117; Ashwin S. Mehta v. Custodian, AIR 2006 SC 795;
and Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & ETIO, AIR
2007 SC 1984.
60. In Thiagarajan v. Sri Venugopalaswamy B. Koil, AIR 2004 SC 1913, the Apex
Court held that it is the obligation of the Courts of law to further the clear intendment
of the legislature and not frustrate it by excluding the same.
61. In Tinsukhia Electric Supply Co. Ltd. v. State of Assam, AIR 1990 SC 123, the
Hon'ble Supreme, Court placed reliance upon the judgment in Whitney v. I.R.C., 1926
AC 37, wherein it had been observed as under:—
“A Statute is designed to be workable, and the interpretation thereof by a Court
should be to secure that object…….”
The Court further held as under:—
“The Courts strongly lean against any construction which tends to reduce a
Statute futility. The provision of the Statute must be so construed as to make it
effective and operative……”
62. Thus, in view of the above, the legal position emerges that Court must interpret
a provision making it fully effective and operative to serve the purpose for which it
stood enacted.
REFUND TO AUCTION PURCHASER — IF SALE IS SET ASIDE:
63. In Seth Kashi Ram Chemical (India) v. State of Haryana, AIR 1991 SC 478, the
Apex Court held that highest bidder may be entitled for refund of the amount offered
and deposited by him with interest by the judgment debtor. He cannot claim the right
to get the property if there had been a compromise between the judgment debtor and
the secured creditor after the auction sale.
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64. A similar view has been reiterated by the Apex Court in Mangal Prasad (dead)
by LRs v. Krishna Kumar Maheshwari, AIR 1992 SC 1857, observing that an equitable
relief should be granted to the auction purchaser to refund the amount with interest.
65. In Seth Kashi Ram Chemical (supra), the Apex Court held that highest bidder
in an auction does not acquire any right, at the most he can claim the refund of the
deposit made by him.
INSTANT CASE & FINDINGS:
66. The instant case requires to be decided in the light of the aforesaid settled legal
propositions. Undoubtedly the petitioners failed to deposit the loan amount as per the
terms incorporated in the loan agreement. Opposite party-Bank had every right to
make the recovery and recovery had to be made expeditiously, keeping in mind the
legislative intent that special statute has been enacted for a speedy recovery of loan
advanced by financial institutions. However, the institutions and the authorities are
legally bound to ensure strict compliance of the statutory requirement, particularly of
those provisions which have been meant to protect the interest of the borrower for the
reason that a detailed and full fledged procedure followed in civil Court proceedings is
not applicable in these proceedings. Thus, the legislature in its wisdom to protect the
public at large from any kind of misrepresentation or fraud enacted the provisions of
Page: 160
Rule 8 (2) providing mandatorily to publish the notice of possession in two leading
newspapers having wide circulation in the locality. Rule 8(6) mandatorily requires
notice of sale to the borrower/guarantor and simultaneously makes it legally obligatory
that auction notice shall be published in two leading newspapers having wide
circulation in the locality concerned and one of them shall be in vernacular language.
The auction notice shall also contain the valuation of the property, the reserve price,
time and place of auction and all other details of the property to be put to auction. The
purpose to make publication of the auction notice in two leading newspapers having
wide circulation and one of them in vernacular language is to invite maximum number
of intending purchasers i.e. maximum public participation, so that the property may
secure the best price. The natural corollary of compliance of the aforesaid statutory
provisions is that there has to be a proper valuation of the property on the basis of
which the set up price may be fixed and auction may be held only after having wide
publication. Purpose of enacting such a statutory requirement is to protect the
borrower and guarantor from any kind of depressed sale of their property and to
certain extent to prevent any kind of collusion or fraud either by the authorities or by
the auction bidders. The non-compliance of the statutory provisions would vitiate the
proceedings altogether. From the point of non-compliance of the statutory requirement
proceedings would render invalid, if not nullity.
67. The total outstanding dues payable to the Bank were about 4.96 lakhs. The
break up of the same was as follows:
“(i) Principal in the account : Rs. 1,91,058.66
(ii) Legal expenses incurred : Rs. 12,516.00
(iii) Expenses incurred on paper publication on 3- : Rs. 3,447.00
9-2005
(iv) Expenses incurred on paper publication on 10 : Rs. 4,168.00
-11-05
(v) Interest payable in the account up to 28-11- : Rs. 2,85,180.00
2005
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—————————————
Total amount payable to the bank = Rs. 4,96,369.66”
68. From the pleadings taken in the petition and submissions made by the learned
counsel for the parties we could not be satisfied that auction had been held giving
strict adherence to the statutory provisions. We summoned the original record and
with the help of the Officers of the Bank examined the same. So far as the procedural
part is concerned, the admitted facts are as under:
(1) Possession Notice had been issued in two leading newspapers as required under
Rule 8 (2) of the Rules. It was published in ‘The Sambad’ an Oriya newspaper,
but the notice was in English language.
(2) Notice of auction has been published in two leading newspapers having wide
circulation in the area as required under the proviso to Rule 8(6) of the Rules. It
is published in ‘The Sambad’ an Oriya newspaper, but the notice was in English
language.
(3) No notice had been issued to the petitioners as required under Rule 8(6) of the
Rules.
69. In the instant case following facts remained undisputed.
(1) The outstanding dues were to the tune of Rs. 4.96 lakhs and the principal dues
had been only Rs. 1.91 lakhs.
(2) The interest had been calculated to the tune of Rs. 2.85 lakhs and the rest
remained the legal and recovery expenses.
(3) Petitioner had deposited a sum of Rs. 99,000/- prior to the date of auction.
(4) The market value of the property had been assessed at Rs. 4.15 lakhs and the
reserve price was fixed as Rs. 3.95 lakhs. Petitioner had not been involved in this
process by any means. Nor any separate notice as required under Rule 8(6) was
given to it.
(5) The issue as to whether the entire property should be sold or a part thereof
would be sufficient to make the recovery has not been considered by the
authorities.
(6) The Authorities did not consider it appropriate to consider petitioners' grievance
as directed by this Court vide order dated 2-1-2006 and rejected the same vide
order dated 1-3-2006 mentioning that property had been put to auction on 17-
12-2005, though this Court passed the order on 2-1-2006 knowing all these
facts.
(7) The sale certificate has been issued in favour of opposite party No. 4.
(8) The petitioner is still in possession of the property in dispute as interim order
has been granted by this Court vide order dated 2-1-2006 in W.P.(C) No.
16213/2005 and again vide order dated 16-5-2008 in the present writ petition.
(9) The Banker's Cheque amounting to Rs. 9,11,243/- sent by the opposite party-
Bank to the petitioner, as the excess amount
Page: 161
after adjusting all its dues, had not been encashed by the petitioner, rather it has
been received back by the opposite party-Bank.
70. There is no explanation worth the name, though the officers of the Bank have
also been called in the Court with the entire record, as under what circumstances and
in which manner the approved valuer has assessed the property at Rs. 4.15 lakhs, if it
has admittedly been sold for Rs. 13.93 lakhs. In case valuation of the property had
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-
been made correctly, it could have been necessary for the opposite parties - bank to
take a decision under sub-rule (5) of Rule 8 of the Rules as to whether the property
should be sold as a whole or in part to make the recovery of the outstanding dues. The
property has fetched the price more than three times than the value assessed by the
approved valuer. Meaning thereby there has not been proper valuation of the property.
Thus the question does arise as to whether not making a proper valuation amounts to
fundamental procedural defect which would vitiate the proceedings subsequent to the
point of making the wrong assessment. If the petitioner had already deposited a sum
of Rs. 99,000/- out of the outstanding dues within a period of two to three months
prior to the date of auction, why the Bank has not considered its request to give some
more time to clear the dues.
71. It is evident that the property has been assessed at Rs. 4.15 lakhs and reserve
price was fixed at Rs. 3.95 lakhs, but it has fetched the value to the tune of Rs. 13.95
lakhs. The difference between the value assessed and value received is more than
three times. Therefore, even by stretch of imagination, it cannot be held that the
valuation has been made correctly. As a consequence reserve price had been fixed at a
lower side and auction on the basis of such report cannot be held to be fair and
reasonable as large number of persons who might have indulged in purchasing
property of higher value like instant, had been misled and they did not participate.
Thus the auction sale is stood vitiated.
72. As the compliance of the statutory requirement had not been made and there is
nothing on record to show that the valuation report had been made properly and the
reserve price has been fixed accordingly. If it is presumed that it was done properly,
then question arises how the property has fetched more than three times of the value
fixed by the Bank. More so, non-publication of the notice in Oriya language is also fatal
as it might have deprived persons not knowing English language to participate in the
proceeding.
73. Out of the outstanding dues of Rs. 4.96 lakhs, the principal amount has been
Rs. 1.91 lakhs. Rest remain the interest, legal and recovery expenses. Petitioners had
deposited a sum of Rs. 99,000/- within a period of six weeks prior to the date of
auction and had been insisted for grant of time to make the deposit of the balance
amount. Of course application for waiving some penal interest or entering into OTS
had also been there. But it is not a case where the petitioners had not shown their
bona fide to deposit the outstanding dues. Petitioners had always been insisting that
proceedings were not being conducted in conformity with the statutory Rules. It is not
a case where petitioners remained a silent spectators sitting on the fence and waiting
for conclusion of the proceedings. They left no stone unturned for redressal of their
grievances. This Court disposed of their writ petition vide judgment and order dated
2nd January, 2006 asking the Bank authority to decide their objections. The
Objections had been brushed aside only on the ground that property had already been
put to auction and third party interest was created. No explanation could be furnished
by Mr. Mishra, learned counsel appearing for the Bank that why the notice of
possession as well as notice of auction as required under Rule 8 had not been
published in “vernacular language” and as to whether it was necessary to involve the
petitioner/borrower/guarantor while fixing the set up price giving it the copy of the
valuation report. Admittedly no notice as required under Rule 8 (6) had ever been
served upon the petitioners. In case we accept the submission made by Mr. Das,
learned counsel for opposite party No. 4 that the auction notice published in the
newspaper itself was tantamount to notice to the borrower and guarantors, and it is
not mandatory to serve a separate notice upon them, particularly, when petitioners
had approached the Bank authority immediately after the auction notice, such a
requirement could have proved to be a futile exercise, the question does arise as to
whether the opposite party-authorities had proceeded in consonance with the
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statutory requirement
Page: 162
under Rule 8(5) taking a decision as to whether the whole or a part of the property
should be sold. More so, Rule 8 (6) provides mandatorily, publication of auction notice
in two leading newspapers and one of them must be in vernacular language.
Admittedly, there had been advertisement in ‘The Sambad’ dated 10-11-2005 which is
a newspaper printed in Oriya language but the notice is in English language.
74. The distinction between the literal interpretation and purposive construction of
statute has almost diminished and there could be hardly a smoke screen dividing the
same. It is not permissible for the Court to change the placement of the words.
However, the language used in the Rules has to be read in the context of the subject
in entirety. The Rule has been engrafted to protect the persons who may be aggrieved
because of depressed sale. The term “vernacular” has to be considered in a correct
perspective in the context of the rural and illiterate masses of the country. If the
notice is published in English in a newspaper printed in vernacular language, it would
definitely not serve the purpose for which the Rule has been grafted. Therefore, notice
has to be published in vernacular language in the newspaper published in vernacular
language. The property mortgaged with the secured creditor may situate in rural area
and the persons residing in rural area may be interested in purchasing it. Therefore,
the need was considered to have the publication of the notice in vernacular language
also. The concept of flexibility in the science of interpretation is to be adopted. If the
provision applicable herein is given a strict literal meaning it will not be possible to
sub-serve the purpose of giving notice to all intending purchasers and get the
maximum price for the secured assets. Section 4 (1) notice under the Land Acquisition
Act is always published in vernacular language.
75. Non-compliance of such a mandatory requirement vitiated the proceedings. The
Tribunal and DRAT have dealt with various issues without touching the most material
issues involved in this case as explained hereinabove. The Tribunal and DRAT have mis
-directed themselves without entering into the legal issues, particularly the
requirement and compliance of statutory provisions as non-compliance thereof would
vitiate the entire proceedings. It seems to be highly arbitrary and unreasonable that
for the recovery of a sum of amount about Rs. 4 lakhs a property had been sold for Rs.
14 lakhs and after adjusting its outstanding dues a sum of rupees more than double of
their outstanding dues had been remitted to the petitioners. The petitioners did not
accept the amount and returned the same to the Bank. The recovery proceedings had
definitely not been made complying with the statutory provisions. Non-compliance of
such statutory provisions tantamount to fundamental procedural defects which enables
the Court to set aside the confirmed sale even after issuance of sale certificate.
Non-compliance of statutory requirements of publication of possession notice and
auction notice in vernacular language rendered the statutory requirement as farce.
There should be purposeful compliance of the provisions of law and it cannot be
reduced to an empty formality. The requirement to cause publication in “vernacular
language” in the newspaper is fundamental and the statutory requirement which
cannot be compromised., It is not for the borrower or guarantor to establish that non-
publication of the said notices in “vernacular language” in the newspaper has caused
any prejudice to its cause. It is for the respondents to establish that non-compliance
of the statutory requirements has not caused any prejudice at all. Proof of prejudice is
unnecessary where requirement of statutory provision is mandatory. “It ill-comes from
a person who has denied justice that the person who has been denied justice is not
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-
prejudiced.” Vide S.L. Kapoor v. Jagmohan, AIR 1981 SC 136; and State of U.P. v.
Shatrughan Lal, AIR 1998 SC 3038.
76. In view of the above, the writ petition succeeds and is allowed. All proceedings
subsequent to notice under Section 13 (4) of the Act, 2002 being in flagrant violation
of the statutory provisions are liable to be quashed. The case is squarely covered by
the judgments of the Apex Court referred to above in Dr. Rajbir Singh Dalai, 2008 AIR
SCW 5817 (supra), Divya Manufacturing Company (P) Ltd., AIR 2000 SC 2346 (supra)
and Valji Khimji and Company, 2008 AIR SCW 5828 (supra), wherein the Apex Court
held that not giving wide publication of the auction notice itself is a good ground for
quashing the confirmed sale. In such a fact situation opposite party No. 4 is entitled to
refund of the amount deposited by him.
Page: 163
The opposite party-Bank shall refund the amount deposited by opposite party No. 4
with interest @ 10% per annum to him within four weeks from today. Opposite party
No. 1 is directed to recalculate the amount due from the petitioner including interest
thereon and issue a fresh demand notice to be served upon the petitioner within four
weeks from today. We further direct that as the opposite party-bank proceeded
illegally, it is not entitled to claim for legal expenses or recovery expenses from the
petitioner. On receipt of the recomputed demand from the bank, the petitioner shall
deposit the same within four weeks from the date of receipt failing which the bank
shall be at liberty to proceed against the petitioner for making full recovery of its
outstanding dues in accordance with law.
No costs.
B.N. MAHAPATRA, J.:— 17. I agree.
Order accordingly.
———
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Page 1 Sunday, March 01, 2020

BEFORE DR. B.S. CHAUHAN, C.J. AND B.N. MAHAPATRA, J.

Swastik Agency and others

that there must be application of mind by the authority concerned while

DECISION TO SELL WHOLE OR PART OF THE SECURED ASSETS:

SETTING ASIDE AUCTION SALE-AFTER CONFIRMATION:

© EBC Publishing Pvt.Ltd., Lucknow.

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