Case Note & Summary
The appellant, Sri Ramesh Meher, was a successful bidder in an auction conducted by the Recovery Officer, Debt Recovery Tribunal, Bangalore, for the sale of property belonging to the third respondent, a borrower of UCO Bank (second respondent). The auction was held pursuant to a Recovery Certificate issued in OA No.399/2004. The appellant deposited 10% earnest money and, being the highest bidder at Rs.1,25,60,001/-, deposited 25% of the bid amount on the same day. He later deposited the balance 75% on 24.7.2009, totaling full payment. Despite this, the Recovery Officer did not issue a sale certificate, leading the appellant to file a writ petition (W.P. No.37978/2009) seeking a direction to issue the certificate. The learned Single Judge dismissed the writ petition on 20.3.2013, holding that the sale had not been confirmed and that the appellant had no right to the certificate. The appellant appealed. The Division Bench allowed the appeal, holding that the sale was complete upon acceptance of the bid and deposit of the full amount, and the Recovery Officer was bound to issue the sale certificate under Rule 57 of the Second Schedule to the Income Tax Act, 1961, read with Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. The court set aside the Single Judge's order and directed the Recovery Officer to issue the sale certificate within four weeks.
Headnote
A) Debt Recovery - Auction Sale - Sale Certificate - Issuance - Recovery of Debts Due to Banks and Financial Institutions Act, 1993, Section 29 read with Second Schedule to Income Tax Act, 1961, Rules 56, 57, 58, 59, 60, 61 - The court considered whether a sale certificate must be issued to an auction purchaser who has paid the full bid amount, even if the sale has not been formally confirmed by the Recovery Officer. Held that the sale is complete upon acceptance of the bid and deposit of the full purchase price, and the Recovery Officer is bound to issue the sale certificate. The confirmation of sale is a ministerial act and cannot be withheld arbitrarily. (Paras 1-10)
B) Debt Recovery - Writ Jurisdiction - Interference with Auction Sale - The court reiterated that a writ court should not interfere with an auction sale conducted by a Recovery Officer except on grounds of fraud or substantial irregularity. In the present case, there was no such irregularity, and the appellant had complied with all conditions. (Paras 11-15)
Issue of Consideration
Whether the Recovery Officer is justified in refusing to issue a sale certificate to the auction purchaser after full payment of the bid amount, on the ground that the sale had not been confirmed?
Final Decision
The Division Bench allowed the writ appeal, set aside the order of the learned Single Judge dated 20.3.2013 in W.P. No.37978/2009, and directed the Recovery Officer to issue the sale certificate to the appellant within four weeks from the date of receipt of the order.
Law Points
- Auction sale is complete upon acceptance of bid and deposit of full purchase price
- Sale certificate must be issued even if sale confirmation is not separately recorded
- Recovery Officer's duty to issue sale certificate under Section 29 of RDB Act read with Rule 57 of Second Schedule to Income Tax Act
- 1961
- Writ Court's interference with auction sale only on grounds of fraud or substantial irregularity
Case Details
2013 LawText (KAR) (12) 21
Writ Appeal No.3995/2013 (GM-DRT)
D.H. Waghela, Chief Justice, S.N. Satyanarayana, J.
The Recovery Officer, Debt Recovery Tribunal, Bangalore; UCO Bank Ltd., Davangere Branch; P. Ravindran
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Nature of Litigation
Writ appeal against dismissal of writ petition seeking direction to Recovery Officer to issue sale certificate after auction purchase.
Remedy Sought
Appellant sought setting aside of order dated 20.3.2013 in W.P. No.37978/2009 and direction to issue sale certificate.
Filing Reason
Recovery Officer refused to issue sale certificate despite full payment of bid amount, on ground that sale was not confirmed.
Previous Decisions
Learned Single Judge dismissed W.P. No.37978/2009 on 20.3.2013, holding that sale was not confirmed and appellant had no right to sale certificate.
Issues
Whether the Recovery Officer is justified in refusing to issue a sale certificate to the auction purchaser after full payment of the bid amount, on the ground that the sale had not been confirmed?
Whether the writ court should interfere with the auction sale conducted by the Recovery Officer?
Submissions/Arguments
Appellant argued that he had complied with all conditions of auction and paid full amount, and was entitled to sale certificate under Rule 57 of Second Schedule to Income Tax Act.
Respondents argued that sale was not confirmed and therefore no right to sale certificate accrued.
Ratio Decidendi
The sale of property in auction by the Recovery Officer is complete upon acceptance of the bid and deposit of the full purchase price. The issuance of a sale certificate is a ministerial act that must follow, and the Recovery Officer cannot withhold it on the ground that the sale has not been formally confirmed. The confirmation of sale is not a condition precedent for issuance of the sale certificate under Rule 57 of the Second Schedule to the Income Tax Act, 1961, read with Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
Judgment Excerpts
Appellant, a successful bidder in an auction conducted by first respondent for sale of property belonging to third respondent, pursuant to Recovery Certificate issued in favour of second respondent in OA.No.399/2004 on the file of Debt Recovery Tribunal, Bangalore, has come up in this appeal.
The appellant herein deposited 10% of reserve price towards earnest deposit, participated in auction and, being the highest bidder at Rs.1,25,60,001/-, he deposited 25% of total bid, amounting to Rs.31,40,001/- on the very same day.
In terms of the conditions of bid, appellant was required to deposit the balance 75% within 15 days from the date of auction, which he did on 24.7.2009.
The Recovery Officer is bound to issue the sale certificate under Rule 57 of the Second Schedule to the Income Tax Act, 1961, read with Section 29 of the Recovery of Debts Due to Banks and Financial Institutions Act, 1993.
The sale is complete upon acceptance of the bid and deposit of the full purchase price, and the confirmation of sale is a ministerial act.
Procedural History
The Recovery Officer conducted auction on 1.7.2009; appellant deposited full amount by 24.7.2009; Recovery Officer did not issue sale certificate; appellant filed W.P. No.37978/2009 which was dismissed on 20.3.2013; appellant filed Writ Appeal No.3995/2013 which was allowed on 6.12.2013.
Acts & Sections
- Recovery of Debts Due to Banks and Financial Institutions Act, 1993: Section 29
- Income Tax Act, 1961: Second Schedule, Rules 56, 57, 58, 59, 60, 61
- Karnataka High Court Act: Section 4
