OPINIION

Sub: Cancellation of Auction held by the R.O. DRT-2 Mumbai with

respect to the industrial plot having area of 204 Acre at Noida. UP.

Brief facts:
1. On 06.07.1982, UPSIDA had allotted Mortgaged Property to M/s DCM
Toyota Ltd.(hereinafter referred as “said company”). After agreement
dated 20.08.1982, possession of the Mortgaged Property was handed over
to the said company on the same day. A lease deed was executed in
favour of the said Company by UPSIDA on 20.11.1987 and vide letter
dated 05.04.1989, the said company was allowed to hypothecate the lease
hold rights of the mortgaged property.
(Para 3.1)
2. It is noted that Said company changed its name to “M/s. Daewoo Motors
Limited” and this fact was informed vide date mentioned. The UPSIDA
vide letter no. 2144 dated 03.07.1997 requested the company to produce
the documents related to shareholders of the company. The UPSIDA vide
letter dated 02.01.1999 and no. 3398 directed the company to deposit a
sum of Rs. 6,97,54,100/- as a transfer levy since most of the
Directors/shareholders of the company were changed akin to transferring
of the property. The amount of Rs. 6.97 Crore mentioned in the vide letter
dated 02.01.1999 was never deposited and therefore, pre-condition for
Daewoo Motors India Ltd. to hold and possess the Mortgaged property is
not satisfied. Any mortgage created after 02.01.1999 is not valid, illegal
and contrary to the pre-condition of deposit Rs. 6.97 Crore. On
13.01.1999, The company objected the levy vide letter dated levied by
UPSIDA .
(Para 3.2)
3. On 26.04.2002, ICICI Bank Ltd. filed Original Application against
Daewoo Motors (India) Ltd. to recover a sum of Rs. 511 Crore Approx
and enforce its mortgage on securities which was allowed and recovery
certificate was issued. On 08.08.2002, The Hon’ble DRAT ordered the
sale of the subject property either by public auction or by private treaty.
On 29.03.2005, ICICI Bank Ltd. assigned its rights to recover dues to
ARCIL.
(Writ Petition)
4. Initially mortgaged property was mortgaged in favour of Industrial Credit
Investment Corporation which was later turned into ICICI Bank Ltd.
5. An auction was held in the year 2007 in the favour of M/s Pan India
Motors which was later cancelled on 22.11.2012 by the Ld. R.O. due to
non-compliance and defaults committed in payment of the sale
consideration by the M/s Pan India Motors. The open public auction held
on 29.01.2015 for Current Assets in the present Recovery proceedings
was successful at Rs. 3.22 Crore and another public auction held on
11.09.2015 for Plant & Machinery in the present R.P. was successful at
Rs. 83.01 Crore.
6. In addition to the above, 10 auctions conducted earlier on 30.10.2015;
25.11.2016; 29.09.2017; 05.11.2018; 18.01.2019; 11.04.2019;
07.09.2020; 21.12.2020; 25.02.2021 and 06.01.2022 were failed due to
non-receipt of any bid.
(Para 2.1)
7. 08.03.2023 The public e-auction was scheduled vide Sale Proclamation
dated at the reserved price of Rs. 310 Crore(at the realizable sale value of
the fresh re-evaluation report received on 22.02.2023) to be held on
18.04.2023. 17.04.2023 One bid was received from M/s IHDP Globals
Pvt. Ltd, since the sale Proclamation dated 08.03.2023 was set aside by
the Hon’ble P.O. DRT-2 Mumbai vide order dated 20.04.2023 in Appeal
 No. 7 of 2003. Registry was directed on 28.04.2023 to release EMD
deposited by M/s IHDP Globals Pvt. Ltd. along with interest, if any, by
breaking FDR, if any, following due procedure in accordance with law.
(Para 2.1)
8. 31.03.2023 The UPSIDA claimed that it has to recover the dues of Rs.
777.84 Crores as encumbrance on the property in question.
It is the case of UPSIDA that it is the owner & landlord of the mortgaged
property and authorized to allot or take back the said plot in case it is not
getting used for the purpose for which it was allotted.
(Para 3.4)
9. On 03.07.2023, at the request of the counsel of CH ARC (ARCIL) fresh
sale proclamation of the mortgaged property was fixed at the reserve
price of Rs. 355 Crore for public e-auction on 17.08.2023. A Sale
Proclamation was issued on 06.07.2023.
(Para 2.2)
10.16.08.2023(inadvertently written as 17.08.2023) 03 bids received for
participation in the open public e-auction scheduled to be held on
17.08.2023 from (i) M/s Shakuntalam (ii) M.s Trivesh (iii) M/s Chandra.

All three bids were found not in compliance of the terms and conditions
of the Sale Proclamation dated 06.07.2023. In order to maintain judicial
propriety by complying with the orders of the higher judicial Forums,
particularly the specific order dated 11.08.2023 passed by Hon’ble High
Court of Bombay, an opportunity was given to all three bidders to comply
with the pre-requisite conditions of Sale Proclamation. Next date of e-
auction was scheduled to 28.08.2023 with inspection 22.08.2023 and date
of submission of bid 24.08.2023. (Para 2.3)
11.In the auction notice dated 16.08.2023, it is specifically mentioned that
certain portion of the property which is put up for action is subject matter
 of a proceeding before the Hon’ble High Court. However, a completely
different version is given to the Hon’ble High Court during the hearing
held on the date mentioned by ARCIL stating that the property which is
subject matter of the writ petition is not included in the auction sale.
Therefore, there are two inconsistent versions. ARCIL has misled this
Tribunal and attempted to flout the orders of Hon’ble Allahabad High
Court. (Para 3.8)
12. On 21.08.2023, In response to order dated 16.08.2023 M/s Chandra
Laxmi filed compliance vide inward No. 1970(84/23). 22.08.2023 M/s
Trivesh filed compliance vide Inward no. 85/23. 24.08.2023 M/s
Shakuntalam filed compliance vide Inward no. 86/23. 24.08.2023.
However new bid was received by M/s Authum in response to the
Corrigendum dated 16.08.2023. (Para 2.4)
13.25.08.2023 M/s Authum filed praecipe submitting therein that he has
mentioned the praecipe to intervene in Appeal on 25.08.2023 before the
hon’ble O.O., DRT-2 Mumbai. It has also been submitted that the hon’ble
P.O. rejected the said praecipe stating that he has passed the order on
24.08.2023 in the said appeal. (Para 2.5)
14. 28.08.2023 at 12.05 PM ARCIL filed Service Affidavits in respect of
Corrigendum dated 16.08.2023 and Inspection Report. (Para 2.6)
15.28.08.2023 at 4:30 PM Report of e-auction of the service Provider was
taken on record vide Exh-835 and M/s Shakuntalam was declared as the
highest successful bidder at Rs. 359.05 Crore in respect of the Mortgaged
Property. (Para 2.7)
16.In compliance of the order dated 24.08.2023 of the Hon’ble P.O., DRT-2
Mumbai, Registry was directed to transfer the EMD amount received
from M/s Shakuntalam in the specified account of ARCIL. As per the
affidavit of ARCIL, M/s Shakuntalam has deposited the entire balance
sale proceeds in the specified account of ARCIL in compliance of the
 order dated 24.08.2023 and has also deposited the requisite Poundage Fee
in Compliance of the order terms and conditions of the sale proclamation
dated 06.07.2023 and order dated 28.08.2023. (Para 2.7)
17.On 21.09.2023 M/s Authum filed I.As. vide Exh.841 & 844 submitting
therein that no further steps to be taken by the Recovery Officer by
confirming the sale in favour of M/s Shakuntalam and no sale certificate
be issued in their favour, as M/s Authum is a bona fide participant who
has higher offer, but could not be allowed to participate only on account
of the order dated 24.08.2023 passed by the Hon’ble DRT-2 Mumbai
which restricted persons other than those who were prosecuting or
defending themselves in the proceedings before DRT-2 Mumbai.
(Para 2.8)
18.On 21.09.2023 UPSIDA filed its I.A. vide Exh-842 submitting therein
that the UPSIDA is the owner and landlord of the Mortgaged Property
and authorized to allot or take back the Mortgaged Property in case it’s
not getting used for the purpose for which it was allotted. UPSIDA is also
not desirous of causing any loss to CH ARC and hence willing to buy
back lease hold rights by paying a sum of Rs. 360 Crore and in alternate,
UPSIDA is ready and willing to offer up to 10% more than 355 crore
Reserve Price fixed by this Tribunal which comes to Rs. 390.50 Crore to
comply formalities of the auction and/or to participate in fresh auction.
(Para 2.9)
19.On 03.10.2023 M/s Shakuntalam filed affidavit in reply to the I.A. (Exh-
846) and application for confirmation to sale (Exh-847). On 03.10.2023
M/s Chandra Laxmi filed its I.A. vide Exh-848 levelling certain
allegations against the procedure and practice adopted by this Tribunal. It
has been submitted that M/s Chandra Laxmi is ready and willing to
outbid the highest bidder(M/s Shakuntalam) and would definitely raise a
bid.
 (Para 2.10)
20.On 19.10.2023 In the interest of natural justice, one opportunity was
given to M/s Chandra Laxmi and M/s Authum to prove their bona fide
and were directed to deposit at least 10% of the offer made by M/s
Authum latest by 21.10.2023.
(Para 2.10)
21.On 23.10.2023 The records were called by the Hon’ble P.O. DRT-2
Mumbai, on 23.10.2023, the order could not be pronounced on the date.
The matter thereafter was adjourned to finally 01.12.2023. (Para 2.11)
22.On 01.12.2023 The records of present Recovery Proceedings were
received. The ld. Counsels for the parties concerned appeared and
submitted that the Hon’ble P.O. DRT-2 Mumbai, has passed an Order on
24.11.2023 in Appeal (D) No. 2208/2023 filed by M/s Shakuntalam.
Later in, Ld. Counsel for ARCIL filed the order dated 24.11.2023 vide
Exh-857. Vide the said Order dated 24.11.2023, the Hon’ble P.O. DRT-2
Mumbai, quashed and set aside the order of Recovery Officer’s dated
19.10.2023.
(Para 2.12)
23.Finally, RO heard the parties on all pending Applications filed by the
parties and vide date order 17.1.2024 set aside the auction in question in
favour of M/s Shakuntalam and passed other directions as below:
A. “I.A. filed vide Exhibit-842 read with Additional Affidavit (Exh-845)
along with Further Affidavit (Exh-849) filed by UPSIDA to the
ext4ent of their higher offers of Rs. 396.00 for participation in the
open public e-auction for the Mortgaged Property is allowed.
B. The I.A. filed vide Exhibit-841 & 844 by M/s. Authum Investment &
Infrastructure Limited to the extent of their higher offers of Rs.396.00
for participation in the open public e-auction for the Mortgaged
Property is allowed.
C. I.A. filed vide Exhibit-848 by M/s. Chandra Laxmi Enterprises Pvt.
Ltd. is dismissed for non-prosecution.
D. Application filed vide Exhibit-847 by M/s. Shakuntalam Landcraft
Private Limited for confirmation of sale of the Mortgaged Property is
rejected.
E. Let the Mortgaged Property be put to open public e-auction with
Reserve Price of Rs.396,00,00,000/- (Rupees Three Hundred Ninety
Six Crore Only).
F. UPSIDA and M/s. Authum Investment & Infrastructure Limited are
directed to deposit Rs.396,00,00,000/- (Rupees Three Hundred Ninety
Six Crore Only) through demand draft/ pay order drawn in favour of
the "Recovery Officer, DRT-II, Mumbai, in R.P. No.1 of 2012 (TRP
No.2 of 2023) within 15 days from the date of its uploading on the
DRT's website. Out of said amount of Rs.396,00,00,000/- (Rupees
Three Hundred Ninety-Six Crore Only) each directed to be deposited
by UPSIDA and M/s. Authum Investment & Infrastructure Limited,
Rs.39,60,00,000/- be kept as EMD for proposed open public e-auction
auction. The decision with regard to the remaining amount shall be
taken after receipt of the said amount of Rs.396,00,00,000/- each from
UPSIDA and M/s. Authum Investment & Infrastructure Limited.
G. Out of the total amount deposited by the Successful Highest Bidder,
M/s. Shakuntalam Landcraft Private Limited, excluding Rs.35.50
Crore deposited by Mr. Ashish Gupta as EMD, Rs.39,60,00,000/-, be
kept as EMD on behalf of M/s. Shakuntalam Landcraft Private
Limited for proposed open public e-auction auction. The decision with
regard to the remaining amount shall be taken while issuing
sale proclamation.
H. ARCIL is directed to file on affidavit within one week clarification on
the present status with regard to Column No. 5 of the Schedule of
 Property in the Sale Proclamation dated 06.07.2023 (Exh-811) vis-à-
vis Orders Dated 17.04.2023 and 16.08.2023 passed by the Hon’ble
Court of Uttar Pradesh.
I. No order as to the cost.”

Legal Analysis:

Relevant Provisions:

1. “The Recovery of Debts and Bankruptcy Act, 1993

1.1 Section 25 (a) : The Recovery Officer shall, on receipt

of the copy of the certificate under sub-section (7) of
section 19, proceed to recover the amount of debt
specified in the certificate by one or more of the
following modes, namely, attachment and sale of the
movable or immovable property of the defendant;
1.2 Section 29: The provisions of the Second and Third
Schedules to the Income Tax Act, 1961 (43 of 1961),
and the Income Tax (Certificate Proceedings) Rules,
1962, as in force from time to time shall, as far as
possible, apply with necessary modifications as if the
said provisions and the rules referred to the amount of
 debt due under this Act instead of to the Income Tax
Act:
PROVIDED that any reference under the said
provisions and the rules to the "assessee" shall be
construed as a reference to the defendant under this
Act.

2. The Income-Tax Act, 1961 (Schedule II)

2.1 Rule 56. Sale to be by auction: The sale shall be by

public auction to the highest bidder and shall be
subject to confirmation by the Tax Recovery Officer:

Provided that no sale under this rule shall be made if

the amount bid by the highest bidder is less than the
reserve price, if any, specified under clause (cc) of rule
53.

2.2 Rule 60. Application to set aside sale of immovable

property on deposit:

(1) Where immovable property has been sold in

execution of a certificate, 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, on his
depositing-

(a) 3*** the amount specified in the proclamation of

sale as that for the recovery of which the sale was
ordered, with interest thereon at the rate of 4[one and
one-fourth per cent for every month or part of a
month], calculated from the date of the proclamation of
sale to the date when the deposit is made; and

(b) for payment to the purchaser, as penalty, a sum

equal to five per cent of the purchase money, but not
less than one rupee.
 (2) Where a person makes an application under rule 61
for setting aside the sale of his immovable property, he
shall not, unless he withdraws that application, be
entitled to make or prosecute an application under this
rule.

2.3 Rule 61. 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, 5[such Income-tax Officer as may be
authorised by the 6[Principal Chief Commissioner or
Chief Commissioner] or 7[Principal 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:

Provided that-

(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 the non-
service or irregularity; and

(b)an application made by a defaulter under this rule

shall be disallowed unless the applicant deposits the
amount recoverable from him in the execution of the
certificate.

3. Rule 62. Setting aside sale where defaulter has no

saleable interest: At any time within thirty days of the
sale, the purchaser may apply to the Tax Recovery
Officer to set aside the sale on the ground that the
defaulter had no saleable interest in the property sold.

Rule 15. Adjournment or stoppage of sale:

 (1) The Tax Recovery Officer may, in his discretion,
adjourn any sale hereunder to a specified day and
hour; and the officer conducting any such sale may,
in his discretion, adjourn the sale, recording his
reasons for such adjournment:

Provided that, where the sale is made in, or within

the precincts of, the office of the Tax Recovery
Officer, no such adjournment shall be made without
the leave of the Tax Recovery Officer.

(2) Where a sale of immovable property is adjourned

under sub-rule (1) for a longer period than one
calendar month, a fresh proclamation of sale under
this Schedule shall be made unless the defaulter
consents to waive it.
(3) Every sale shall be stopped if, before the lot is
knocked down, the arrears and costs (including the
costs of the sale) are tendered to the officer
conducting the sale, or proof is given to his
satisfaction that the amount of such arrears and
costs has been paid to the Tax Recovery Officer who
ordered the sale.

THE SECURITISATION AND RECONSTRUCTION OF

FINANCIAL ASSETS AND ENFORCEMENT OF
SECURITY INTEREST ACT, 2002

1. Section 13 (8): Where the amount of dues of the secured

creditor together with all costs, charges and expenses
incurred by him is tendered to the secured creditor at
any time before the date of publication of notice for
public auction or inviting quotations or tender from
public or private treaty for transfer by way of lease,
assignment or sale of the secured assets,— (i) the
secured assets shall not be transferred by way of lease
assignment or sale by the secured creditor; and (ii) in
case, any step has been taken by the secured creditor for
transfer by way of lease or assignment or sale of the
assets before tendering of such amount under this sub-
section, no further step shall be taken by such secured
creditor for transfer by way of lease or assignment or
sale of such secured assets]”
Relevant judgements:

1. In Celir LLP Vs. Bafna Motors (Mumbai) Private Limited

in Civil Appeal Nos.5542-5543, the Hon'ble Supreme Court
of India held that the failure on the part of the borrower in
tendering the entire dues before the publication of the
auction notice as per Section 13(8) of the SARFAESI Act
constituted an "extinguishment of right of redemption of
mortgage" (para 63 of the judgment). The Hon'ble Apex
Court also held that once the Section 13(8) stage was over
and the auction was concluded, the borrower did not have
any right of redemption under Section 13(8) left. The
judgment authored by Hon'ble Justice Pardiwala also stated,
"The right of redemption is clearly restricted till the date of
publication of the sale notice under the SARFAESI Act,
whereas the said right continues under Section 60 of the
Transfer of Property Act 1882 till the execution of
conveyance of the mortgaged property." In light of the
inconsistency between the two sections, the Hon'ble Court
also held that Section 13(8) of the SARFAESI Act, being a
special enactment would override the general enactment of
Section 60 of the Transfer of Property Act, 1882.

2. In Valji Khimji Vs. Official Liquidator of Hindustan Nitro

Product (Gujarat) Ltd. and Ors (2008) 9 SCC 299, the
Hon'ble Supreme Court of India has observed that auctions
are of two types - (1) where the auction is not subject to
subsequent confirmation, and (2) where the auction is
 subject to subsequent confirmation by some authority after
the auction is held.
In the first case mentioned above, i.e., where the auction is
not subject to confirmation by any authority, the auction is
complete on the fall of the hammer, and certain rights
accrue in favour of the auction purchaser.
However, where the auction is subject to subsequent
confirmation by some authority (under a statute or terms of
the auction) the auction is not complete and no rights accrue
until the sale is confirmed by the said authority. Once,
however, the sale is confirmed by that authority, certain
rights accrue in favour of the auction purchaser, and these
rights cannot be extinguished except in exceptional cases
such as fraud.

3. In the matter of Eva Agro Feeds Pvt Limited Vs. Punjab

National Bank in Civil Appeal No.7906 of 2021, the Hon'ble
Supreme Court of India referred to the decisions in Valji
Khimji Vs. Official Liquidator of Hindustan Nitro Product
(Gujarat) Ltd. and Ors. case along with K. Kumara Gupta
Vs. Sri Markendaya and Sri Omkareswara Swamy Temple
and Ors. {(2022) 5 SCC 710} wherein it was opined that
unless and until it was found that there was any material
irregularity and/or illegality in holding the public auction
and/or the auction sale was vitiated by any fraud or
collusion, it is not open to set aside the auction or sale in
favour of the highest bidder on the basis of some
representations made by a third party who did not even
participate in the auction proceedings and did not make any
 offer. It was held in that case that unless there are
allegations of fraud, collusion etc., the highest offer
received in the public auction should be accepted as a fair
value. Otherwise, there shall not be any sanctity of a public
auction.

The facts in Eva Agro Feeds Pvt Ltd. (Supra) were that
even after cancelling the highest bid of the appellant, in the
subsequent sale notice dated 24.12.2021, Respondent No.2,
i.e., the Liquidator had again fixed the reserve price of the
subject property at Rs. 10.00 Crore which was the reserve
price in the previous round of auction sale and which was
also the bid value of the appellant. It was observed that post
auction it is not open to the Liquidator to act on third party
communication and cancel an auction, unless it is found
that fraud or collusion had vitiated the auction.

4. In Vedica Procon Pvt. Limited vs. Balleshwar Greens

Private Limited in Civil Appeal No.6165 of 2015 (2015) 10
SCC 94, it was held that in the absence of any legal tenable
ground for not confirming the sale, it cannot be ground for
refusing confirmation of the sale or offer already made. The
facts in this case were that the highest bid of the appellant
was accepted by the Company Court and all the
stakeholders of the company in liquidation were heard
before such an acceptance Nobody ever objected including
the first respondent who was second highest bidder at that
stage on any ground whatsoever, such as, that there was any
fraud or irregularity in the sale nor was there any objection
 from any one of them that the price offered by the
appellant was inadequate.

5. In Anil Nandkishor Tibrewala v. Jammu and Kashmir Bank

Ltd., (2006) SCC OnLine Bom 686 it was held as under:

“9. Under section 34 of the RDB Act, the provisions of the

Act shall have effect notwithstanding anything inconsistent
therewith contained in any other law for the time being in
force or in any instrument having effect by virtue of any law
other than this Act. Under section 18 no Court or other
authority shall have, or be entitled to exercise, any
jurisdiction, powers or authority (except the Supreme
Court, and a High Court exercising jurisdiction under
Articles 226 and 227 of the Constitution) in relation to the
matters specified in section 17.
10. Against the order of the Tribunal an appeal lies to
Appellate Tribunal. In other words, the Act has conferred a
specific jurisdiction on the Tribunal in respect of the class
of matters which can be dealt with by the Tribunal under
section 17. An appeal is provided and the jurisdiction of
other courts is taken away. In other words, the orders
passed under RDB Act becomes final and cannot be
questioned in any Court of law other than by way of
petition before this Court or any available remedy before
the Apex Court in appropriate cases. As the petitioners are
not parties to the proceedings and as it is their case, that
the property belongs to them what is the Forum available to
such parties.
11. We may first gainfully refer to the provisions of the
Code of Civil Procedure i.e. Order XXI, Rule 58. Rule 58
specifically provides that if any claim is preferred to, or any
objection is made to the attachment of, any property
attached in execution of a decree on the ground that such
property is not liable to such attachment, the Court shall
proceed to adjudicate upon the claim or objection in
accordance with the provisions as contained therein. Under
sub-rule (2) of Rule 58 - all questions (including questions
relating to right, title or interest in the property attached)
arising between the parties to a proceedings or their
representatives under this rule and relevant to the
adjudication of the claim or objection, shall be determined
by the Court dealing with the claim or objection and not by
a separate suit. The proviso to Order 21, Rule 58(1)
provides for a situation where the Court may not entertain
the objection. By virtue of Sub-Rule (5) if on account of the
proviso the Court refuses to entertain the objection, the
party against whom such order is made may institute suit to
establish his right. By virtue of section 47 of Code of Civil
Procedure all questions arising between the parties to the
suit, in which the decree was passed or their
representatives and relating to execution, discharge or
satisfaction of the decree shall be determined by the Court
executing the decree and not by separate suit. The
expression used under section 47 therefore “parties to the
suit”. The section would not apply to a case where an
aggrieved person was not a party to the suit. On the other
hand Order 21, Rule 58 contemplates a case where a claim
is preferred or an objection made to attachment on the
ground that such property is not liable to such attachment.
It is that Court which can decide the claim or objection. A
reading of this would indicate that it can also be by a
person other than the party to the suit. In the matter of
dispossession of property, there is provision in Order 21,
Rule 99 for an aggrieved person to raise his objection.
Under Order 21, Rule 101 all questions as to right, title or
interest in the property can be considered while hearing
such objection. In other words, under the Code of Civil
Procedure, there is specific remedy provided to a party
aggrieved by the order of attachment or dispossession.
12. Section 22(1) of the RDB Act specifically sets out that,
the Tribunal and the Appellate Tribunal shall not be bound
by the procedure laid down by the Code of Civil Procedure,
1908 (5 of 1908), but shall be guided by the principles of
natural justice and, subject to the other provisions of this
Act and rules. By virtue of sub-section (2) certain powers of
the Code of Civil Procedure, have been conferred on the
Tribunal. Under section 22(2)(e) that power includes the
power of review. Rules have been framed which are known
as the Debt Recovery Tribunal (Procedure) Rules, 1993.
Rule 5-A(1) reads as under:
“5-A. Review-
(1) Any party considering itself aggrieved by an order made
by the Tribunal on account of some mistake of error
apparent on the fact of the record desires to obtain a review
of the order made against him, may apply for a review of
the order to the Tribunal which had made the order.”
13. A reading, therefore, of section 22(2)(e) and Rule 5-
A(1) would result in holding that the Tribunal or Appellate
Tribunal has been conferred the power of review. Rule 5-
A(1) however uses the expression “any party”. The
expression used in Order 47, Rule 1 of the Code of Civil
Procedure, is “any person”. The language in the two
statutes, therefore, is different and distinct. Insofar as the
Code of Civil Procedure is concerned, the language is
wider, in that, any person aggrieved can prefer a Review
whereas insofar as Rule 5-A(1) is concerned there it is
limited to parties to the proceedings. The power of review
therefore conferred on the Debts Recovery Tribunal cannot
be exercised by a party other than a party to the
proceedings.

15. Proceeding further, the Full Bench approved the

observations in another judgment cited and stated the law
as thus:
While it is true that in form a remedy was available against
the order dismissing the application under Order 21, Rule
90 inasmuch as Order 43, Rule 1(j) provides for an appeal
against such an order, the existence of the remedy, in
circumstances, as in this case, where no evidence at all was
adduced, would be more imaginary than real.”
16. If we examine, therefore, the remedy if available to the
person like the petitioners, under section 20, the question
would be whether this is an effective remedy or is it elusive.
In the appeal preferred, the Tribunal would be bound to
consider the record as it stands. The question of invoking
the provisions of Order 41, Rule 27 assuming it is
applicable would not be attracted as is only meant in a case
of producing additional evidence. We are dealing with a
case where a party had no opportunity even to plead his
case. The question therefore of leading evidence in the
absence of any pleading would be futile. Section 20 though
a remedy available would not be an effective remedy at law.
17. The other remedy which is available in respect of an
order passed by recovery officer, is section 30 of the Act. By
virtue of section 30 notwithstanding anything contained in
section 29, any person aggrieved by an order of the
Recovery Officer made under the Act has to challenge that
order within thirty days. Section 26(1) of the Act will also
have to be considered, which reads as under:
“26(1). It shall not be open to the defendant to dispute
before the Recovery Officer the correctness of the amount
specified in the certificate, and no objection to the
certificate on any other ground shall also be entertained by
the Recovery Officer.”
18. In other words, it is not open to the Recovery Officer to
go beyond the certificate. The grant of declaration in
favour of a financial institution, cannot be gone into by the
Recovery Officer. The Recovery Officer having no power to
go in that issue, the question of section 30 being an
effective remedy would again be elusive. In our opinion,
therefore, the remedy under section 30 in a case where the
Tribunal has given a declaration would again be elusive
and non-effective, as the Recovery Officer cannot go behind
the order or certificate issued by the Tribunal and/or
Recovery Officer.
19. We may now refer to the provisions of section 29 of the
RDB Act. Section 29 makes applicable the provisions of
second and Third Schedules of the Income Tax Act and the
Income Tax (Certificate Proceedings) Rules, 1962
applicable for execution of the recovery certificate under
the RDB Act. Under the Second Schedule, proviso, recovery
of tax in the instant case for the recovery of amount under
the order/certificate various modes of recovery have set out
under Rule 4. Under Order 38, Rule 11 of the Code of Civil
Procedure, if a claim is preferred or objection is preferred
for attachment or sale in execution of the certificate on the
ground that such property is not liable for such attachment
or sale, it is open to the Investigating Officer to examine
the same. Here also, the same difficulty would arise
inasmuch as what the Investigating Officer can do is to
hear the challenge to the attachment. It will not be open to
the Investigating Officer to go behind the order or
certificate. If the order and/or the certificate has given a
declaration that the property is validly mortgaged in favour
of financial institution, such an exercise cannot be
undertaken by the Investigating Officer. It is only in the
event, if there been order/certificate for money and
pursuant to that certificate, property of the judgment debtor
is sought to be recovered in terms of Rule 4 or recovery by
attachment or sale of immovable property then only Rule 11
apply. That Rule will not apply in a case where the property
was mortgaged and where the declaration was given in
favour of the financial institution. The remedy, therefore,
under section 29 also is not available to a party like the
petitioners. Our attention is invited to the judgment of a
learned Judge of Karnataka High Court, in the case of
(Actia Technologies Pvt. Ltd., v. Canara Bank)2, reported
 in 2006 (2) Bank C.L.R. 169 (Kant.). In that case the
property was put for sale by the Recovery Officer. The
contention of the petitioners was that the property never
belonged to the judgment debtor nor was mortgaged with
the Bank as a security of payment of loan count. The Court
after observing the various provisions of the Act, came to
the conclusion that a writ petition could not be entertained,
as a alternate remedy was available to the petitioners
before it. In that case on the facts we may note that there
appears to have been no declaration given by the Tribunal
that the property was validly mortgaged.
20. Does the Act provide any remedy to a person like the
petitioners. The Court while considering the legislation
which has created a special mechanism for recovery of
dues of financial institution and bearing in mind the
various provisions earlier referred which exclude the
jurisdiction of other courts and Tribunals wall have to
examine, whether an effective remedy is available under the
Act itself. If a remedy is not available under the Act, a party
may have a remedy at civil law. If an aggrieved person was
not party to the proceedings before the Debts Recovery
Tribunal, and a party to the proceedings has secured a
decree, based on a fraudulent document, the jurisdiction of
the Civil Court in such a case normally should not be
ousted. For examining whether there is a provision under
the Act, let us consider section 19(25) of the RDB Act,
which reads as under:
“19(25). The Tribunal may make such orders and give such
directions as may be necessary or expedient to give effect to
its orders or to prevent abuse of its process or to secure the
ends of justice.”

24.Every Public auction sale is subject to confirmation by the

Recovery Officer in terms of Rule 56, Second Schedule,
Income Tax Act, 1961 read with Section 29 of the RDB Act.
25.In the present matter, the auction sale conducted on 29.08.2023
is subject to confirmation by Recovery Officer as mentioned
above and said auction sale conducted on 28.08.2023 has not
been confirmed in the favour of M/s Shakuntalam as I.As filed
by UPSIDA , M/s Authum and M/s Chandra Laxmi are pending
in the present RP.
26.It was observed since first time three bidders had shown
interest in the auction and deposited huge amount towards
EMD, rather than disqualifying the said intending bidders, an
opportunity was given to all three bidders in their respective
flaws.
27.Since public e-auction was rescheduled form 17.08.2023 to
28.08.2023 which was less than one calendar month, no fresh
proclamation was required to be issued in terms of Rule 15 of
the Second Schedule of the Income Tax Act.
28.After consideration that the e-auction was conducted as per
relevant Rules of the Second Schedule of the Income Tax Act,
1961 and in compliance of the directions of the Hon’ble P.O.
DRT-2 Mumbai. Therefore, keeping in the facts in the present
matter and provisions of Rule 61 read with proviso (a) thereof
and also in order to maintain judicial discipline, Tribunal
preferred to refrain at this stage, from deciding whether Rule 61
is applicable or not in the I.As. filed by UPSIDA and M/s
Authum.
29.Regard the applicability of term number 4 of the sale
proclamation dated 06.07.2023. The hon’ble presiding officer,
DRT-2 Mumbai, has directed intra alia, … “…. to conduct the
E auction fairly and transparently, as per the Minutes of The
Order exhibit 8”. The said exhibit 8 was the Minutes of The
 Order, which was agreed between the parties pursuant to the
arguments in the miscellaneous appeal No. 1855 of 2023 and
was signed by the (i) counsel for the appellant(M/s Trivesh) (ii)
counsel for the intervener(M/s Shakuntalam), (iii) counsel for
R-2(ARCIL) and R-3(SASF) and counsel for R-1. No
documentary evidence has been placed on record in the present
recovery petition by any party, whether the Ld. O.L. attached to
hon’ble Delhi High Court representing M/s Daewoo had
obtained authorization and/or approval of the hon’ble High
Court of Delhi as per rules and procedures to instruct the Ld.
Counsel appearing for the Ld. O.L. to become party to the said
Minutes of The Order. As per the exhibit 8 (filed by ARCIL) (i)
the successful bidder shall credit the bid amount less the EMD
tendered, along with EMD, to the account of ARCIL in HDFC
Bank Limited Kamala Mills compound branch, Senapati,
Baghpat, Marg, Lower Parel, Mumbai, 400013. The EMD of
the successful bidder shall be transferred to the said account of
the ARCIL by the learned recovery officer upon successful bid
being declared and (iii) EMD of the unsuccessful bidder shall
be refunded by the recovery officer directly to the unsuccessful
bidder. Thus, Term No. 4 of the Sale Proclamation dated
06.07.2023 is fully applicable, except to the extent modified by
the hon’ble presiding officer, DRT-2 Mumbai with regard to the
deposit of EMD and balance sale consideration of the
successful bidder in the specified bank account of the ARCIL,
the present RP.

30.The tribunal has carefully examined the copies of the bid

documents originally submitted by M/s Shakuntalam vide Exh-
817 and found DD No. 501885 dated 09.08.2023 of ICICI
Bank for Rs 35.50 Crore in the name of RO DRT-II Mumbai,
towards the EMD in respect of the open public e-auction of the
Mortgaged property conducted on 28.08.2023 bears the
Purchaser name “ASHISH GUPTA.” In other words, M/s
Shakuntalam did not submit its EMD with its bid, therefore
there is clear violation of Term No. 4 of the said Sale
Proclamation dated 06.07.2023 and irregularity on the part of
M/s Shakuntalam, as the EMD was not submitted. There is
nothing on record to prove that said individual, namely Mr
Ashish Gupta, is either a Director or a shareholder of M/s.
Shakuntalam. The Ld. Counsel for M/s. Shakuntalam has
admitted that whatever violation is there, it is under the
Companies Act. Here I consider it appropriate to note that
violation of provisions one enactment cannot be accepted as
legally permissible in another enactment while monitoring
and/or ensuring compliance of another enactment unless, of
course, such violation has been given specific relaxation and/or
exemption by the Competent Authority under the said particular
enactment on a particular date. Till the date of open public E-
auction conducted on 28.08.2023 and even as on date of
conclusion of the detailed arguments Shakuntalam has neither
placed on record any such specific relaxation and Oregon
exemption from the competent authority on the Companies Act
nor has M/s. Shakuntalam placed on record whether the said
deposit of EMD by an individual Mr Ashil Gupta has been
ratified under the provisions of the relevant Act. In view of the
relevant rules of Second Schedule to Income Tax Act read with
Section 29 of RDB Act along with terms and conditions of the
 sale proclamation dated 06.07.23, the tribunal was of the view
that provisions abovementioned are mandatory. Since there was
non-compliance with the aforesaid provisions of the rules and
terms of the Sale Proclamation, there was no proper submission
of bid by M/s. Shakuntalam at all. Therefore, the application
for confirmation of sale filed by M/s. Shakuntalam was
rejected.

CONCLUSION

31. It is matter of record that the auctions have failed consistently. In our
view the order of the RO is not in accordance with the law. It was
required not to cancel the auction and to direct UPSIDA and M/s Authum
to deposit the equal amount deposited by M/s Shakuntalam and hold on
inter se bidding between them to fetch the best sale consideration. It is
correct that there is no provision in the DRT Act for inter se bidding but it
is not barred as well. In many other cases it has happened and there are
judicial precedents as well. Now M/s Shakuntalam need to file an appeal
within 30 days i.e., up to 17th Feb, 2024.