RAMSONS GARMENT FINISHING EQUIPMENTS P LTD Vs. SMALL INDUSTRIES DEVELOPMENT BANK OF INDIA
LAWS(DR)-2005-11-4
DEBTS RECOVERY APPELLATE TRIBUNAL
Decided on November 18,2005

Appellant
VERSUS
Respondents

JUDGEMENT

K.Gnanaprakasam, - (1.) THIS appeal has arisen this way. It appears that during the pendency of the OA, an advocate commissioner was appointed to bring the properties listed in the OA, in auction, and accordingly the advocate commissioner fixed the date of auction on June 29, 2005. The appellant was one of the participants in the auction. The appellant and several others have sent their offer in a sealed cover and all the covers were opened on June 29, 2005, i.e., on the date of auction. It is stated that the appellant had quoted Rs. 34 lakhs as the offer amount. M/s. Progressive Associates, who is impleaded as the fourth respondent in this appeal, also took part in the auction and submitted their offer in a sealed cover for Rs. 20 lakhs. Other offers in the sealed covers were less than these offers. The Advocate Commissioner having opened the covers, found that Rs. 34 lakhs offered by the appellant was the highest one and fixed the said price as the base price and put the property in open auction. That in the said process, one Mr. Rajeswar Rao of M/s. Sri Rajarajeswari Steel Traders, bid for an amount of Rs. 35,50,000 and he was declared as the successful bidder in the auction held on June 29, 2005 and he was directed to deposit 25 per cent, of the said amount within 24 hours as could be seen from the proceedings of the advocate commissioner, which is available at page 2 of the typeset of papers filed by the first respondent-bank. The advocate commissioner filed another memo dated July 4, 2005, which is available at page 3 of the same typeset of papers, wherefrom it is made out that Mr. Rajeswar, the successful bidder deposited a sum of Rs. 9,60,000 towards compliance of the condition of deposit of 25 per cent, of the bid amount and he undertook to deposit the balance amount on or before July 14, 2005. Subsequently, the advocate commissioner by his letter dated July 19, 2005, addressed to the appellant herein stating that Mr. Rajeshwar failed to deposit the balance amount, hence the preliminary sale in his favour was set aside. If the appellants are willing to accept the said bid amount, they are called upon to deposit a sum of Rs. 35,50,000 by way of demand draft or bankers cheque in favour of "The Registrar, D. R. T. Hyderabad". Accepting the offer made by the advocate commissioner, the appellant by its letter dated July 25, 2005, sent a demand draft for Rs. 35,50,000 favouring the Registrar, DRT, Hyderbad. On receipt of the entire sale consideration from the appellant, the advocate commissioner by his letter dated July 25, 2005, sent a letter of confirmation of sale informing, "in pursuance of auction on June 29, 2005, and your letter dated July 25, 2005, the plant and machinery belonging to M/s. Saaf Laundromat P. Ltd. is sold to you and hereby acknowledged that you have paid a sum of Rs. 35,50,000 towards full sale consideration by way of DD enclosed to your letter dated July 25, 2005. You are hereby directed to lift the machinery within 15 days from today, in the absence of any agreement with the land lady in relation to lease agreement in your favour. Please make it convenient to attend panchanama proceedings on July 26, 2005, at 3.00 pm for preparation of list of items being handed over to you". The advocate commissioner sent a similar letter to the respondent-bank also : Subsequently, it appears that without any notice or order, the demand draft of Rs. 35,50,000 which was sent by the appellant, in favour of the Registrar, DRT, Hyderabad, was returned without even any covering letter and on receipt of the same, the appellant addressed letter to the PO of DRT, Hyderabad, on August 4, 2005, marking a copy to the advocate commissioner wherein it is stated that subsequent to the confirmation of sale in favour of the appellant by the advocate commissioner, the demand draft has been returned to the appellant without any authority and the cancellation of sale was protested and the demand draft was also received under protest. It appears that the advocate commissioner has further advertised for the sale of the property in auction sale to be held on August 12, 2005. As against the cancellation of the confirmation of sale in favour of the appellant and also bringing the property in a fresh auction, the appellant has preferred this appeal.
(2.) During the pendency of the appeal, M/s. Progressive Associates have filed an application to implead themselves in the appeal and the appellants as the first respondent have agreed that the said application may be allowed without prejudice to their rights and contentions and the said petition was allowed subject to their objections. I have heard the learned advocate for the appellant and respondents.
(3.) THE learned advocate for the appellant would contend that in response to the auction sale, which was scheduled to be held on June 29, 2005, the appellant and several persons have sent their offer by sealed covers. As per the directions of the advocate commissioner, all the covers were opened on the date of auction and the appellant's offer of Rs. 34 lakhs was the highest. But however, the advocate commissioner wanted to put the property in open auction fixing the offer amount of the appellant as the base price and one Mr. Rajeswar Rao had offered Rs. 35,50,000 and, therefore, the advocate commissioner confirmed the sale in his favour. As Mr. Rajeswar Rao failed to deposit the amount as directed by the advocate commissioner, sale in his favour was cancelled and as the appellant had offered Rs. 34 lakhs in the sealed cover, which was the highest offer, the Advocate Commissioner sent a letter to the appellant to offer his acceptance if he is willing to purchase the property for the very same price of Rs. 35,50,000 and the appellant also accepted the offer and also sent the demand draft for the entire amount and after having accepted the offer made by the appellant, the advocate commissioner also confirmed the sale in favour of the appellant and sent a letter of confirmation of sale on July 25, 2005, and called upon the appellant to lift the machinery also and directed the respondent-bank also to be present on July 26, 2005, to hand over the machinery to the appellant. That in the meanwhile, without any reason or rhyme, the advocate commissioner seems to have cancelled the sale in favour of the appellant and the demand draft was returned to the appellant and the same was received by the appellant under protest and the same was intimated to the Advocate Commissioner and also to the Debts Recovery Tribunal. THE learned advocate for the appellant submits that no reason has been adduced either by the advocate commissioner or by the Debts Recovery Tribunal for the cancellation of confirmation of sale in favour of the appellant. It is further submitted that the advocate commissioner having confirmed the sale, he has become functus officio, and the sale cannot be set aside. It is further pointed out that the Debts Recovery Tribunal has also not passed any order on intimation to the auction purchaser cancelling the sale. Even if any order has been passed either by the advocate commissioner or by the Debts Recovery Tribunal against the bank or the appellant, the same is not binding upon the appellant.;


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