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M/S. Garden Pick Pvt. Ltd. v. Central Bank Of India
Factual and Procedural Background
The petitioner challenged the auction process conducted by the respondent-Bank concerning a Plot owned and possessed by the petitioner. The auction was completed on 20.1.2014, with the highest bid accepted from Baibhav Patil of District Harda. The petition contests the auction process following the decision of the Debt Recovery Tribunal, Jabalpur dated 10.1.2014 in S.A No. 187/2013. The petitioner had previously participated in proceedings before the Tribunal, which on 29.10.2013 directed the Bank to proceed with the auction process from the stage of Section 13(4) of the Securitisation and Reconstruction of Financial Assets & Enforcement of Security Interest Act, 2002 ("the Act"). The petitioner now raises objections to the auction process at a belated stage.
Legal Issues Presented
- Whether the petitioner can challenge alleged irregularities in the auction process that preceded the stage of Section 13(4) of the Act, after having acquiesced to the Tribunal's order directing the auction to proceed from that stage.
- Whether misdescription of the property in the auction notice affects the validity of the auction process and the participation of bidders.
Arguments of the Parties
Petitioner's Arguments
- The petitioner contended that the Bank committed irregularities prior to the stage of Section 13(4) of the Act in conducting the auction process.
- The petitioner argued that the ground of irregularity was not urged before the Tribunal and thus can be agitated at this stage.
- The petitioner relied on the Supreme Court decision in Kewal Singh v. Smt Lajwanti (AIR 1980 SC 161) to support the contention that the ground could be raised despite the prior proceedings.
- The petitioner raised that the auction notice misdescribed the property, which allegedly affected participation of more bidders.
Respondent-Bank's Arguments
- The Bank contended that the petitioner had only argued two points before the Tribunal, and the alleged ground of irregularity was available but neither pressed nor pursued.
- The Bank highlighted that the auction process was conducted in compliance with the Tribunal's order from Section 13(4) of the Act onwards.
- The Bank pointed out that bids were received pursuant to the auction notice despite the alleged misdescription, and the highest bid exceeded the reserved price.
- The Bank raised a preliminary objection that the petitioner should have availed the statutory remedy of appeal against the Tribunal's decision, though this was not pursued due to lack of a Presiding Officer.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Kewal Singh v. Smt Lajwanti (AIR 1980 SC 161) | Whether a ground not urged in earlier proceedings can be raised later based on a distinct cause of action. | The Court distinguished the present case from this precedent, noting that the petitioner’s ground was based on the same cause of action and was available earlier but not pursued, thus it could not be raised at a belated stage. |
Court's Reasoning and Analysis
The Court examined whether the petitioner could challenge alleged irregularities preceding the stage of Section 13(4) of the Act after having acquiesced to the Tribunal’s order directing the auction to proceed from that stage. It found that the petitioner had only argued two points before the Tribunal, and the ground now raised was available but never pressed or pursued. The Court held that such a belated challenge is not permissible.
Regarding the alleged misdescription of the property in the auction notice, the Court noted that this issue was raised before the Tribunal and was addressed. The Court accepted the explanation that the change in district name was due to administrative restructuring and that bids were received despite the description. The highest bid exceeded the reserved price, and no claim was made that the price was below the reserve. Therefore, this ground was found without merit.
The Court also considered the preliminary objection about the petitioner’s failure to appeal the Tribunal's decision but did not enforce it due to the absence of a Presiding Officer in the appellate forum, choosing instead to decide on merits.
Holding and Implications
The Court’s final decision was to DISPOSE OF the petition, holding it to be devoid of merits.
The direct effect of this decision is the validation of the auction process conducted by the Bank from the stage of Section 13(4) of the Act onwards, and rejection of the petitioner’s belated challenge. No broader precedent was established beyond the application of principles regarding the timing and availability of grounds for challenge in such proceedings.
Heard, counsel for the parties.
This petition takes exception to the decision of the Debt Recovery Tribunal, Jabalpur dated 10.1.2014 in S.A No. 187/2013.
The petitioner, in effect, is challenging the auction process in respect of Plot which is owned and possessed by him. The auction process has been completed by the respondent-Bank on 20.1.2014 by accepting highest bid given by Baibhav Patil of District Harda.
Challenge to the said auction process before this Court is, essentially, on two counts. Firstly, about the irregularity committed by the Bank which precedes the stage of Section 13(4) of the Securitisation And Reconstruction of Financial Assets & Enforcement Of Security Interest Act 2002 (for short “the Act”). The question is: whether the petitioner can be permitted to challenge the said infirmity at this belated stage having allowed the process from the stage of Section 13(4) of the Act to proceed further in conformity with the order passed by the Tribunal on 29/10/2013 in the proceedings taken out by the petitioner himself.
The argument before us is that the ground on which the petitioner intends to assail the entire auction process was not urged before the Tribunal which had the occasion to decide the proceedings on 29.10.2013 and for which reason it is open to the petitioner to agitate that plea.
We are not impressed with this submission at all. In the first place, the order dated 29.10.2013 makes it amply clear that the petitioner had argued “only two points” before the Tribunal, as can be discerned from paragraph 5 of the said order of the Tribunal. The Tribunal after considering those two points passed the order in favour of the petitioner to the effect of directing the Bank to follow the procedure from the stage of Section 13(4) of the Act. Secondly, as aforesaid, the petitioner not only acquiesced of the order dated 29.10.2013, but also allowed the auction process from the stage of Section 13(4) to proceed further. The fact that the said ground was available and has not been pointedly answered by the Tribunal in its order dated 29.10.13, therefore, cannot be the basis to overturn the entire process which otherwise proceeded in compliance with the mandatory provisions from the stage of Section 13(4) of the Act as ordered by the Tribunal on the application filed by the petitioner.
Counsel for the petitioner relied on the decision of the Apex Court in the case of Kewal Singh v. Smt Lajwanti (AIR 1980 SC 161), in particular, exposition in paragraph 5 of the judgment.
In the present case, however, the ground which is sought to be urged is not on account of distinct cause of action as was the case in the reported decision. The ground was very much available to the petitioner in the first round on the basis of the same cause of action but was never pressed into service nor pursued to its logical end.
The petitioner then contends that there is mis-description of the property in the auction notice published by the Bank.
This contention was raised before the Tribunal. The Tribunal has noted in second paragraph of the impugned order that the counsel appearing for the petitioner fairly conceded at the time of arguments that, in fact, at the time of mortgaging, the property was situated in District Hoshangabad and subsequently, after restructuring, new District Harda was formed, and now the property is situated in district Harda.
The counsel submits that if proper description of the property was notified, some more bidders would have participated in the auction process.
It is not the case of the petitioner that due to misdescription, no offers were received. From the communication tendered across Bar by the counsel for the Bank, it is obvious that the bids were received pursuant to the auction notice and the auction was confirmed in favour of the highest bidder on 20.1.14 Incidentally, the said highest bidder is resident of New LIC Colony in district Harda (MP). In that sense, the ground raised by the petitioner that more residents of district Harda would have participated, is devoid of any substance. Further, it is not the case of the petitioner that the auction price which has been accepted by the Bank is below the reserved price. The reserved price of the Plot in question was fixed at Rs. 11,000,00/-(Rupees eleven lacs), whereas the highest bid which has been accepted by the Bank is over Rupees fifteen lacs and fifty one thousand.
The action of the Bank in fixing the reserved price at Rupees Eleven Lacs has not been challenged.
Taking any view of the matter, therefore, even second ground urged before us does not merit consideration.
No other ground has been urged before us.
We are of the opinion that this petition is devoid of merits.
We, however, place on record the preliminary objection raised by the respondent that the petitioner ought to have resorted to the statutory remedy of appeal against impugned decision of the Tribunal. We did not invoke that objection as we are in agreement with the submission of the petitioner that the said remedy, though provided by the statute, is not available as of now for want of Presiding Officer in the said Tribunal. Therefore, we thought it appropriate to examine the matter on merits.
Petition disposed of, accordingly.
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