DELHI DEVELOPMENT AUTHORITY versus CORPORATION BANK & ORS.

Citation: [2025] 9 S.C.R. 1559 · Decided: 25-09-2025 · Supreme Court of India · Bench: SANJAY KUMAR · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2025] 9 S.C.R. 1559 : 2025 INSC 1161
Delhi Development Authority 
v. 
Corporation Bank & Ors.
(Civil Appeal No. 11269 of 2016)
25 September 2025
[Sanjay Kumar and Alok Aradhe,* JJ.]
Issue for Consideration
Whether in the facts and circumstances of the case, the auction 
was per se illegal being conducted in violation of the terms and 
conditions of the lease deed and the provisions of the Income 
Tax Act, 1961 and Income Tax (Certificate Proceedings) Rules, 
1962; whether the High Court erred in dismissing the Writ Petition 
filed by the appellant-DDA without adverting to the validity of the 
auction; whether the e-auction conducted by the Recovery Officer, 
DRT, the confirmation of sale and sale certificate issued in favour 
of the Auction Purchaser ought to be quashed and set aside and 
the amount deposited by the Auction Purchaser with the bank be 
returned to it.
Headnotes†
Recovery of Debts Due to Banks and Financial Institutions 
Act, 1993 – s.29, 19 – Income Tax Act, 1961 – r.53 of Second 
Schedule thereto – Income Tax (Certificate Proceedings) 
Rules, 1962 – r.16 – Appellant-DDA allotted subject plot to 
Respondent No.2-Club, lease deed executed – Subject plot 
was mortgaged with the Bank, Club defaulted in payment of 
the loan taken from the Bank – E-auction notice was issued 
by the Bank without disclosing inter alia that DDA had an 
encumbrance i.e. the claim for an amount of unearned increase 
in respect of subject plot – Subject plot purchased by auction 
purchaser – Writ Petition filed by DDA for setting aside the 
e-auction conducted by the Recovery Officer in pursuance of 
the e-auction notice and to set aside the acts and omissions 
of the Bank and the club w.r.t the subject plot – High Court 
dismissed the Writ Petition without adverting to the validity 
of the auction – Challenge to:
* Author
1560
[2025] 9 S.C.R.
Supreme Court Reports
Held: 1.1 Under Clause 5(a) and 5(b) of the lease deed executed 
between the lessee and the Club, the DDA had the right of  
pre-emption – The fact that the subject plot had been allotted on 
lease to the Club by the DDA was within the knowledge of the 
Bank – However, DDA was not impleaded as a party in the said 
proceedings u/s.19 of the 1993 Act – In pursuance of Recovery 
Certificate issued by DRT, for recovery of sum of Rs.86,46,790.37, 
the Recovery Officer issued notice for drawing up the proclamation 
of sale and settling the terms thereof and informed, the Bank to 
bring to its notice, the encumbrances, charges, claims of liabilities 
attached to the said property. [Para 26]
1.2 DDA filed an objection before the Recovery Officer on the 
ground that no permission was granted by it to mortgage subject 
plot to the Bank – However, the aforesaid objection was rejected 
by the Recovery Officer – The Recovery Officer without directing 
the DDA to quantify its claim on account of unearned increase 
in relation to the subject plot and without ascertaining the same, 
directed, that sale proclamation be issued. [Para 26]
1.3 An e-auction notice was issued on 27.09.2012 – In the said 
e-auction notice, sale price was fixed at Rs.8.85 crores – However, 
the fact that DDA has an encumbrance i.e. the claim for an amount 
of unearned increase in respect of subject plot was not disclosed 
in the e-auction – The Bank also failed to disclose the terms and 
conditions of the lease executed between the DDA and the Club, 
to the Recovery Officer which, it was under an obligation to do 
so in view of the statement made by it before the High Court, as 
recorded in the order dated 05.11.2012 pass in W.P. (C) No. 6972 
of 2012. [Para 27]
1.4 Thus, e-auction notice was issued in violation of r.53 of the 
Second Schedule to the 1961 Act as well as r.16 of the Rules, 
1962 – Therefore, no sanctity can be attached to the e-auction sale 
notice and proclamation of sale as well as confirmation of sale and 
sale certificate issued in favour of the Auction Purchaser. [Para 27]
1.5 High Court without adverting to the validity of the auction which 
was per se illegal as the same was conducted in violation of the 
terms and conditions of the lease deed and the provisions of the 
1961 Act and 1962 Rules, erred in dismissing the Writ Petition on 
the ground that the same was barred by the principles analogous 
to s.11 of the CPC. [Para 29]
[2025] 9 S.C.R. 
1561
Delhi Development Authority v. Corporation Bank & Ors.
1.6 Impugned order passed by the High Court, the e-auction notice 
as well as t
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