DEENADAYAL NAGARI SAHAKARI BANK LTD. & ANOTHER versus MUNJAJI AND OTHERS

Citation: [2022] 8 S.C.R. 948 · Decided: 16-02-2022 · Supreme Court of India · Bench: M.R. SHAH · Disposal: Appeal(s) allowed

cites 3 · see the full citation network in Lexace

Judgment (excerpt)

A
B
C
D
E
F
G
H
948
SUPREME COURT REPORTS
[2022] 8 S.C.R.
[2022] 8 S.C.R. 948
948
DEENADAYAL NAGARI SAHAKARI BANK LTD. &
ANOTHER
v.
MUNJAJI AND OTHERS
(Civil Appeal No. 818 of 2022)
FEBRUARY 16, 2022
[M. R. SHAH AND B. V. NAGARATHNA, JJ.]
Maharashtra Co-operative Societies Act, 1960: s.154 –
Auction – Respondent no.1-borrower borrowed loan from two banks
and as a security mortgaged four properties – Default in payment –
Both the banks initiated separate recovery proceedings – Appellant-
bank published proclamation in the daily newspaper and thereafter,
tendered a notice to sell the mortgaged properties – Appellant-
auction purchaser was found to be the highest bidder – Sale
certificate was issued in favour of the auction purchaser on
17.01.2011 and the sale deed was also executed on 19.01.2011 –
No further steps were taken by respondent no.1 immediately – He
also did not come forward to deposit 5% of the amount equal to the
purchase money within 30 days from the date of the sale so as to
seek setting aside of the sale in terms of r.107(13) of the MCS Rules,
1961 – No objection was raised before the Recovery Officer about
any irregularity or fraud as required under r.107(14) of the MCS
Rules, 1961 – When the officers of the bank went to take possession
of the property, they were attacked – FIR reporting attack lodged
on 24.02.2011 – Thereafter, respondent no.1 challenged the auction
proceedings before the Divisional Joint Registrar by way of revision
under s.154 of the MCS Act, 1960, which was dismissed – Order of
Divisional Joint Registrar was challenged before High Court, which
was allowed and auction was set aside – On appeal, held: Once the
revision application before the Divisional Joint Registrar under s.154
was held to be not maintainable, High Court ought not to have
considered the writ petition on merits – The borrower never applied
to the recovery officer to set aside the sale on the grounds of material
irregularity, mistake or fraud in publishing or conducting it,
therefore, once the borrower failed to apply to the Recovery Officer
to set aside the auction sale within a period of thirty days from the
A
B
C
D
E
F
G
H
949
date of sale of immovable property, it was not open for the borrower
to challenge the sale on the ground of material irregularity – U/
r.107(14)(i) of the MCS Rules, 1961, no sale shall be set aside unless
the Recovery Officer is satisfied that the applicant had sustained
substantial injury by reason of such irregularity, mistake or fraud
– In the present case, there is no finding recorded by the High Court
that the borrower had sustained substantial injury – Setting aside
of auction sale by the High Court was just contrary to the proviso
to r.107(14)(i) of the MCS Rules, 1961 – Maharashtra Co-operative
Societies Rules, 1961 – r.107(11)(f) .
Allowing the appeals, the Court
HELD: 1. In the present case, Sale Certificate was issued
in favour of the auction purchaser on 19.01.2011 after a period of
thirty days from holding the auction sale. Even the Sale Certificate
was issued by the Bank/Recovery Officer only after the receipt
of the approval of the District Deputy Registrar. While approving
the sale, the District Deputy Registrar noted in the approval dated
29.11.2010 that the valuation of the land was determined at Rs.
98,10,000/- according to the letter issued by the Government
approved Valuer dated 10.06.2010 which was the upset price and
the amount realised was Rs.1,26,00,000/-, which is higher than
the upset price. Therefore, as such, even the District Deputy
Registrar also did not doubt the valuation and the amount
realised, i.e., Rs. 1,26,00,000/- against the upset price of
Rs.98,10,000/-. Therefore, once the borrower failed to apply to
the Recovery Officer to set aside the auction sale on the grounds
of material irregularity, mistake or fraud in publishing or
conducting the auction sale within a period of thirty days from
the date of sale of immovable property, thereafter it was not open
for the borrower to challenge the sale on the ground of material
irregularity. All the grounds on which the High Court has set
aside the auction sale/sale were available with the borrower and
the borrower did not apply to set aside the sale on the said grounds
of material irregularity, mistake or fraud. [Para 7.1][962-D-G]
2. Even under Rule 107(14)(i) of the MCS Rules, 1961, no
sale shall be set aside on the ground of material irregularity,
mistake or fraud unless the Recovery Officer is satisfied th

Excerpt shown. Read the full judgment & AI analysis in Lexace.