B.S. Chauhan, C.J.
1. 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. Nos. 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 No. 2 and 3 stood as guarantors by securitizirtg their assets pertaining to Sabak Plot No. 2, Sabak Khata No. 94 corresponding to Hal Plot No. 2, Khata Nos. 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 & 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 for 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 1 st 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. Petitioner was asked to deposit 25% of the offered amount by 5th December, 2005 as the auction sale was fixed for 17th December, 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 W.P.(C) Nos. 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. Nos. 29 of 2006 which was dismissed vide Order Dated 7.6.2006. Petitioner preferred appeal Nos. 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. 3.95 lakhs as it had been assessed at Rs. 4.12 lakhs. Proposal for OTS submitted by the Petitioner was rejected straight away 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 or 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 the 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. 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. Mence, 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 confined 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, its Judgment cannot be set aside. Therefore, the facts of the case do not 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 confined 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 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 xxx9. (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 (6) or notice of sale has been served to the borrower.
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 negotiation. 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 and Ors. (2007) 10 SCC 448, 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 & Chemicals Ltd. and Ors. : AIR2007SC2458 ; and Commissioner of Municipal Corporation, Shimla v. Prem Lata Sood and Ors. (2007) 11 SCC 40.
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 and Ors. v. Harinarayan Jaiswal and Ors. : [1972]3SCR784 , 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.
15. In Haryana Financial Corporation and Anr. v. Jagdamba Oil Mills and Anr. : [2002]1SCR621 , 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. : AIR1995SC1632 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.
16. Therefore, it becomes an 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 involve himself in small sales/deals.
VALUATION & RESERVE PRICE:
17..The word 'value' means intrinsic worth or cost or price for sale of a thing/property, (vide Union of India and Ors. v. Bombay Tyre International Ltd. and Ors. (1984) 1 SCC 467; and Gurbachan Singh and Anr. v. Shivalak Rubber Industries and Ors. : [1996]2SCR997 .
18. In State of U.P. v. Shiv Charan Sharma and Ors. : AIR1981SC1722 , 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. and Anr. : AIR2004SC4299 , the Hon'bie 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. and Ors. : 2000ECR19(SC) , 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 that there must be application of mind by the authority concerned while 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 OFTHE SECURED ASSETS:
21. In Ambati Narasaya v. M. Subba Rao and Anr. : AIR1990SC119 , 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 portiort and sold it; Unfortunately, no such attempt was made and it was not even thought of. The Court has blind fold 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 and Ors. : [1977]3SCR692 .
23. InS.Mariyappa (Dead) By LRs. and Ors. v. Siddappa and Anr. : (2005)10SCC235 , the Hon'ble Supreme Court held that it is duty of the Executing Court to consider whether sale of only a pajt 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 (supra).
24. In Desh Bandhu Gupta v. N. L. Anand & Rajinder Singh : (1994)1SCC131 , 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 and Ors. v. Babu Bhakta Ratan and Ors. : [1974]1SCR372 , 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 and Ors. : [1997]2SCR208 ; and D.S. Chohan and Anr. v. State Bank of Patiala : (1997)10SCC65 .
27. In Gajraj Jain v. State of Bihar and Ors. : (2004)7SCC151 , 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 hold to obtain the best possible price for the mortgaged assets and the best possible price must, in the 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 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 & Sons v. Sri Ramanya Das and Ors. : [1970]3SCR1 , 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 theprice 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 Drums (P) Ltd. and Anr. : [1974]3SCR678 .
31. In Union Bank of India v. Official Liquidator High Court of Calcutta and Ors. : AIR2000SC3642 , 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 and Ors. : (2007)5SCC745 , 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 and Anr. : AIR2007SC712 , the Apex Court explained the scope of various provision of the Act, 2002 and the Rules observing that the Act 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 Dalal v. Chaudhari Devi Lal University, Sirsa and Anr. : (2008)9SCC284 ; and Divya . and Anr. v. Union Bank of India and Ors. : AIR2000SC2346 , 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. and Ors. : (2008)9SCC299 , 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. and Ors. AIR 2008 SCW 5284, 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 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 (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 confined 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 hither to uncontroverted legal position thai, 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, 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; Nazir Ahmed v. King Emperor ; Deep Chand v. State of Rajasthan : [1962]1SCR662 ; Patna Improvement Trust v. Smt. Lakshmi Devi : AIR1963SC1077 ; State of Uttar Pradesh v. Singhara Singh and Ors. : [1964]4SCR485 ; Hukam Chand Shyam Lal v. Union of India and Ors. : [1976]2SCR1060 ; Chettiam Veettil Ammad v. Taluk Land Board and Ors. : [1979]3SCR839 ; State of Bihar v. J.A.C. Saldanna AIR 1980 SC 327; State of Mizoram v. Biakchhawna : (1995)1SCC156 ; J.N.Ganatra v. Morvi Municipality Morvi : AIR1996SC2520 ; Haresh DayaramThakur v. State of Maharashtra and Ors. : AIR2000SC2281 ; Dhanajaya Reddy v. State of Karnataka etc. etc. (2001) 4 SCC 9; Commissioner of Income Tax, Mumbai v. Anjum M.H. Ghaswala and Ors. : [2001]252ITR1(SC) ; Prabha Shankar Dubey v. State of Madhya Pradesh AIR 2004 SC 486; Ram Phal Kundu v. Kamal Sharma : AIR2004SC1657 ; Indian Banks' Association v. Devkala Consultancy Service AIR 2004 SC 2615; Parle Biscuits (P) Ltd. v. State of Bihar and Ors. : 2005(192)ELT23(SC) ; Harinarayan G. Bajaj v. Rajesh Meghani and Anr. (2005) 10 SCC; and Raja Ram Pal v. Hon'ble Speaker, Lok Sabha and Ors. : (2007)3SCC184 ).
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 and Ors. : AIR2000SC3243 , 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 and Anr. : (2001)10SCC191 . WRIT COURT'S -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 : [1970]76ITR692(SC) ; M.P. Mittal v. State of Haryana and Ors. : [1985]1SCR940 ; State of U.P. and Ors. v. U.P. State Law Officers Association and Ors. : [1994]1SCR348 ; Dr. Arundhati A. Pargaonkar v. State of Maharashtra : (1995)ILLJ927SC ; Chandra Singh v. State of Rajasthan and Anr. : AIR2003SC2889 ; ONGC Ltd. v. Sendhabhai Vastram Patel and Ors. (2005) 6 SCC 454; and K.D. Sharma v. Steel Authority of India Ltd. and Ors. AIR 2008 SCW 6654).
42. In Andhra Pradesh State Financial Corporation v. GAR Re-Rolling Mills and Anr. : [1994]1SCR857 , 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 : (1995)ILLJ622SC , 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 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.
44. In Jamshed Hormusji Wadia v. Board of Trustees, Port of Mumbai and Anr. : 2004(176)ELT24(SC) , 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 and Ors. : AIR2005SC3434 , 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 Rom Francis Tellis : (1973)ILLJ226SC , 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 and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr. : (1975)ILLJ399SC , 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.
49. Similar view has been taken by the Supreme Court in Commissioner of Police, Bombay v. Gordhandas Bhanji : [1952]1SCR135 ; Ambica Quarry Works etc. v. State of Gujarat and Ors. : [1987]1SCR562 ; Shrilekha Vidyarthi etc. etc. v. State of U.P. and Ors. : AIR1991SC537 ; Indra Sawhney II v. Union of India and Ors. : AIR2000SC498 ; and A.P. Aggarwal v. Government (of N.C.T.) of Delhi and Ors. : AIR2000SC205 .
50. In M.C. Mehta v. Union of India and Ors. : AIR2006SC1325 , 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 and Ors. : [1998]1SCR470 , 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 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 and Ors. v. Union of India and Ors. : (1994)1SCC44 , and held that 'the oxercise 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 and Ors. : AIR1999SC3471 held that any action being violative of Article 14 of the Constitution is arbitrary and if it is found to be de hors 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 statuary 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 and Anr. : (1972)ILLJ565SC ; B.N. Nagarajan and Ors. v. State of Karnataka and Ors. : (1979)IILLJ209SC ; Delhi Development Hprticulture Employees' Union v. Delhi Administration, Delhi and Ors. : (1992)IILLJ452SC ; State of Orissa and Ors. v. Sukanti Mohapatra and Ors. : (1993)IILLJ297SC ; State of Himachal Pradesh v. Nodha Ram and Ors. : [1996]1SCR54 ; Nazira Begum Lashkar and Ors. v. State of Assam and Ors. AIR 2001 SC 102; Mrs. Dr. Chanchal Goyal v. State of Rajasthan : [2003]2SCR112 ; M.D., State of Haryana and Anr. v. Tilak Raj and Ors. : (2003)IIILLJ487SC ; and* Sultan Sadik v. Sanjay Raj Subba and Ors. : AIR2004SC1377 ).
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 de hors 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, up set 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 and Ors. : AIR1990Ori196 ; Nutakki Sesharatanam v. Sub-Collector, Land Acquisition, Vijayawada and Ors. : AIR1992SC131 ; and Sanjeevanagar Medical & Health Employees' Co-operative Housing Society v. Mohd. Abdul Wahab and Ors. : [1996]2SCR308 ). 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 and Ors. v. Kaki and Ors. : AIR2006SC1975 , the Apex Court held that the Courts are bound to administer the law according to the provisions of law. 11 is their duty to discern legislative intention in the process of adjudication. Justice administered 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 and Anr. : [2007]291ITR519(SC) , the Hon'ble Supreme Court placed reliance upon its earlier Judgment in P.N. Krishna Lai and Ors. v. Govt, of Kerala and Anr. : 1994(5)SCALE1 and held 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 1992 SC 1289; Meera Gupta v. State of West Bengal and Ors. : AIR1992SC1567 ; Food Corporation of India v. New Delhi Assurance Co. Ltd. : [1994]1SCR939 ; S. Gopal Reddy v. State of Andhra Pradesh : 1996CriLJ3237 ; Gayatri Devi Pansari v. State of Orissa AIR 2000 SC 1531; Regional Provident Fund Commissioner v. Shiv Kumar Joshi : (2000)ILLJ552SC ; Gautam Paul v. Debi Rani Paul and Anr. AIR 2001 SC 61; Ambalai Sarabhai Enterprises Ltd. v. Amrit Lal & Co. and Anr. : AIR2001SC3580 ; Commissioner of Income Tax, Mumbai v. Anjum M.H. Ghaswala and Ors. : [2001]252ITR1(SC) ; Joseph Joseph and Ors. v. State of Kerala and Ors. : (2002)ILLJ1051SC ; Ashwin S. Mehta and Anr. v. Custodian and Ors. : AIR2006SC795 ; and Southern Petrochemical Industries Co. Ltd. v. Electricity Inspector & ETIO and Ors. : AIR2007SC1984 ).
60. In Thiagarajan and Ors. v. Sri Venugopalaswamy B. Koil and Ors. : AIR2004SC1913 , 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 and Ors. : AIR1990SC123 , 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 M/s. Seth Kashi Ram Chemical (India) v. State of Haryana and Ors. : AIR1991SC478 , 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.
64. A similar view has been reiterated by the Apex Court in Mangal Prasad (dead) by LRs and Anr. v. Krishna Kumar Maheshwari and Ors. : AIR1992SC1857 , observing that an equitable relief should be granted to the auction purchaser to refund the amount with interest.
65. In M/s. 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 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 haying 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 Rs. 3,447.00publication on 03.9.2005(iv) Expenses incurred on paper Rs. 4,168.00publication on 10.11.05(v) Interest payable in the account Rs. 2,85,180.00upto 28.11.2005Total amount payable to the = Rs. 4,96,369.66Bank
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) Nos. 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 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 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 there by 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 no the on 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 statutory requirement 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 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 the 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 prejudiced.' (Vide S.L. Kapoor v. Jagmohan and Ors. : [1981]1SCR746 ; and State of D.P. v. Shatrughan Lai and Anr. : [1998]3SCR939 .)
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 (supra), Divya . and Anr., (supra) and Valji Khimji and Company (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. 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 Nos. 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.
I agree.