1. This is an appeal against the order dated 4.6.2003 passed by the learned Presiding Officer of the Debts Recovery Tribunal-1, Delhi (hereinafter referred to as 'the DRT'). The learned Presiding Officer of the DRT, by the said order, allowed the appeal filed by the 4th respondent herein against the order passed by the Recovery Officer in R.C. 116/2001 on 17.4.2003.
2. The Recovery Officer had, by his order dated 17.4.2003, dismissed the objections filed by the 4th respondent herein for setting aside the sale in favour of the appellant herein in respect of the property, namely, Plot No. Spl (A&C), RIICO Industrial Area, Bhiwadi. Distt Alwar, Rajasthan, measuring 74764 sq. metres together with all buildings, plant and machinery', fixtures, fittings, and hypothecated goods/assets, etc. (hereinafter refered to as 'the Property in question').
3. The learned Presiding Officer of the DRT, by the impugned order dated 4.6.2003, while allowing the appeal, set aside the sale in favour of the appellant herein, and directed the Recovery Officer to re-auction the mortgaged property by, observing the rules and procedures prescribed in Rule 53 of Schedule-II to the Income Tax Act.
He also directed that fresh proclamation for sate should be issued showing the dues of the Revenue and the State Electricity Board, He further directed that notice in accordance with Rule 53 should be given to the defaulter before settling the terms of the proclamation of sale.
4. Aggrieved, the auction-purchaser of the property in question has preferred this appeal. The 4th respondent herein, at whole instance, the sale was set aside, has filed a reply by way of affidavit opposing the appeal. On behalf of respondents 1 to 3 (financial institutions) a reply by way of an affidavit has been filed opposing the appeal.
5. I have heard the Counsels for both the sides, and perused the records.
In pursuance of the Recovery Certificate issued by the DRT, the Recovery Officer initiated the execution proceedings in R.C. 116/2001. By order dated 5.9.2001 the Recovery Officer ordered attachment of the property in question and directed issue of notice for settling the terms of the proclamation for sale, to be served dasti and by affixation, as also by beat of drum. The Recovery Officer also directed that the valuation report regarding the property in question, its present status along with the certified copies of the title deeds be filed. On 11.2.2002, the Recovery Officer once again directed the issue of show-cause notice to the certificate-debtors 2 and 3 with a direction to the financial institutions to file the valuation reporting regarding the property in question.
7. By order dated 7.6.2002 the Recovery Officer ordered that the property in question be sold in public auction on 12.9.2002, fixing the reserve price at Rs. 1,85,60,000/-, and the earnest deposit at Rs. 25 lakhs. He also directed that the sale proclamation be served upon the certificate-debtors through Registered Post, by affixation at a conspicuous part of the property, by beat of drum, and by publication in the leading newspapers in Hindi and English at Delhi, Mumbai and Rajasthan, with a further direction to the Court auctioneer appointed by him to arrange for the wide publicity of the proposed auction by distribution of handbills and placing the banners at strategic points.
8. The Recovery Officer also directed the financial institutions to collect the details of the amount due on the property from the Revenue/Municipal/Rajasthan Electricity authorities, and to confirm the publication of the advertisements in the newspaper, and to place a photocopy of the same on the file. The Recovery Officer adjourned the matter to 9.9.2002 for confirmation of the publication of the proclamation of sale and report regarding service of notice of the sale proclamation.
9. On 9.9.2002 the Recovery Officer, observing that the Counsel for the financial institutions has filed the affidavit regarding service along with photographs, adjourned the matter to 3.10.2002, awaiting the report of the auctioneer.
10. The order dated 3.10.2002 passed by the Recovery Officer shows that on the request of the Counsel for the financial institutions for an adjournment to file the revised valuation, the matter was adjourned to 31.1.2002. The Recovery Officer has observed in the impugned order dated 17.4.2003 that the attempt to sell the property on 12.9.2002 failed (though there is no order to that effect on 12.9.2002).
11. The order dated 31.10.2002 passed by the Recovery Officer shows that the financial institutions filed an application mentioning that the appellant M/s. Archirsha Investment Pvt. Ltd. (hereinafter referred to as 'the Appellant herein') had approached the financial institutions by their letter dated 10.10.2002 to purchase the property in question for Rs. 4.86 crores, and had also tendered a draft for Rs. 25 lakhs in the name of the Recovery Officer, as earnest money, but, he (the Recovery Officer) could not accede to that request. In this order the Recovery Officer has observed that if the appellant herein is interested in purchasing the property in question, it should participate in the auction. But, this order dated 31.10.2002, however, shows that the Counsel for the financial institutions, while requesting that a fresh sale proclamation be issued for auctioning the property, staled that since the earlier auction failed in spite lot of expenditure, the property in question be now sold by inviting bids in sealed envelopes. The Recovery Officer accepting this request, directed (hat the property in question be sold on 2.1.2003 by calling for sealed tenders, fixing the reserve price at Rs. 4,85,60,000/-, and the earnest deposit at Rs. 25 lakhs. He also ordered for the service of the sale proclamation on the certificate-debtors through Registered Post, by , affixture at a conspicuous part of the property, by beat of drum. The Recovery Officer also directed that the tender notice be published in the leading newspapers in Hindi and English.
12. The Recovery Officer once again directed the financial institutions to collect the details of the amount due on the property in question from the Revenue/Municipal/Rajasthan Electricity Board authorities, and adjourned the matter to 3.12.2002 for confirmation of the publication of the advertisements in the newspaper and to place a photocopy of the same on the file.
13. The order dated 2.1.2003 passed by the Recovery Officer shows that in response to the advertisement, four bids had been received in sealed envelopes, on opening of which, it was found that the appellant herein had given the highest of bid for Rs. 4,88,00,555/-, and therefore, this was fixed as the reserve price. This order further shows that the parties present were asked to bid from this amount onwards, and that ultimately the appellant gave the highest bid for Rs. 4.95 crores, and was declared the highest bidder. The order further shows that the matter was adjourned to 23.1.2003. The order dated 23.1.2003 of the Recovery Officer shows that the appellant had deposited the bid amount in full and other charges. This order also shows that the Electricity Department had filed a claim. The matter was adjourned to 5.2.2003.
14. The order of the Recovery Officer, dated 30.1.2003, shows that the 4th respondent herein had filed an application along with two drafts for Rs. 4,35,00,000/- and Rs. 1,50,00,000/- respectively offering to purchase the property in question. The order of the Recovery Officer shows that the 4th respondent herein namely. National Steel and Agro Industries Ltd. also filed additional objections dated 7.2.2003 urging among other things that proper publication had not been made, and therefore, it could not know about publication stated to have been made inviting tenders, that by not selling the property in open auction appropriate price could not be fetched, that prejudice has been caused to bona fide purchasers, that the provisions of Rules 52, 53, 54 and 56 of the Second Schedule to the Income Tax Act had not been observed, that as per Rule 56 the sale has to be made by public auction only, whereas the advertisement speaks of tenders only, that the details of the Revenue assessed on the property have not been mentioned, that there was no beat of drum, that the copy of proclamation was not affixed on the conspicuous part of the property, and had prayed for setting aside the sale in favour of the appellant herein. Another objector, Basant Bansal, had also filed an objection on 31.1.2003, made a similar prayer for setting aside the auction sale, with an offer to purchase the property at Rs. 5.95 crores. Another objection filed by the State Bank of Bikaner and Jaipur, and an application filed on 31.1.2003 by the Jaipur Electricity Board for impleading itself as a party to the proceedings alleging that certain sums were outstanding and due to them, were rejected by the Recovery Officer, with which we are not concerned in this appeal. In this appeal we are concerned with the objections raised by the 4th respondent herein only, since the present appeal has been filed against the order passed at the instance of the 4th respondent only.
15. The Recovery Officer, after hearing the parties, by his order dated 17.4.2003 held that the 4th respondent herein and the other objection Basant Bansal have no locus standi to file the objections since they are neither aggrieved nor affected party, since the 4th respondent and the other objector had not participated in the auction. He also observed that proper publication was carried out in the local and leading newspapers, and was advertised in the official website of the financial institutions. He further observed that the procedure followed was of public auction, that proper bid was conducted on 2.1.2003, and that the sale by tenders and by public auction are the same, but, however, on opening of the sealed envelopes, the highest offer amongst the participants was considered as reserve price on which proper bidding was started and concluded. The Recovery Officer also observed that the objectors failed to show any reason for their grievance, and to show that the objectors are aggrieved, and had suffered due to this auction sale. The Recovery Officer observed that the objection can be raised by a person whose interest has been affected, and that the objectors cannot be stated to be the affected persons as they did not participate in the sale. He further observed that in case the sale is set aside and re-auction is ordered, the amounts deposited by the successful bidder and objectors have to be refunded, and that there is no provision for compelling the objectors or the successful bidder to participate in the re-auction, or to withhold the amount deposited by the objectors.
16. Ultimately, the Recovery Officer dismissed the objections with a direction to refund the amount deposited by the objectors, i.e., Rs. 5.86 crores and Rs. 25 lakhs respectively.
17. Aggrieved by this order, the 4th respondent herein filed Appeal 21/2003 before the DRT. The DRT by the impugned order dated 4.6.2003 allowed the appeal, setting aside the sale in favour of the appellant herein and directing re-auction of the property in question.
18 The learned Presiding Officer of the DRT opined that the auction was not conducted in accordance with the procedure prescribed, and referred to Rule 53 of the Procedure for Recovery of Tax contained in the Second Schedule to the Income Tax Act, which is applicable to the proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (hereinafter referred to as 'the Act') also. Clause (b) of Rule 53 provides that the proclamation of sale, among other things, should show the revenue, if any, assessed on the property, and Clause (d) provides that it should also show any other thing which the Recovery Officer considers it material for the purchaser to know, in order to judge the nature and the value of the property. The learned Presiding Officer of the DRT also referred to the order dated 7.6.2002 passed by the Recovery Officer directing the service of the proclamation of sale on the certificate-debtors through registered post, the affixation of the same on the conspicuous part of the property and the publication of the proclamation of sale in leading newspapers in Hindi and English at Delhi, Mumbai and Rajas than. He also referred to the order of the same date by which the Recovery Officer gave a direction to the financial institution to collect the details of the amount due on the property in question from the Re venue/Municipal/Rajasthan Electricity Board authorities. After referring to these directions given by the Recovery Officer, the learned Presiding Officer of the DRT made an observation to the effect that these are important factors which should be known to everyone including the auction purchaser, whereas these particulars are not found in the proclamation of sale.
19. The learned Presiding officer of the DRT, after taking note of the fact that the Recovery Officer had adjourned the matter to 9.9.2002 with a direction to the financial institutions to confirm about the publication of the proclamation of sale and about the service thereof, observed that there is nothing in the order-sheet dated 9.9.2002 as to how service was effected, whereas, perusal of the affidavit regarding service filed by Mr. Sandip Sahni, Clerk of the Counsel for the financial institutions, showed that the demand notice dated 27.6.2001 was served upon the certificate-debtors, but, still mentioned that the unserved copies are being produced into the Tribunal. He further observed that even the unserved envelopes are not on record, though postal receipts are available. The learned Presiding Officer of the DRT also observed that as per Rule 53 the notice has to be given to the defaulter before the issue of the sale proclamation, whereas, the notice issued on 27.6.2001 is regarding the demand of the certificate-amount from the defendants. The learned Presiding Officer also observed that there is nothing to show that the sale proclamation was affixed or pasted. Ultimately, he held that there was no compliance of order dated 7.6.2002 passed by the Recovery Officer.
20. The learned Presiding Officer of the DRT also observed that it is not clear from the records as to what happened on 11.9.2002 (mistake for 12.9.2002, the date fixed for the auction sale), though there is the report of the auctioneer with regard to the same.
21. The learned Presiding Officer of the DRT observed that the financial institutions were privately negotiating with the prospective buyers, of whom the auction purchaser (appellant herein) was one, that auction purchaser gave his offer of Rs, 4.85 crores, that an attempt was made to negotiate with the Recovery Officer, but the Recovery Officer did not adhere to the legal process even though he was aware that the public auction should have been conducted and the offer had to be rejected, whereas, the Recovery Officer had called for sealed tenders. After so observing, the learned Presiding Officer of the DRT held that the order for inter se bidding was made to show the judicial honesty on the part of the parties, but, in his view, it was the most unjudicial act, and that ignoring all norms :of the law the Recovery Officer was made the victim of the designs of the financial institutions and the auction purchaser. Therefore he held that auction should be set aside.
22. The learned Presiding Officer observed that one of the important ingredients of public sale is to give wide publicity, and that the publication in the newspaper 'Aaj Bhi Kal Bhi' cannot amount to wide publication.
23. He held that even the tender notice was not issued in accordance with the provisions of Rule 53, that there was no mention that there was wide publicity in this regard, and that there was no proof that any efforts were made to publicise the auction, even though law requires that beat of drum, issue of pamphlets and publishing of news are necessary.
24. The learned Presiding Officer observed that any person who has shown interest in the purchase-of-the property is an interested persons as per Rule 61 (of the Procedure of Recovery of Tax); and the Recovery Officer is bound to decide-these objections.
25. I have considered the respective contentions put forward by both the sides. Since I have already set out in detail the facts, it is not-necessary to repeat them again except where it is necessary for the discussion.
26. First of all, I will take up for consideration the question whether there was proper and adequate publication of the sale scheduled to be held either on 12.9.2001 or on 2.1.2003.
27. Before take up the discussion of this issue, it will be necessary to refer to the provisions contained in Rules 52, 53 and 54 of the Procedure of Recovery of Tax contained in the Second Schedule to the Income Tax Act.
"52. Sale and proclamation of sale--(1) The Tax Recovery Officer may direct that any immovable property which has been attached, or such portion thereof as may seem necessary to satisfy the certificate shall be sold. (2) Where any immovable property is ordered to be sold, the Tax Recovery Officer shall cause a proclamation of the intended sale to be made in the language of the district.
53. Contents of proclamation: A proclamation of the sale of immovable property shall be, drawn up after notice to the defaulter, and shall state the time and place of sale, and shall specify, as fairly and accurately as possible-- (b) the revenue, if any, assessed upon the property or any part thereof; (cc) the reserve price, if any, below which the property may not be sold and (d) any other thing which the Tax Recovery Officer considers it material for a purchaser to know, in order to judge the nature and value of the properly.
54. Mode of making proclamation--(1) Every proclamation for the sale of the immovable property shall be made at some place on or near such property by beat of drum or other customary mode, and a copy of the proclamation shall ;be affixed on a conspicuous part of the property and also upon a conspicuous part of the office of the Tax Recovery officer.
(2) Where the Tax Recovery Officer so directs, such proclamation shall also be published in the Official Gazette or in a local newspaper, or in both, and the cost of such publication shall be deemed to be costs of the sale.
(3) Where the property is divided into lots for the purpose of being sold separately, it shall not be necessary to make a separate proclamation for each lot unless proper notice of the sale cannot, in the opinion of the Tax Recovery Officer, otherwise be given.
The contention of the 4th respondent herein is that since there was no proper and adequate publication of the sale, it (4th respondent herein) could not take part in the proceedings for sale, and that proper price was not fetched by the sale held by the Recovery Officer.
28. In this connection, the learned Counsel for the 4th respondent herein points out that for the auction, which was scheduled to be held on 12.9.2002, the order dated 7.6.2002 passed by the Recovery Officer is that the sale proclamation be published in the leading newspapers in Hindi and English at Delhi, Mumbai and Rajasthan. The learned Counsel for the 4th respondent herein also points out the order dated 31.10.2002 whereby the fresh date for the sale of the property in question through sealed tenders was fixed as 2.1.2003 with a direction that the tender notice be published in the leading newspapers in Hindi and English. The learned Counsel for the 4th respondent herein contends that these directions of the Recovery Officer were not complied with by the financial institutions (respondents 1 to 3 herein). He specifically points out that no publication was made in the issue circulated in Mumbai. The contention of the 4th respondent herein is that it (4th respondent herein) is located at Mumbai, and in view of the fact that there was no proper publication of the proclamation of sale in Mumbai it (4th respondent herein) could not take part in the auction. But, the learned Counsel for the financial institutions (respondents 1 to 3 herein), on the other hand, contends that publication of the proclamation of sale scheduled to be held on 12.9.2002 was made in the Times of India (Delhi edition), Navbharat Times (Delhi edition), Economic Times (Delhi edition), Times of India (Mumbai Edition), Navbharat Times (Mumbai edition), Economic Times (Mumbai Edition) and Rajasthan Patrika. He also contends that since there was no response (received by the Recovery Officer) another sale proclamation was published in the newspaper including the Hindustan published from Delhi and Rajasthan Patrika, which is a local newspaper of the area where the property in question is situated. In this connection, he points out the affidavit dated 10.10.2003 filed by Rashmi Kapoor on behalf of the respondents 1 to 3 herein, wherein these averments are found in paragraph 5(c). A perusal of the said affidavit shows that these averments have been made on behalf of the respondents 1 to 3 herein, but, though it has been mentioned in this paragraph that the copies of the advertisements are marked herein as Annexure-A, there is no such annexure filed with the affidavit, and copies of the publication have not been filed.
29. The learned Presiding Officer of the DRT has held in the impugned order dated 4.6.2003 that the order of the Recovery Officer dated 7.6.2002 was not complied with, and that there is no mention about the fact that wide publicity was given. But, a perusal of the records of the Recovery Officer shows that there is a copy of the publication of the tender notice in the English newspaper "Hindustan Times" inviting sealed tenders stating that the tenders will be opened on 2.1.2003 and that the offerors may remain present and raise the bids if they so desire. The records of the Recovery Officer also show that there is the copy of the Hindi newspaper 'Rajasthan Patrika' for that purpose, Though there is a tabulated statement regarding list of dates and events on the record of the DRT, which mentions about the publication in some newspapers also, the copies of the newspapers are not on record of the DRT also. In my view, the mere averments made in the affidavit filed (before this Tribunal on behalf of the respondents 1 to 3 herein cannot and does not mean that there was actually publication of the proclamations of sale in the newspapers. This fact has to be proved by the appellant if it can, or the financial institutions (respondents 1 to 3 herein), by producing satisfactory evidence, mainly, the copies of such publication in the newspapers, stated to have been made by the respondents 1 to 3, in view of the provisions contained in Rule 54(2) of the Procedure for Recovery of Tax referred to above.
30. Therefore, for this purpose, I am of the view that in the interests of justice, the matter has to be remanded back to the Recovery Officer to enable the appellant or the respondents 1 to 3 herein to establish that there was proper and adequate publication of the sale proclamation and the tender notice in the newspapers with regard to the dates 12.9.2002 and 2.1.2003 as directed by the Recovery Officer. The Recovery Officer shall afford opportunity to the appellant or the respondents 1 to 3 herein, to place on evidence the copies of the newspaper publications, and also opportunity to the 4th respondent herein to put forward its case with reference to the same.
31 This apart, the learned Counsel for the appellant herein contends that the publication of the sale proclamation was made on the official website of the financial institutions. In this connection, he also points out the averment make in the reply filed on behalf of the respondents 1 to 3 herein to the directions filed by the 4th respondent herein before the Recovery Officer herein it has been stated that the invitation for lenders was also shown and flashed on the website of the certificate-holders (financial institutions). The Recovery Officer has also, in his order dated 17.4.2003 mentioned about the advertisement on the official website of the financial institutions. But, the learned Counsel for the 4th respondent herein contends that even if it be so, it was a private website, and, therefore, it cannot amount to giving wide publicity. In these circumstances, I am of the view that the appellant or the respondents 1 to 3 have to establish that such publication was made on the official website of the financial institutions with reference to the two dates fixed for sale, namely, 12.9.2002 or 2.1.2003. For this purpose also the appellant or the respondents 1 to 3 herein have to be given an opportunity to establish these facts, and the matter has to be remanded back to the Recovery Officer. The Recovery Officer shall give opportunity to the appellant or the respondents 1 to 3 herein to establish that there was publication of the proclamation of sale scheduled to be held on 12.9.2002 and/or 2.1.2003, and also to give opportunity to the 4th respondent herein to put forward its case with reference to the same.
The Recovery Officer as also to decide as to whether this publication on the official website of the financial institutions would be adequate and proper publication of the proclamation of sale for the purposes of the proceedings under this Act.
32. Another contention of the 4th respondent herein is that the publication of the proclamation of sale was not made in Mumbai where it has its Registered and Corporate offices, as result of which it (4th respondent) could not take part in the proceedings for sale, and was thereby deprived of an opportunity of purchasing the property in question. But, the learned Counsel for the appellant herein contends that the 4th respondent herein has an office at Delhi also and, therefore, this contention that the 4th respondent herein could not know about the intended/proposed sale, is not correct, inasmuch as the publication was made in the newspapers circulated in Delhi, But, the learned Counsel for the 4th respondent herein, on the other hand, contends that there is only a small office of the 4th respondent herein at Delhi, which only arranges for sale of the goods for the 4th respondent-company, and none of its directors is based in Delhi or is having sitting in the office at Delhi, In this connection, he also points out the affidavit dated 15.9.2003 of Mr. V.K. Jain, the branch manager of the 4th respondent herein at Delhi, wherein he has stated about these facts and also that he was not competent to take the decision for purchase of immovable property or the plant and machinery, and that neither he nor any official at Delhi office has anything to say in the policy matters of the 4th respondent herein. Therefore, the learned Counsel for the 4th respondent herein contends that the fact that there is a branch office of the 4th respondent herein at Delhi does not mean that the 4th respondent herein had notice of the publication of the proclamation of sale in the newspaper at Delhi, or that the officials at the branch can take any decision for the purchase of the property in question. In my view, this matter again calls for evidence. The 4th respondent herein has to establish these averments made in the affidavit of Mr. V.K. Jain referred to above, and also that the 4th respondent herein could not have even known about the intended/proposed sale in view of the facts urged by it. For this purpose also the matter has to be remanded back to the Recovery Officer who shall give opportunity to the 4th respondent herein to lead evidence in this regard, and also give an opportunity to the appellant and the financial institutions (respondents 1 to 3 herein) to put forward their case in this behalf. The Recovery Officer shall then decide this issue in accordance with law.
33. Yet another contention put forward by the 4th respondent herein is that the proclamation of sale was not affixed on the conspicuous part of the property in question, and that there was no beat of drum regarding proposed/intended sale. The learned Presiding Officer of the DRT has also observed in the impugned order dated 4.6.2003 that there is nothing on record to show that the sale proclamation was affixed or pasted, and that though it is correct that the beat of drum is an obsolete method, till dale, the law requires that there should be beat of drum. Of course, the learned Counsel for the financial institutions (respondents 1 to 3 herein) contends that the requisite money for beat of drum was deposited. But, in my view, the appellant or the financial institutions (respondents 1 to 3 herein) have to establish that the copy of the proclamation was affixed on a conspicuous part of the property in question and that there was beat of drum. For this purpose, I am of the view that the appellant or the respondents 1 to 3 herein should be given opportunity to establish the same before the Recovery Officer. I have already held that the matter requires to be remitted back to the Recovery Officer with regard to certain other aspects.
Because, it does not appear from the order of the Recovery Officer, dated 17.4.2003, that he had given any pportunity to any of the parties to lead evidence with regard to the several averments made by them respectively. He appears to have passed orders, on perusing the records available and on hearing arguments only, whereas many of the facts urged by the respective parties have to be proved by producing evidence by the respective parties. In these circumstances, I am of the view that the Recovery Officer shall give opportunity to the appellant or the respondents 1 to 3 herein to establish that there was such affixture of the proclamation of sale on the conspicuous part of the property, and there was beat of drum. The Recovery Officer shall also give opportunity to the 4th respondent herein to put forward its case with regard to this aspect.
34. Of course, the learned Counsel for the appellant relies upon the decision in Rai Vimal Krishna v. State of Bihar, IV (2003) SLT 457=AIR 2003 Supreme Court 2676, in support of his contention that even if there is no beat of drum, it cannot affect the sale inasmuch as there has been proper publication of the sale proclamation otherwise. He relies upon the following observations of the Hon'ble Supreme Court: "It is an elementary principle of interpretation that words in statutory provisions take their colour from their context and object, keeping pace with the time when the word is being construed.
When or where no other means of effective publication is available, no doubt, announcing the assessment list by beat of drum and by displaying placards would have to be complied with. Where equality efficacious, if not better, modes of publication are available, it would be ridiculous to insist on an obsolete form of publication as if it were a ritual." But, the learned Counsel for the 4th respondent herein contends that this decision was rendered with reference to the provisions contained in Section 119 of the Patna Municipal Corporation Act (13 of 1952), which related to the publication of the assessment list, whereas, the present case relates to the auction sale of the property of a considerable value affecting valuable rights of parties and, therefore, this decision is not applicable to the facts of the case on our hand.
35. But, I am of the view that the Recovery Officer has to first decide on the questions of fact that have arisen in this behalf, and thereafter consider the applicability of this decision relied upon by the appellant herein to the facts of the case on our hand, and then come to a proper decision.
36. Another contention put forward by the learned Counsel for the 4th respondent herein is that the proclamation of sale does not mention about the revenue assessed on the properly, and also the charges on or the amounts outstanding and due against the property in question. In this connection, he also points out the specific order passed by the Recovery Officer in this behalf on 7.6.2002 and 31.10.2002 whereby the Recovery Officer directed the financial institutions (respondent 1 to 3 herein) to collect the details of the amount due on the property in question from the Revenue/Municipal/Rajasthan Electricity Board authorities. The learned Counsel for the 4th respondent herein also points out an application filed by the Jaipur Electricity Board claiming that certain amounts are due to it in respect of the properly in question. A perusal of the records of the Recovery Officer shows that on 30.1.2003 the Jaipur Electricity Board had filed an application for getting itself impleaded as a party to the proceedings, slating that up to December 2002 it has to recover Rs. 1,32,20,854/- with future interest @ 18% per annum. The learned Counsel for the 4th respondent herein, therefore, contends that the specific orders of the Recovery Officer irecting the financial institutions (respondents 1 to 3 herein) to collect the amounts due against the property have not been complied with by the financial institutions (respondents 1 to 3 herein). He contends that this is a violation of the provisions contained in Clause (d) of Rule 53 of the Procedure for Recovery of Tax referred to above, which provides that the Tax Recovery Officer should mention in the proclamation of sale anything which he considers it material for a purchaser to know in order to judge the nature and value of the property. The learned Presiding Officer of the DRT has also in his order dated 4.6.2003 has observed that these are very important factors, and the omission to mention these factors vitiates the proclamation of sate (inasmuch as it does riot show the amount due against the property in question).
37. But, the learned Counsel for the appellant herein, on the other hand, contends that this is not a matter with regard to which neither the 4th respondent herein (who says that he was interested in purchasing the property in question) nor even the certificate-debtors can have any grievance, and if at all, it will be the auction purchaser, namely, the appellant herein who could have any grievance in this behalf. He contends that if any of the charges outstanding against the property in question are not mentioned in the proclamation of sale, it is the appellant, who has purchased the property, will suffer loss, if any, and not the 4th respondent herein or even the certificate-debtors.
38. Of course, it is true that if any amount is due against the property in question, the auction purchaser could be the aggrieved person inasmuch as it was not mentioned in the proclamation of sale since it will deprive the auction purchaser of the opportunity to know the real value of the property at which he could purchase the property in question, and he may have to bear the undisclosed charges. If he had known about the charges on the property, he would have made the bid for the appropriate amount taking into consideration that amount which is due against the property. But, the 4th respondent herein claims that he is interested in purchasing the property and, therefore, the non-mentioning of the charges in the proclamation of sale is a material irregularity which would affect the sale. I am also of the opinion that in case the 4th respondent herein is entitled to maked out a case that he is a person whose interests are affected by the sale and who will suffer a substantial injury as a result of the material irregularity alleged, then the 4th respondent herein will be entitled to plead that the non-mentioning of the amounts due against the property in question in the proclamation of sale is a material irregularity which deprives him, as the intending purchaser, to know about the real value of the property in question. But the right of the 4th respondent herein to attack the sale in favour of the appellant herein on this ground will depend upon the answer to the questions whether the 4th respondent herein is a person whose interests have been affected by the sale, and whether he is a person who has substantially suffered as a result of the alleged material irregularity. Therefore, in my view, the question whether the sale in favour of the appellant has to be set aside in view of non-mentioning of the amounts/charges due against the property in question will have to be decided after deciding the questions whether the 4th respondent herein is entitled to claim that he is a person whose interests have been affected by the sale in favour of the appellant and whether he sustained substantial injury as a result of the alleged material irregularity.
39. Therefore, the next question that will have to be consider is whether the 4th respondent herein can claim to be a person whose interests are affected by the sale in favour of the appellant herein, and whether the 4th respondent herein has sustained any substantial injury as a result of the material irregularity alleged.
40. The learned Counsel for the 4th respondent herein contends that if there was proper publication of the intended/proposed sale in the newspapers as directed by the Recovery Officer, the 4th respondent herein would have taken part in the auction sale which was scheduled to be held on 12.9.2002, that the 4lh respondent would have given the offer in pursuance of the subsequent notice inviting the sealed tenders, and would have even taken part in the bid which is stated to have taken place on 2.1.2003. The learned Counsel for the 4th respondent herein further contends that since the 4th respondent herein has been deprived of the opportunity to take part in the auction sale and purchase the property in question since there was no proper publication, the 4lh respondent herein is a person who is entitled to challenge the sale in favour of the appellant herein.
41. Rule 61 of the Procedure of Recovery of Tax referred to above provides as follows: "Application to set aside sale of immovable property on ground of non-service of notice or irregularity--Where immovable property has been sold in execution of a certificate, such income-tax officer as may be authorised by the Chief Commissioner or Commissioner in this behalf, the defaulter or any person whose interests are affected by the sale, may, at any time, within thirty days from the date of the sale, apply to the Tax Recovery Officer to set aside the sale of the immovable property on the ground that notice was not served on the defaulter to pay the arrears as required by this Schedule or on the ground of a material irregularity in publishing or conducting the sale: (a) no sale shall be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of non-service or irregularity; and (b) an application made by defaulter under this rule shall be disallowed unless the applicant deposits the amount recoverable from him in execution of the certificate." From the above Rule it is seen that the application to set aside the sale can be filed by the defaulter (i.e., certificate-debtor) or any person whose interests are affected by the sale on the ground that notice was not served on the certificate-debtor, or on the ground of material irregularity in publishing or conducting the sale. But, the proviso (a) to this Rule stipulates that the sale shall not be set aside on any such ground unless the Tax Recovery Officer is satisfied that the applicant has sustained substantial injury by reason of non-service or irregularity.
42. By pointing out these provisions, the learned Counsel for the appellant herein contends that the 4th respondent herein who had not even taken part in the proceedings for sale of the property in question, cannot contend that he is a person whose interests are affected by the sale in favour of the appellant herein, or that he has sustained substantial injury in view of the material irregularity or non-service of notice on the certificate-debtor. He contends that the 4th respondent herein is a third party whose interests are in no way affected by the sale, and who has not suffered any substantial injury and, therefore, the 4th respondent herein is not entitled to raise any objection challenging the sale in its (appellant's) favour. But, as pointed out already, the learned Counsel for the 4th respondent herein contends that if the publication of the sale proclamation had been properly made, the 4th respondent would have taken part in the proceedings for the sale, whereas the 4th respondent has been deprived of the opportunity and, therefore, the 4th respondent herein is a person whose interests are affected by the sale, and who has sustained substantial injury as a result of the material irregularity alleged.
43. In this connection, the learned Counsel for the 4th respondent herein contends that there is no material to prove that notice of the proclamation of sale was served upon the certificate-debtors in this case, and that this is a material irregularity in publishing and conducting the sale. He refers to the observations of the learned Presiding Officer of the DRT in his order dated 4.6,2003 in this behalf. The learned Presiding Officer of the DRT has, in his order, referred to the order dated 7.6.2002 passed by the Recovery Officer that the proclamation of sale be served upon the certificate-debtors through Registered Post, and directed the financial institutions (respondents 1 to 3 herein) were directed to confirm about the service.
The learned Presiding Officer of the DRT has even pointed out that the Recovery Officer had adjourned the matter to 9.9.2002 for this purpose, whereas, in the order dated 9.9.2002 there is no mention as to whether service has been effected on the certificate-debtors. The learned Counsel for the 4lh respondent herein also points out that the learned Presiding Officer of the DRT has further observed that Mr. Sandip Sahni (clerk of the Counsel for the financial institutions) had filed an affidavit regarding service stating that he was producing the unserved envelopes containing the notices. The learned Counsel for the 4th respondent herein, therefore, contends that it is evident that there was no service of the proclamation of sale on the certificate-debtors.
44. A perusal of the records of the Recovery Officer shows that on 9.9.2002 the Counsel for the financial institutions had filed an affidavit regarding service along with certain photographs, which were taken on record, The learned Counsel for the 4th respondent herein points out that the learned Presiding Officer of the DRT has observed that in the said affidavit it has been sated that a demand notice dated 27.6.2001 was served upon the certificate-debtors. But, the learned Counsel for the financial institutions, on the other hand, contends that no objection was filed by anybody regarding service alleging that there was no proper service.
45. In these circumstances. I am of the view that the financial institutions (respondents 1 to 3 herein) have to establish that the proclamation of sale was served upon the certificate-debtors; and for this purpose also the matter has to be remitted back to the Recovery Officer. Because, the order of the Recovery Officer dated 9.9.2002 shows that the Counsel for the financial institutions has filed the affidavit of service along with certain photographs. But, it is not clear whether the Recovery Officer was satisfied whether the certificate-debtors were served with the proclamation of sale or not.
Further, as pointed out already, the order dated 7.6.2002 passed by the Recovery Officer directed the property to be sold on 12.9.2002.
Apparently, the sale did not take place on that date. Once again, on 31.10.2002, the Recovery Officer directed the sale of the property through sealed tender on 2.1.2003, and had also ordered the proclamation of sale to be served upon the certificate-debtors through Registered Post. From 31.10.2002, the Recovery Officer adjourned the matter to 30.12.2002 for confirmation about publication and service.
The records of the Recovery Officer show that on 30.12.2002 the Recovery Officer was on leave, and the matter was adjourned, and ordered to be listed on 2.1.2002 (mistake for 2.1.2003). That order has not been signed by anybody. It is not clear from the records of the Recovery Officer whether the Recovery Officer had satisfied himself about the service of the proclamation of sale on the certificate-debtors. Therefore, I am of the view that in the interests of justice, the matter has to be remanded back to the Recovery Officer in this respect also. The financial institutions (respondents 1 to 3 herein) have to establish before the Recovery Officer that the proclamation for sale for the two dales, namely, 12.9,2002 and 2.1.20.03, were served upon the certificate-debtors.
46. But, still, the question will be whether the 4th respondent herein will be entitled to say that the proclamation of sale had not been served upon the certificate-debitors; or, that there had been a material irregularity in publishing and conducting the sale and there/ore the sale should be set aside. Even if the proclamation of sale had not been served upon the certificate-debtors, the 4th respondent has still to establish as to how his interests are affected, and as to how he has sustained any substantial injury as a result thereof, even though a reading of Rule'61 of the Procedure of Recovery of Tax referred to above shows that any person, whose interests are affected by the sale, may apply to set aside the sale on the ground that the notice was not served upon the defaulter, or on the ground of a material irregularity in publishing or conducting the sale. The provisions of this Rule 61 have to be properly and appropriately interpreted to find out whether the 4th respondent herein, who had not even taken part in the auction proceedings, can derive advantage of this provision contained in the Rule 61 referred to above. But, as pointed out already, whether the 4th appellant herein can be called a person whose interests are affected or a person who has suffered substantial injury in account of alleged non-service or material irregularity, will depend upon the establishment of the other facts alleged, as mentioned above. It is only after, the establishment of the facts, the further question whether on this ground the 4th respondent herein is entitled to have the sale set aside has to be considered and decided.
47. Of course, the learned Counsel for the appellant herein relies upon the decision in Lakshmikutty Amma Ratnamma v. P.N. Krishna Pillai, AIR 1992 Kerala 373, wherein it was held that as follows: "More importantly, the relief that can be claimed in a case like this/where the plaintiff is not a party to the suit leading to the sale, can only be one for a declaration that the decree and sale will not bind him, a stranger. It will not be proper for him to seek the remedy of setting aside the sale. The Judicial Committee of the Privy Council had held consistently that the remedy for a stranger to a suit, in which a sale, is ordered, is a declaratory relief and not a suit to set aside the Court sale." But, the learned Counsel for the 4th respondent herein contends that this decision will have no application to the facts of the case on our hand since the question before the Hon'ble Kerala High Court was, whether a third party to the suit leading to the sale, can file another suit for setting aside the sale, or has to sue for a declaration that the decree and the sale will not bind him. He points out that the case before the Hon'ble Kerala High Court did not relate to an application of this sort filed by the 4th respondent herein to set aside the sale in execution proceedings.
48. The learned Counsel for the 4th respondent, on the other hand, relies upon the decision of the Hon'ble Supreme Court in Shreenath v.Rajesh, (1998) 4 Supreme Court Cases 543, wherein it was held that the expression "any person" found in Rule 97 of Order XXI, CPC will include even persons not bound by the decree. This decision related to the case of resistance or obstruction by a third party to the delivery of the possession of the immovable property in execution of a decree. This decision also does not relate to an application of the sort with which were concerned.
49. The learned Counsel for the 4th respondent herein, also relies upon the decision in Siraj-ul-Haq v. S.C. Board of Waqf, AIR 1959 Supreme Court 198. That decision related to the interpretation of the expression "any person interested in Waqf," and docs not relate to a case where a prayer has been made for setting aside the sale in execution on the ground that non-service of the proclamation of sale or material irregularity in publishing or conducting the sale.
50. The learned Counsel for the 4th respondent herein, also relies upon the decision in Navin Chandra v. Ram Devi, AIR 1933 Allahabad 161, wherein it was held that the denial of opportunity to purchase the property which is to be sold in auction is a substantial injury within the meaning of Order XXI Rule 90, CPC. But, it has also been held in this decision as follows: "It may be true that anybody else who is not one of the persons entitled to apply for the setting aside of a sale may suffer a similar injury and he has no remedy to apply for the setting aside of the sale. But it does not follow necessarily from this that a person who is entitled to ask the Court to set aside a sale cannot establish that by being denied an opportunity to bid at the sale he has sustained a substantial injury, inasmuch as he has lost his opportunity to purchase an immovable property which he wanted to purchase." From this it is clear that a person who is entitled to make a prayer for setting aside the sale can show that he has sustained a substantial injury by being denied of an opportunity to bid at the sale.
51. In my view, these decisions relied upon by the Counsel for both the sides will not have application to the facts of the case on our hand.
As pointed out already, the 4th respondent herein will have to establish as to how he is a person whose interests are affected by the sale in favour of the appellant, and that he has suffered substantial injury as a result of the alleged non-service of the proclamation of sale on the certificate debtors, or the alleged material irregularity in publishing or conducting the sale. For this purpose also, in my view, the matter has to be remitted back to the Recovery Officer for further consideration and fresh disposal. The Recovery Officer, shall give opportunity to the 4th respondent herein to establish that the 4th respondent herein is a person whose interests are affected by the sale in favour of the appellant herein, and that he has sustained substantial injury as a result of the non-service of the proclamation of sale and the alleged material irregularity in publishing or conducting the sale.
52. The learned Counsel for the appellant herein also relies upon the decision in Kesharbai v. Bank of Baroda, AIR 1987 Madhya Pradesh 106, wherein it was held as follows:-- "From a perusal of the provisions in Order 21, Rule 90(2) of the Code extracted above it is clear that in order that sale may be set aside the Court has to be satisfied upon the facts proved, about the contention between the material irregularity and the substantial injury. Mere proof of material irregularity and inadequacy of price, in other words injury is not sufficient. It has also to be proved from the material on record that there was connection between the inadequacy of price and the material irregularity, in other words that the inadequacy of price was caused by reason of material irregularity. They must be correlated with each other as cause and effect.
Therefore, it is evident that it is not sufficient for the 4th respondent herein to say that there was material irregularity in the publishing or the conduct of the sale, but, the 4th respondent herein has also to prove that the material irregularity alleged was the cause for the substantial injury. Therefore, the 4th respondent herein has to establish the connection between the material irregularity alleged by it and the substantial injury alleged to have been suffered by it (4th respondent).
53. The learned Counsel for the 4th respondent herein contends that the property ought not to have been sold by inviting sealed tenders, but, ought to have been sold in open auction. In support of his contention, the learned Counsel for the 4th respondent herein relies upon the decision in LICA (P) Ltd. v. Official Liquidator, 1996(85) Company Cases 768. But, as against this, the learned Counsel for the appellant herein relies upon the decision in CMD, SIPCOT, Madras v. Contromix Pvt. Ltd., JT 1995(6) Supreme Court 283, wherein it was held that the sale by inviting tenders cannot be stated to be ipso facto invalid. In the decision in Motors and Investments v. New Bank of India, 1996 (8) SCALE 645, the Hon'ble Supreme Court held that the property should have been sold by public auction by inviting either tenders or open auction.
54. But, I have already pointed out that this matter has to be remitted back to the Recovery Officer for giving both sides opportunity to lead evidence, and to establish certain factors as indicated above. I have also pointed out that the 4th respondent herein will have to establish that its (4th respondent's) interests are affected, that it has sustained substantial injury as a result of the material irregularity in publishing or conducting the sale as alleged by it, and that it can claim to be a person whose interests are affected as a result of the sale and as a person who has suffered substantial injury on account of the alleged non-service or material irregularity. In effect, I have pointed out that the 4th respondent herein should establish itself to be entitled to take advantage of the provisions of rule 61 of the Procedure for Recovery of Tax referred to above. Then only the 4th respondent will be entitled to put forward the plea that the sale should have been effected by conducting an open auction, and not by inviting sealed tenders.
55. This apart, I also find from the orders of the Recovery Officer that after having received and opened the sealed tenders, the Recovery Officer fixed the highest tender-amount as the reserve price, and had asked the parties who were present at that time to make further bids.
In the bid that ensued thereafter, the appellant herein was the highest bidder and was declared to be the successful bidder. This aspect has also to be taken note of by the Recovery Officer in deciding whether the sale in favour of the appellant herein has to be set aside. The Recovery Officer has to consider and decide whether such invitation of tenders, and permitting inter se binding between the parties who had made the tender and were present at the time of bidding held on 2.1.2003 is not permissible.
56. Therefore, taking into consideration all these aspects, this appeals allowed setting aside the impugned order dated 4.6.2003 passed by the learned Presiding Office of the DRT, and remitting the matter back to the Recovery Officer for further consideration and fresh disposal of the matter in accordance with law, and in the light of the observations contained in the order.
57. The Recovery Officer shall take the matter back to his file, give opportunity to the appellant herein and the respondents 1 to 4 herein to adduce such evidence as may be necessary in support of their respective claims and contentions. After giving them sufficient opportunity to put forth their case, the Recovery Officer shall decide the matter afresh in accordance with law, and in the light of the observations contained in this order.
58. For this purpose, the appellant and the respondents 1 to 4 herein, through their Counsel, are directed to appear before the Recovery Officer on 23.8.2004 for taking further directions in this matter. The Recovery Officer, if he so deems fit, may issue notice to such of the other respondents herein, as may be necessary, before proceeding further with the matter.
59. Copy of this order be furnished to the appellant and the respondent 1 to 4 herein. A copy be also forwarded to the concerned Recovery Officer.