There is no quarrel to the settled proposition of law that it is a bounden duty of the Court to see that the best price is fetched at the auction as held in case of Divya Manufacturing Company Pvt. Ltd. and Gaurav Enterprises (supra). The aforesaid proposition of law in my considered opinion has no manner of relevance in the present context. What the petitioner intended is to allow him to redeem the mortgage by depositing the amount fetched in the auction sale, after the sale is confirmed and made absolute upon issuance of the sale certificate. It is not even remotely suggested that the price fetched in the auction sale is shockingly low and a better offer is, in fact, received for the disputed property. The right of the mortgager to redeem the mortgage is lost, once the sale is made absolute on issuance of the sale certificate. The aforesaid proposition can further be fortified from the recent judgment of the Supreme Court rendered in case of Ram Kishun (supra) in these Words:
"23. In view of the above, the law can be summarised to the effect that the recovery of the public dues must be made strictly in accordance with the procedure prescribed by law. The liability of a surety is co-extensive with that of principal debtor. In case there are more than one surety the liability is to be divided equally among the sureties for unpaid amount of loan. Once the sale has been confirmed it cannot be set aside unless a fundamental procedural error has occurred or sale certificate had been obtained by misrepresentation or fraud."
Kolkata High Court (Appellete Side)
Bishnu Devi Shaw & Ors - vs The Federal Bank Ltd on 20 January, 2014
Citation;AIR 2014 Calcutta 90C.O. No. 3091 of 2012
This revisional application is directed against an order dated August 21, 2012 passed by the Debt Recovery Appellate Tribunal, Kolkata in Appeal No. 144 of 2011 by which the appeal is dismissed. The Predecessor-in-Interest of the present petitioner namely Ramji Shaw, since deceased, was the absolute owner of the Premise No. 135/77, Girish Ghosh Road, Belurmath and put the said property as co- lateral security with the opposite party no.1 (bank in short) against the cash credit limit of Rs. 15 lakhs availed by the petitioner no.2. The petitioner no.2 committed default in repayment of the amount to the bank which led the bank to declare the said amount as non-performing assets. On March 27, 2007, the bank issued a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and subsequently took a symbolic possession of the said property under Section 13 (4) of the said Act. The Bank proceeded to sale the said property kept as a co-lateral security and fixed the sale to be conducted on 21st October, 2008. The opposite party nos. 3 to 5 were declared as a highest bidder and the sale certificate was issued. The said Ramji Shaw through his Advocate caused a letter dated October 29, 2008 intimating that one of his relative has agreed to buy the said property at Rs. 30 lakh and further forwarded a demand draft of Rs. 3 lakh with an undertaking to pay the balance sum. Subsequently another demand draft of Rs. 4.5 lakh was forwarded to the bank with further undertaking that the balance of sum of Rs. 22.5 lakh would be paid within 15 days. The bank returned the aforesaid drafts as the sale certificate has already been issued in favour of the highest bidder i.e. opposite party nos. 3 to 5. On November 7, 2008, the said Ramji Shaw, since deceased, filed an application before the Debt Recovery Tribunal, Kolkata which was registered as S.A/218/2008 alleging that the property have been sold at much lower price. The Debt Recovery Tribunal rejected the said application on October 5, 2011 by directing the opposite party nos.3 to 5 to deposit a further sum of Rs. 4,99,449/- so as to make the total sale price at Rs. 30 lakh. The said order is assailed by the petitioners before the Debt Recovery Appellate Tribunal, Kolkata in S.A. No. 218 of 2008. The learned Advocate appearing for the petitioner submits that the tribunal should have cancelled the sale certificate, the moment it is found the offer, is inadequate and not matching the market price. In support of the aforesaid contentions, the reliance is placed upon the judgments of the Apex Court rendered in case of Maganlal -vs- M/s Jaiswal Industries, Neemach & Ors., reported in AIR 1989 SC 2113, Divya Manufacturing Company Pvt. Ltd. & Anr. -vs- Union Bank of India & Ors., Official Liquidator & Ors., reported in (2000) 6 SCC 69 and Ram Kishun & Ors -vs- State of U.P. & Ors reported in AIR 2012 SC 2288.
The learned Advocate appearing for the opposite party nos. 3 to 5 counterd the submissions of the petitioner by submitting that after the sale is confirmed, the right of redemption extinguishes and placed reliance upon a division bench judgment of Madhyapradesh High Court in case of Saroj Shivhare & Ors., -vs- Gaurav Enterprises & Ors., reported in 2012 (2) D.R.T.C. 47 (M.P). It is further contended that upon insurance of the sale certificate, the sale is complete which is the evidence of title and placed reliance upon a judgment of Madhyapradesh High Court in case of M/s Gaurav Enterprises, Gwalior -vs- State Bank of India reported in AIR 2012 MP 35.
From the respective submissions, the point which emerges for consideration is whether the right of redemption would prevail over the sale certificate or the sale can be reopened after its confirmation upon insurance of certificate if a right of redemption is exercised. Admittedly the petitioner or their predecessor-in-interest approached the bank after the sale was conducted and sale certificate is issued in favour of the opposite party nos. 3 to 5. The judgment of the Supreme Court in case of Maganlal (supra) is not pointer to an above issue as narrated above.
The arena of controversy involved in the above noted case was whether an application under Order 34 Rule 5 of the Code of Civil Procedure for redemption of the mortgage is maintainable notwithstanding the confirmation of sale in favour of the purchaser. The Apex Court held that in a suit for redemption of a mortgage than the mortgage by conditional sale or an anomalous mortgage, the mortgager has a right of redemption even after the sale has taken place but before the confirmation thereof becomes absolute. It was factually found that the sale did not become absolute as the order has been challenged in an appeal which is pending. In the above backdrop, it was held that the application for redemption of the mortgage at the instance of a mortgager is maintainable under Order 34 Rule 5 of the Code. In case of Gourav Enterprises (supra), the M.P. High Court placed reliance upon a judgment of the Apex Court in case of B. Arvind Kumar -vs- Govt of India & Ors. reported in (2007) 5 SCC 745 wherein it is held that the sale certificate is a valid evidence of title as the same is issued to the purchaser only when the sale becomes absolute. The High Court relying upon the ratio of the Supreme Court set aside the action of the financial institution in accepting the amount from the mortgager after the issuance of the sale certificate.
There is no quarrel to the settled proposition of law that it is a bounden duty of the Court to see that the best price is fetched at the auction as held in case of Divya Manufacturing Company Pvt. Ltd. and Gaurav Enterprises (supra). The aforesaid proposition of law in my considered opinion has no manner of relevance in the present context. What the petitioner intended is to allow him to redeem the mortgage by depositing the amount fetched in the auction sale, after the sale is confirmed and made absolute upon issuance of the sale certificate. It is not even remotely suggested that the price fetched in the auction sale is shockingly low and a better offer is, in fact, received for the disputed property. The right of the mortgager to redeem the mortgage is lost, once the sale is made absolute on issuance of the sale certificate. The aforesaid proposition can further be fortified from the recent judgment of the Supreme Court rendered in case of Ram Kishun (supra) in these Words:
"23. In view of the above, the law can be summarised to the effect that the recovery of the public dues must be made strictly in accordance with the procedure prescribed by law. The liability of a surety is co-extensive with that of principal debtor. In case there are more than one surety the liability is to be divided equally among the sureties for unpaid amount of loan. Once the sale has been confirmed it cannot be set aside unless a fundamental procedural error has occurred or sale certificate had been obtained by misrepresentation or fraud."
(Emphasis Supplied)
The contingencies as laid down in the above referred judgments has not been made out and, therefore, this Court has no hesitation to hold that the sale can not be reopened at the instance of the petitioner after it is made absolute. Additionally this Court found that the tribunal have sufficiently protected the interest of the petitioner in directing the auction purchaser to pay the differential amount to meet the price quoted by the petitioner to be reasonable and the market price which, in fact, have been deposited by the successful bidder. This Court, therefore, does not find any illegality and/or infirmity in the impugned order.
The revisional application is devoid of any merit and is thus dismissed.
However, there shall be no order as to costs.
Urgent photostat certified copy of this order, if applied for, be given to the parties on priority basis.
(Harish Tandon, J.)
LATER
After delivery of judgment the learned advocate appearing for the petitioner prays for stay of operation of this judgment. Upon consideration of the submissions made in this behalf, this Court does not think that this is a fit case for staying the operation of the said judgement.
The prayer for staying the operation of the judgement is thus refused.
(Harish Tandon, J.)
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