C.N. Paramasivan v. Sunrise Plaza, represented by its Partner Kalyanasundaram No.637-638 (321-C), Poonamallee High Road Aminjikarai, Chennai-600 029

For Petitioners : Mr.R.MurariFor Respondents : Mr.T.V.Ramamujam Senior Counsel for Mr.S.Ramesh Advocate for Respondents 1 to 3 Mr.M.Vijayan for M/s. King & Partridge for R4. O R D E RC.NAGAPPAN, J.The petitioners have sought for issuance of a Writ ofCertiorari to quash the order dated 28.2.2007 passed by the DebtRecovery Appellate Tribunal, Chennai in MA.No.90 of 2006.2. The facts which led to the filing of the writ petitionare as follows. The first respondent is a PartnershipFirm and respondents 2 and 3 are its partners. The firstrespondent availed loan from the fourth respondent Bank to thelimit of Rs.90 lakhs on 9.9.1991. The respondents 2 and 3 alsocreated equitable mortgage on their properties by depositing thetitle deeds for the said loan. There was default inrepayment and for recovery, the fourth respondent herein filedOriginal Application in O.A.No.238 of 1998 on the file of DebtsRecovery Tribunal at Chennai and it was re-numbered asO.A.No.1098 of 2001. 3. Respondents 1 to 3 were set exparte on 25.2.1999and exparte Decree also came to be passed on 20.9.1999. Therespondents 1 to 3 filed Application in I.A.No.2240 of 1999 forsetting aside the exparte order and Application in I.A.No.2606of 1999 for setting aside the exparte Decree. TheApplications were dismissed for default on 20.11.2001. Therespondents 1 to 3 herein filed I.A.Nos.897 and 898 of 2001to restore the Interlocutory Applications in I.A.Nos.2240and 2606 of 1999 and they were dismissed on 1.5.2002. 4. In the meanwhile, in execution of the RecoveryCertificate, the immovable property was brought to sale bypublic auction held on 7.3.2003 and the petitioners herein tookpart in the auction and purchased the property. Therespondents 1 to 3 filed I.A.No.146 of 2003 for setting aside theauction held on 7.3.2003 and I.A.No.150 of 2003 seeking fornot to confirm the sale. The Debts Recovery Tribunalpassed a conditional order, dated 10.4.2003 in I.A.No.150 of2003 to defer the confirmation of sale on condition therespondents 1 to 3 paying a sum of Rs.10 lakhs tothe Bank or to the Recovery Officer on or before 25.4.2003. TheTribunal dismissed I.A.No.146 of 2003 on 15.4.2003 as notmaintainable. When the matter was called on 25.4.2003, therespondents 1 to 3 sought for extension of time and the DebtsRecovery Tribunal rejected the request and allowed the https://hcservices.ecourts.gov.in/hcservices/ Recovery Officer to proceed further in accordance with law.Sale Certificates were issued to the petitioners on 28.5.2003. 5. The respondents 1 to 3 herein filed appeal inIN.No.197 of 2003 challenging the orders passed by the DebtsRecovery Tribunal-II, Chennai in I.A.Nos.897 and 898 of 2001 andthe Debts Recovery Appellate Tribunal, by order dated 29.8.2003directed the appellants therein/respondents 1 to 3 herein to payrequisite Court fee if they want to challenge the final orderof Debts Recovery Tribunal. Challenging the abovesaid order ofthe Appellate Tribunal, the respondents 1 to 3 herein filedWrit Petition in W.P.No.28235 of 2003 without notice to theCourt auction purchasers viz. the petitioners herein and thisCourt by Order dated 14.10.2003 set aside the exparte Decreepassed by the Debts Recovery Tribunal subject to payment ofcosts of Rs.10,000/- to the fourth respondent Bank. Theorder was complied with and the Original Application is stillpending. 6. Challenging the Order of this Court inW.P.No.28235 of 2003, the fourth respondent Bank haspreferred Special Leave Petition before the Supreme Court andit was dismissed by Order dated 8.7.2004. Thereafter, thefourth respondent Bank filed Review Application No.13 of 2004and the petitioners herein filed Review Application No.19 of2004 seeking for review of the Order dated 14.10.2003passed in W.P.No.28235 of 2003 and this Court dismissed theReview Applications by Order dated 5.10.2004 by observing thatthe auction purchasers are free to represent their case beforethe Debts Recovery Tribunal in the main Original Application.7. Based on the above observation, the petitioners hereinfiled Application in I.A.No.20 of 2005 on the file of DebtsRecovery Tribunal-II, Chennai seeking for delivery ofpossession of the property purchased by them. The DebtsRecovery Tribunal, by order dated 28.3.2006, allowed theApplication by directing the Recovery Officer to put thepetitioners in possession of the property. The respondents 1to 3 herein challenged the said order by preferring Appeal inM.A.No.90 of 2006 before the Debts Recovery Appellate Tribunal,Chennai and the Appellate Tribunal by order, dated 13.7.2006,allowed the appeal and set aside the order and directed theDebts Recovery Tribunal to take up the InterlocutoryApplication in I.A.No.20 of 2005 along with O.A.No.1098 of2001 and dispose of them in accordance with law. Challengingthe said order, the petitioners herein preferred writ petitionin W.P.No.29356 of 2006 and a Division Bench of this Court,by Order dated 29.11.2006, set aside the order of theAppellate Tribunal and remitted the case to Debts RecoveryAppellate Tribunal to decide the issue whether the rights ofthe bonafide purchasers stand curtailed or not even after theexparte Decree is set aside. On remand, the DebtsRecovery Appellate Tribunal held that the petitioners hereinare not bonafide purchasers of the property and set aside the https://hcservices.ecourts.gov.in/hcservices/ sale and directed the respondents 1 to 3 to deposit the entireamount claimed in Original Application. The said impugnedorder is challenged in the present writ petition.8. Mr.R.Murari, learned counsel for the petitioners,submitted that the petitioners were not made parties to anyApplication filed by respondents 1 to 3 and the question ofbeing aware of any such Application at the time when the sale wasconfirmed in their favour would not arise and the finding of theDebts Recovery Appellate Tribunal that the petitioners were live tothe litigation between the Decree Holder and the Judgment Debtorsand purchased the properties with a view to make a capital out ofit and they are not bonafide purchasers and their purchasecannot be lawfully protected is totally incorrect andliable to be set aside. It is his further contentionthat though the petitioners were not aware of the petitionsfiled by the respondents 1 to 3/Judgment debtors to set asidethe sale, it however transpires that the Recovery Officerhad passed conditional order directing them to deposit a sumof Rs.10 lakhs as pre-condition for the sale not beingconfirmed and they failed to comply with such a condition andthe petitions were dismissed and the sale was confirmed andtherefore the respondents 1 to 3 could not be permitted torely upon any such application at this point of time andthe petitioners who are strangers to the Court proceedings havepurchased the properties in the Court auction sale and thesale has been confirmed and they are bonafide purchasers andthe sale in their favour is protected and they cannot beasked to restitute the properties to the Judgment Debtorseven if the Decree is set aside and as bonafidepurchasers, they are entitled to possession of the propertiesand the order of the Appellate Tribunal is erroneous andliable to be set aside. In support of his submission,he relied on the following decisions of the Supreme Court andthis Court."1.JANAK RAJ V. GURDIAL SINGH (AIR 1967SUPREME COURT 608)2. GURJOGINDER SINGH VS. JASWANT KAUR (SMT) ANDANR. (SC) (1994) 2 SCC 368)3. PADANATHIL RUQMINI AMMA V. P.K.ABDULLA(1996) 7 SCC 668)4. ASHWIN S.MEHTA AND ANOTHER V. CUSTODIANAND OTHERS (2006) 2 SCC 385)5. JANATHA TEXTILES AND ORS. VS.TAX RECOVERY OFFICER AND ANR. (2008)8 SCALE 76)6. S. CHOKALINGAM ASARI V. N.S.KRISHNA IYERAND OTHERS (A.I.R. 1964 MADRAS 404)" https://hcservices.ecourts.gov.in/hcservices/

9. Per contra, Mr. T.V. Ramanujam, learned SeniorCounsel appearing for the respondents 1 to 3/Judgment Debtorssubmitted that the petitioners are not bonafide purchasersfor valid consideration and the properties have been soldfor a pittance while the actual value is more than Rs.8Crores and the petitioners were well aware of theApplications filed by the respondents 1 to 3 herein forsetting aside the exparte Decree and to stay the sale andwith the knowledge of pending litigation, the purchase hasbeen made and such purchase is not legally protected andin any event the Application seeking possession has beenfiled beyond the statutory period of limitation viz.one year, as prescribed under Article 134 of the LimitationAct and it is hit by limitation and hence it is notmaintainable. The learned Senior Counsel further contendedthat the auction sale proceedings became void due tooperation of Rule 57 Second Schedule to Income Tax Act,1961, when the Auction Purchasers failed to deposit 25% ofthe auction amount on the date of auction after declarationas successful bidders and even after default of such deposit,the property was not re-sold and further the Auction purchasershad failed to deposit the balance of purchase money within aperiod of fifteen days as mandated in Rule 57 as well as inthe Terms and Conditions of sale and the Sale had becomenull and void and the Sale proceedings are completely wipedout as if they do not exist in the eye of law and thepetitioners are not entitled to possession and order ofthe Appellate Tribunal is sustainable. In support of hissubmission, the learned Senior Counsel relied on thefollowing decisions of the Apex Court and High Court."1. MANILAL MOHANLAL SHAH AND OTHERS V. SARDARSAYED AHMED SAYED MAHMAD AND ANOTHER (AIR 1954SUPREME COURT 349)2. RAO MAHMOOD AHMED KHAN V.Sh. RANBIR SINGH AND OTHERS (AIR 1995 SUPREMECOURT 2195)3. BALRAM SON OF BHASA RAM V. ILAM SINGH ANDOTHERS (AIR 1996 SUPREME COURT 2781)4. NARAYANA KARWA V. UNION OF INDIA [2008]296 ITR 0545]"10. In reply, Mr. Murari, the learned counsel forthe petitioners submitted that the respondents 1 to3/Judgment Debtors have for the first time raised the pleathat the sale had become null and void because of non-compliance of provisions of Rule 57 of Second Schedule tothe Income-Tax Act, 1961 in the additional counter filed bythe respondents 1 to 3 on 5.11.2009 and the saleproceedings would be conducted by the Recovery Officer as https://hcservices.ecourts.gov.in/hcservices/ per the procedure contained in Second Schedule to Income-TaxAct and the Recovery Officer would follow such Rules containedin Second Schedule as far as possible with necessarymodifications to the extent necessary and there is a discretionconferred on the Recovery Officer under Section 29 of theRecovery of Debts Due to Banks and Financial Institutions Act,1993, to follow Rule 57 as far as possible and it makesRule 57 as directory only and the petitioners haddeposited 25% of the bid amount by Draft and Cheque onthe date of sale itself and the balance of the purchase moneyhas also been deposited and it is not open to therespondents to challenge the sale proceedings on the ground ofviolation in conduct of sale and valuable rights haveaccrued to the Auction purchasers and there is no force inthe submission made by the learned Senior Counsel appearingfor the respondents 1 to 3. In support of this submission,the learned counsel for the petitioners relied on the decisionof a Division Bench of Andhra Pradesh High Court inP.MOHANREDDY AND ORS. VS. DEBTS RECOVERY APELLATE TRIBUNAL AND ORS.(AIR 2004 AP 94).11. From the submissions made at the Bar, it wouldemerge that the sale proceedings are challenged on theground of non-compliance of provision of Rule 57 of SecondSchedule to Income-Tax Act, 1961 for recovering the amount ofdebt due. 12. Section 29 of Recovery of Debts Due to Banks andFinancial Institutions Act, 1993 makes the Second and ThirdSchedules to the Income-Tax Act , 1961 applicable for recoveryof debt due under the Act. Rules 57 and 58 of Second Scheduleto the Income-Tax Act, 1961 are relied upon to have theauction sale set aside for breach of the said Rules. The saidRules read as under."57. Deposit by purchaser and resale indefault:- (1) On every sale of immovable property,the person declared to be the purchaser shall pay,immediately after such declaration, a deposit oftwenty five per cent on the amount of hispurchase money, to the Officer conducting thesale; and, in default of such deposit, theproperty shall forthwith be resold.(2) The full amount of purchase money payableshall be paid by the purchaser to the Tax RecoveryOfficer on or before the fifteenth day from thedate of sale of the property.58. Procedure in default of payment:-In default of payment within the period mentionedin the preceding rule, the deposit may, if the https://hcservices.ecourts.gov.in/hcservices/ Tax Recovery Officer thinks fit, after defrayingthe expenses of the sale, be forfeited to theGovernment, and the property shall be resold, andthe defaulting purchaser shall forfeit all claimsto the property or to any part of the sum forwhich it may subsequently be sold."Similar provisions are contained in Code of Civil Procedure, 1908also. Rule 57 is identically worded as that of Rules 84 and 85 ofOrder 21 of CPC and Rule 58 is identically worded as that of Rule86 of Order 21 of CPC. The principles and decisionsinterpreting Rules 84, 85 and 86 of Order 21 of CPC wouldsquarely apply in case of Rules 57 and 58 of SecondSchedule to Income-Tax Act, 1961. 13. The Supreme Court considered Rules84, 85 and 86 of Civil Procedure Code in the decision inMANILAL MOHANLAL SHAH'S CASE (AIR 1954 SUPREME COURT 349)and laid down as follows. "8. The provision regarding the deposit of 25per cent by the purchaser other than the decree-holder is mandatory as the language of the rulesuggests. The full amount of the purchase moneymust be paid within fifteen days from the date ofthe sale but the decree-holder is entitledto the advantage of a set-off. Theprovision for payment is, however, mandatory(Rule 85). If the payment is not made within theperiod of fifteen days, the court has thediscretion to forfeit the deposit and there thediscretion ends but the obligation of the court tore-sell the property is imperative. Afurther consequence of non-payment is thatthe defaulting purchaser forfeits all claim to theproperty ... (Rule 86). 9. ..... There was default in depositing25 percent of the purchase money and further therewas no payment of the full amount of thepurchase money within fifteen days from the dateof the sale. Both the deposit and the payment ofthe purchase money being mandatory under thecombined effect of rules 84 and 85, theCourt has the discretion to forfeit the depositbut it was bound to re-sell the property with theresult that on default the purchaser forfeited allclaim to the property. These provisions leave nodoubt that unless the deposit and the payment aremade as required by the mandatory provisions ofthe rules there is no sale in the eye of law infavour of the defaulting purchaser and no right toown and possess the property accrues to him. 10. .... 11. Having examined the language of therelevant rules and the judicial decisions bearing https://hcservices.ecourts.gov.in/hcservices/ upon the subject we are of opinion that theprovisions of the rules requiring the deposit of25 per cent of the purchase money immediately onthe person being declared as a purchaser and thepayment of the balance within 15 days ofthe sale are mandatory and upon non-compliancewith these provisions there is no sale at all.The rules do not contemplate that there can be anysale in favour of a purchaser without depositing25 per cent of the purchase money in the firstinstance and the balance within 15 days. Whenthere is no-sale within the contemplation of theserules, there can be no question of materialirregularity in the conduct of the sale. Non-payment of the price on the part of the defaultingpurchaser renders the sale proceedings as acomplete nullity. The very fact that the courtis bound to re-sell the property in the event of adefault shows that the previous proceedings forsale are completely wiped out as if they do notexist in the eye of law. We hold,therefore, that in the circumstances of thepresent case there was no sale and the purchasersacquired no rights at all."The above decision has been followed by the Supreme Court in thesubsequent decision in BALRAM SON OF BHASA RAM'S CASE (AIR 1996SUPREME COURT 2781) and it was held that the duty to pay the fullamount of purchase money within the prescribed period of 15days from the date of sale is cast on the purchaser by virtue ofRule 85 of Order XXI CPC and therefore, the entireresponsibility to make full compliance of the mandatoryprovision is his and non-compliance of the same would renderthe sale a nullity. 14. The Auction Sale Notice, in the present case, isfound in the typed set filed by respondents 1 to 3 and the UpsetPrice fixed was Rs.1,15,00,000/- (Rupees One Crore and FifteenLakhs only) and the Conditions mentioned therein are as follows."1. The intending bidders should pay 10% of theupset price of the property as EMD by means of aD.D. Drawn in favour of the Recovery Officer,Chennai Debts Recovery Tribunal-II, Chennaipayable at Chennai before 12 Noon on the date ofauction. They can inspect the property between11.00 A.M., and 3.00 P.M. on 8.2.2003.2. The successful bidder should pay 25% of thebid amount (less the E.M.D) immediately on thesale being knocked down in his favour and thebalance money within 15 days. https://hcservices.ecourts.gov.in/hcservices/

3. The successful bidder should bear thecharges/fee payable for conveyance such asRegistration fee, stamp duty etc as applicable asper law in addition to poundage fee.4. The Recovery officer has the absolute right toaccept or reject a bid or postpone/cancel thesale.5. ......."The auction was held on 7.3.2003 at 3.30 pm and the petitionersbid for a sum of Rs.1,15,50,000/- (Rupees One Crore and FifteenLakhs and Fifty thousand only) was accepted.15. The petitioners claim that they have paid the depositof 25% on the amount of purchase money on the date of sale itself.As per the order of the Recovery Officer dated 7.3.2003, a copy ofwhich is found in the typed set filed by the respondents 1 to 3,the deposit of 25% of the purchase money is made by thepetitioners in the following manner and for better appreciation,the order is reproduced below."DRC 164/2001 Received Rs.28,87,500/- (Rupees twentyeight lakhs eighty seven thousand five hundredonly) consisting 2 DDs for 11,50,000/- and 2cheques for Rs.17,37,500/- towards 25% bid amountfrom Mr.C.N.Paramasivam, 16, TTK Road, 1st CrossStreet, Alwarpet, Chennai-18 andMr.E.M.C.Palaniappan, 46, Prakasam Street,T.Nagar, Chennai-17 for the properties auctionedon 7-3-2003 in the above DRC proceedings andthe balance bid amount and 1% poundage payable bythe bidders within 15 days is Rs.87,78,000/-."From the above, it is seen that the petitioners have paid a sum ofRs.17,37,500/- (Rupees seventeen lakhs thirty seven thousand fivehundred only) by two cheques while making the deposit of 25%of the amount of the purchase money.16. The Supreme Court, in the decision in RAO MAHMOODAHMED KHAN'S CASE (AIR 1995 SUPREME COURT 2195), while interpretingRule 285-D of the U.P. Zamindari Abolition and Land Reforms Rules,which is regarded as parimateria to Rule 84 of Order XXI ofCPC held that the deposit of 25 per cent of bid amount by chequewill not be a valid tender within the meaning of the Rule and theRule does not contemplate any payment by cheque but a cash depositof 25 per cent of the bid amount and there was non-compliance ofthe rule. For better appreciation, the relevant observation madeby Their Lordships in the said decision are as follows: "11. Thus, it is settled law that theprovisions of Order 21, Rule 84, 85 and 86 of https://hcservices.ecourts.gov.in/hcservices/ the Code of Civil Procedure are mandatory andthe provisions of Rules 285-D and 285-E beingsimilar in terms of the aforementionedcorresponding provisions of the Code of CivilProcedure and in view of the aforesaiddiscussion there is no escape from declaring thesale a nullity if Rule 285-D is not compliedwith. 12. ..... The question is whether such apayment by cheque could be regarded as a validdeposit within the meaning of Rule 285-D. Asdiscussed above Rule 285-D is a mandatory ruleaccording to which if 25 per cent of thebid amount is not deposited immediately theland shall forthwith be again put up and sold.In other words on the failure of the purchaserto deposit 25 per cent of the bid amountimmediately the land shall be resold immediatelyafter such failure the very same day. If forinstance the 25 per cent of the bid amount isaccepted by cheque and subsequently thepurchaser changes his mind and advises hisbanker not to encash the cheque or there is noamount in the account of the purchaser in thebank and the cheque is bounced, the purpose ofRule 285-D would be frustrated and thus themandatory provisions would be rendered nugatory.The result would be that neither the authoritieswould be in a position to forfeit any amount ofthe purchaser nor the authority would be in aposition to defray the expenses of the sale ascontemplated by Rule 285-E. The otherconsequence that will follow is that the re-saleof land will have to be delayed and a freshproclamation for sale has to be issued asprovided by Rule 285-G. It, therefore, appearsto us that Rule 285-D does not contemplate anypayment by cheque but a cash deposit of 25 percent of the bid amount has to be made inaccordance with the requirement of the rule,otherwise the very purpose of the mandatory rule285-D would be frustrated and rendered nugatory.In these facts and circumstances we are of theview that deposit of 25 per cent of the bidamount by cheque will not be a valid tenderwithin the meaning of the rule." 17. Rule 57 of Second Schedule to Income-Tax Act, 1961 is amandatory Rule directing a deposit of 25 per cent on the amount ofthe purchase money immediately on being declared to be thepurchasers and it does not contemplate any payment by cheque buta cash deposit of 25 per cent of the purchase money and hence part https://hcservices.ecourts.gov.in/hcservices/ payment of deposit of 25 per cent of the purchase money by chequeswill not be a valid tender within the meaning of the Rule and therewas no compliance of Rule 57(1) as well as the Conditions ofauction sale.18. The second limb of the contention of the learnedSenior Counsel appearing for the respondents 1 to 3 pertaining tonon-compliance of provision of Rule 57(2) is that the Auctionpurchasers viz. the petitioners had failed to deposit the balancepurchase money within a period of fifteen days from the date ofsale and hence there was no sale at all.19. The payment of balance of purchase money withinfifteen days from the date of sale is mandatory as per Rule 57 andit is also mandatory condition stipulated in the Auction SaleNotice. Moreover, the Recovery Officer in his order dated7.3.2003, referred above, has also reiterated that the balance ofbid amount and one per cent poundage fee payable by thepetitioners within 15 days is Rs.87,78,000/- (Rupees eighty sevenlakhs and seventy eight thousand only). The period of fifteendays from the date of sale lapsed on 22.3.2003. Admittedly, theauction purchasers/petitioners did not pay the balance ofpurchase money till 22.3.2003. They did not also file anypetition seeking for extension of time.20. The petitioners in their letter dated 2.5.2003addressed to the Recovery Officer, a copy of which is foundin the typed set, have stated that after the payment of depositof 25 per cent of the purchase money, they have paid a sum ofRs.10 lakhs on 30.4.2003 and they are remitting on the saiddate, viz. 2.5.2003, a sum of Rs.15,00,000/- (Rupees fifteen lakhsonly) by Pay Order dated 2.5.2003, drawn on Indus Ind Bank;a Cheque for Rs.2,00,000/- (Rupees two lakhs only) dated2.5.2003 , drawn on HDFC Bank and a Cheque for Rs.1,89,000/-(Rupees one lakh and eighty nine thousand only) dated 2.5.2003,drawn on Citi Bank and they have further stated in their letterthat there is a balance of purchase money to the tune ofRs.50,00,000/- (Rupees fifty lakhs only) as on that date and aloan has been sanctioned to them by LIC Housing Finance Limited,Teynampet Branch for a sum of Rs.50,00,000/- (Rupees fiftylakhs only) subject to condition that the Debts RecoveryTribunal would register the property individually in the names ofthe petitioners conveying 50% undivided share of the property ineach person's favour and the balance amount of Rs.50 lakhswould be remitted by LIC Housing Finance Limited, TeynampetBranch on their behalf and the petitioners requested for issuanceof letters individually to them stating the balance and thatthe property would be registered individually in their names asundivided share of land. The petitioners also filed individualmemo dated 6.5.2003 before Debts Recovery Tribunal-II statingthat they have paid a sum of Rs.59 lakhs approximately constituting50% of the bid amount and the balance of 50% remains to be paidand LIC Housing Finance Limited, Teynampet Branch has sanctionedloans in their individual names for the above amount and they https://hcservices.ecourts.gov.in/hcservices/ pray for issuance of Certificate of Sale representing 50% ofundivided share in respect of the property to each of them.Pursuant to the above request of the petitioners, the RecoveryOfficer issued individual Certificate to each of thepetitioners certifying that they are joint successfulbidders of the properties in the Auction held on 7.3.2003 andbalance of Rs.25 lakhs is payable by each of thepetitioners. Thereafter, on 28.5.2003, individual SaleCertificate in the names of the petitioners were issued bythe Recovery Officer. From the above, it is clear that theAuction purchasers/petitioners did not pay the balance ofpurchase money within fifteen days of sale viz. 22.3.2003 andno payment was made during that period and they have paid the fullamount of purchase money only in the month of May, 2003.There was clear non-compliance of Rule 57 and also theConditions of sale.21. A Division Bench of the Bombay High Court in thedecision in NARAYAN KARWA'S CASE [2008] 296 ITR 545)considered Rule 57 of Second Schedule of Income-Tax Act, 1961and held that failure to deposit the entire purchase money on orbefore the fifteenth day from the date of sale not only rendersthe sale invalid but also renders the 25 per cent purchase pricedeposited on the date of auction liable to be forfeited. Forbetter appreciation, the relevant portion of the above decisionis extracted below. "However, in the present case, it is anadmitted fact that respondent No.4 has failedto deposit the entire purchase price withinthe time stipulated under the Act. Accordingto the petitioners, failure to deposit theentire purchase price within the stipulatedtime, not only renders the sale invalid but alsorenders the 25 per cent deposit made on thedate of auction liable to be forfeited. It is not necessary for us to go into thequestion as to whether the failure on the part ofthe auction purchaser to deposit the entirepurchase price within the stipulated timerenders the 25 per cent purchase pricedeposited on the date of auction sale liable tobe forfeited. Suffice it to say that the orderof the Tax Recovery Officer in confirming theauction sale on July 11, 1991, is whollyunjustified because, in the present case,respondent No.4 has not deposited the entirepurchase price on or before the fifteenth dayfrom the date of sale, in spite of the specificprovision contained in rule 57 of the SecondSchedule to the Act and in spite of specificclause No.24 contained in the terms andconditions of sale...... ..... https://hcservices.ecourts.gov.in/hcservices/ There is no merit in this contention, becausethere is neither any provision under the Actwhich permits the auction purchaser to depositthe entire purchase price beyond the period offifteen days from the date of sale nor there isany provision empowering any authorityto grant extension of time. Therefore, the TaxRecovery Officer could not have accepted thebalance purchase price beyond the period offifteen days from the date of sale. Theargument that respondent No.4 had therequisite money and that he was ready andwilling to pay the entire purchase price withinthe stipulated time cannot be accepted,because, in our opinion, under rule 57 readwith the terms and conditions of sale, it wasmandatory on the part of respondent No.4 todeposit the entire purchase price on or beforethe fifteenth day from the date of sale. Onceit is admitted that the entire purchase pricehas not been deposited within the stipulatedtime, then, it must be held that the sale hadbecome invalid and the Tax Recovery Officercould not have confirmed the sale."The ratio of the above decision is applicable to the facts ofthe present case.22. There is no separate procedure laid down inRecovery of Debts Due to Banks and Financial Institutions Act, 1993for recovering the debt due. Section 29 of the Act makesSecond and Third Schedules to Income-Tax Act, 1961 and theIncome-Tax (Certificate Proceedings) Rules, 1962 as in forcefrom time to time, as far as possible applicable withnecessary modifications as if the said provisions and the Rulesreferred to the amount of debt due under the Act instead of tothe Income-Tax.23. A Division Bench of the Andhra Pradesh High Courtin the decision in P.MOHANREDDY AND OTHER'S CASE (AIR 2004 AP 94)held that Section 29 of the Act does not enjoin upon the RecoveryOfficer to follow the provisions of Recovery of Tax Rulesprovided in Second Schedule to Income-Tax Act in letter andspirit but gives him discretion to follow the same as far aspossible and Section 29 of the Act makes Rule 57 as directoryonly and the belated payment of purchase money will not affectthe legality and validity of the sale.24. With respect, we are not in agreement with theview taken by the Division Bench of Andhra Pradesh High Court inthe above decision. https://hcservices.ecourts.gov.in/hcservices/

25. Section 29 of the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993 makes the Second Schedule to theIncome Tax Act applicable for recovery of the debt due and theRecovery Officer is bound to follow the said rule. In theabsence of any rule under the Recovery of Debts Due to Banks andFinancial Institutions Act, 1993 modifying the Second Schedule toIncome-Tax Act, 1961, it is not open to the Recovery Officerto deviate from the said rules and make modifications of his own.The rules do not contemplate that there can be any sale infavour of a purchaser without depositing 25% of the purchasemoney in the first instance and the balance within 15 days.The very fact that the Recovery Officer is bound to resell theproperty in the event of default shows that the previousproceedings for sale are completely wiped out. The onlydiscretion conferred on the Recovery Officer is whether toforfeit the deposit of defaulting purchaser or not. 26. Keeping in view the intent and object of Recoveryof Debts Due to Banks and Financial Institutions Act, 1993, in ourview, the Recovery Officer is obliged to follow the provisionsof Second and Third Schedules to the Income-Tax Act, 1961with regard to recovery of debt due and in the absence of anymodification, Rule 57 is mandatory only.27. The petitioners, being auction purchasers, failed todeposit 25% of the purchase money on the date of sale and the fullamount of purchase money within 15 days from the date of saleand having not complied with the mandatory provision under Rule 57read with the conditions of sale have forfeited all claim tothe properties. 28. In view of our conclusion that there was no saleand the purchasers acquired no rights at all to the properties,there is no need to go into the merits of the contentions as towhether the petitioners are bonafide purchasers and as to whetherthe claim of the petitioners is barred by the provisions of theLimitation Act.29. The conclusion of the Debts Recovery AppellateTribunal that the sale in favour of the petitioners cannot belegally protected and liable to be set aside, is sustainablealbeit for the reasons stated above.30. The Writ Petition is dismissed. However, thereshall be no order as to costs. Connected M.P.Nos.1 and 2of 2007 are closed.Sd/Asst.Registrar/true copy/Sub Asst.Registrar https://hcservices.ecourts.gov.in/hcservices/ vksTo1. Indian BankAnna Nagar Branch,Chennai-600 040.2. The Registrar,Debts Recovery Appellate Tribunal,Chennai.1 cc To M/s.King & Partridge, Advocate, SR.21730.1 cc To Mr.R.Murali, Advocate, SR.21720.1 cc To Mr.S.Ramesh, Advocate, SR.21476.W.P.No.No.14594 of 2007and M.P.Nos.1 and 2 of 2007GS(CO)RVL 07.04.2010