S.S.Parkar, J. (Chairperson) -
(1.) THIS appeal has been preferred by one of the bidders for purchase of the property belonging to the respondent No. 7 at the public auction held on 11th January, 2007, challenging the order dated 29th January, 2007 passed by the Presiding Officer of D.R.T., Pune confirming the sale in favour of the respondent No. 12 and forfeiting the sum of Rs. 50 lacs out of the amount deposited by the appellants. Facts leading to the present appeal are as follows:
The respondent Banks and financial institutions forming a consortium have filed proceeding for recovery of the dues from the respondent No. 7 before the D.R.T. Pending the Original Application, the factory premises of the respondent No. 7 were sought to be sold by consent of the creditors as well as the borrowers after obtaining an order dated 6th December, 2006 from this Tribunal fixing sum of Rs. 8 crores as a reserve price.
(2.) THE notice dated 21st December, 2006 was published in the newspapers in Bombay and in Karnataka State on 26th December, 2006. Pursuant to the said notice three bids were offered and the highest was at respondent No. 12 i. e. Nirani Cements Pvt. Ltd. for Rs. 10.15 crores. The second highest bid was of Katwa Udyog Ltd. for Rs. 10.10 crores and the third highest bid was of the appellants for Rs. 9.80 crores. The said auction was held by the D.R.T. Receivers who submitted their report dated 17th January, 2007 to the D.R.T. Before submission of that report the appellants had by their letter dated 15th January, 2007 increased their offer to a sum of Rs. 10.65 crores and also showed their willingness to deposit 25% of the said amount within three days of the confirmation of the sale and the balance amount of 75% within ten days thereafter. Along with that letter demand draft of Rs. 80 lacs was enclosed. On the following date i.e. on 16th January, 2007 the appellants sent demand draft for Rs. 2 crores so as to make the deposit of 25% of Rs. 10.65 crores. The said increased offer did not find place in the report of the Receivers dated 17th January, 2007. However, by their report of 18th January, 2007 the Receivers mentioned about the said increased offer of the appellants and also about the deposit of two demand drafts for total sum of Rs. 2.80 crores being 25% of the increased offer. Curiously on 19th January, 2007 the appellants tendered an application to the Receivers seeking permission to withdraw the offer submitted by them by their letters dated 15th January, 2007 and 16th January, 2007 and for refund of the amount of Rs. 2.80 crores. The report of the Receivers came up for consideration before the D.R.T. on 29th January, 2007. After considering the report of the Court Receivers and the offers and the highest offer of the respondent No. 12 which was accepted by the Receivers and after considering the withdrawal of the increased offer given by the appellants, the D.R.T., Pune confirmed the sale of the property in question in favour of the respondent No. 12 and ordered forfeiture of Rs. 50 lacs out of the sum deposited by the appellants which is under challenge in this appeal. It may be mentioned here that the appellants who had given the bid on 11th January, 2007 of Rs. 9.80 lacs which was the third highest bid and subsequently by letter of 15th January, 2007 had increased the bid to Rs. 10.65 crores which was thereafter withdrawn on 19th January, 2007 in this appeal again re -offered to purchase the property for the sum of Rs. 10.65 crores. Accordingly, the appellants' prayer in this appeal is firstly, to accept their offer to purchase the property for the sum of Rs. 10.65 crores and to set aside the impugned order confirming the sale in favour of the respondent No. 12. By this appeal the appellants have also impugned the order of D.R.T. forfeiting the sum of Rs. 50 lacs from the earnest money deposited by the appellants. Thus, the appeal raises two questions whether the order of forfeiture of Rs. 50 lacs out of the earnest money deposited by the appellants should be confirmed or set aside and secondly, whether the offer of the appellants to purchase the property for the sum of Rs. 10.65 crores should be accepted and sale in favour of the respondent No. 12 be set aside. In this appeal apart from these two points, two more issues are raised pursuant to the applications being Miscellaneous Application No. 200/2007 filed by the respondent No. 7 and Miscellaneous Application No. 201 /2007 filed by the interveners, Penna Cements Industries Ltd. While the respondent No. 7 wants the property, which is the subject -matter of the auction, to be demarcated so that possession of the only mortgaged property which does not include survey No. 15/3 is handed over to the auction purchaser, to which all the parties including the appellants and other respondents have not taken exception. The interveners who were not aware about the advertisement given for sale of the property have offered to purchase the said property for a sum of Rs. 10.75 crores, being 10% of their offer immediately and to increase the offer, if so required if fresh auction is held in respect of the said property. I, therefore, heard all the parties on the aforesaid issues and propose to deal with them separately as follows:
(3.) THE first issue raised by the appellants is with regard to the impugned order directing forfeiture of the sum of Rs. 50 lacs out of the earnest amount deposited by the appellants. The said order of forfeiture has been passed because vide letter dated 15th January, 2007 the appellants had increased their offer from Rs. 9.80 crores to Rs. 10.65 crores which was withdrawn by their application dated 19th January, 2007. It is not in dispute that the offer of the appellants for the sum of Rs. 10.65 crores was never accepted by the Receivers but only mention was made about it in the supplementary report filed by the Receivers on 18th January, 2007. The offer for this increased price was withdrawn on 19th January, 2007 and by the time when the matter was kept for consideration of the report of the Receivers on 29th January, 2007 it was as good as there was no offer by the appellants for purchase of the property for the increased amount of Rs. 10.65 crores. Going by the terms and conditions of the auction, the only provision for forfeiture of the amount is made in Clause 15 thereof, according to which if the successful bidder does not pay the balance of the purchase price on the date specified by the D.R.T. or if the sale is not completed by reason of any default of the successful bidder, the Receivers shall be entitled to forfeit all the amount deposited by the successful bidder and put up the property for re -auction. Since the appellants were not the successful bidders there was no question of forfeiting the amount deposited by the appellants, and for this reason none of the respondents have ventured to support the order of forfeiture. It is the case of the appellants that though on behalf of some of the creditors forfeiture of the entire earnest amount or the part of the earnest amount deposited by the appellants was not advocated, the Kotak Mahindra Bank strongly supported and submitted that the entire amount should be forfeited. The reasons given in para 6 of the impugned order for forfeiting the sum of Rs. 50 lacs, in my view ex facie appear to be arbitrary and, therefore, need to be set aside.;