{"file_name": "2024_10_1371_1380_EN.pdf", "text": "[2024] 10 S.C.R. 1371 : 2024 INSC 780\n\nIDBI Bank Ltd. \nv. \nRamswaroop Daliya and Ors. \n\n(Civil Appeal Nos. 11115-11116 of 2024)\n\n16 October 2024\n\n[Pankaj Mithal* and R. Mahadevan, JJ.]\n\nIssue for Consideration\n\nWhether there was any default on part of the respondents-auction \npurchasers  in  depositing  the  balance  auction  amount  within  the \ntime prescribed pursuant to the auction sale so as to attract Rule \n9(4) of the Security Interest (Enforcement) Rules, 2002 and allow \nthe appellant-Bank to cancel the auction which had already been \nconfirmed.\n\nHeadnotes†\n\nSecurity Interest (Enforcement) Rules, 2002 – r.9(4), (5) – When \nnot applicable:\n\nHeld: The period to deposit the balance sale consideration under \nr.9(4) is not absolute/sacrosanct and is extendable with the consent \nin writing of the parties – r.9(4) will only come into play when there \nis default on part of the party i.e. the auction purchaser to deposit \nthe  amount  and  will  not  apply  where  there  is  no  default  or  that \nthe default, if any, lies upon the auctioneer i.e. appellant-Bank in \nthe  present  case  –  Respondents  were  always  ready  and  willing \nto deposit the balance auction amount, no material on record to \njustify  non-acceptance  of  the  balance  sale  consideration  from \nthe respondents within 15 days of the confirmation of the sale – \nSilence  on  part  of  the  appellant  in  either  immediately  revoking \nthe  sale  confirmation  or  refusing  to  extend  the  time  as  sought \nby  the  respondents,  impliedly  amounted  to  extension  of  time  in \nwriting  with  consent  –  Reason  for  the  non-issuance  of  the  sale \ncertificate  was  solely  attributable  to  it  –  Since  there  were  no \nlatches, negligence or default on part of the respondents in offering \nto  deposit  the  balance  auction  amount,  non-deposit  of  the  said \namount within the stipulated period would not be fatal within the \nmeaning of sub-Rules (4) and (5) of r.9 – Unilateral cancellation \n\n* Author\n\n\f1372 \n\n[2024] 10 S.C.R.\n\nof the auction sale without any notice or opportunity of hearing to \nthe respondents was per se in violation of the principles of natural \njustice and was illegal – In the peculiar facts and circumstances of \nthe case, High Court did not commit any error in holding that the \nappellant-Bank erred in cancelling the auction sale and in directing  \nto  issue  sale  certificate/register  the  sale  deed  in  favour  of  the \nrespondents after getting the balance auction amount deposited \nwithin four weeks. [Paras 18-22]\n\nPractice and Procedure – Appellant-Bank cancelled the auction \nsale vide communication dated 24.12.2019 without referring \nto  the  default,  if  any,  by  the  respondents  in  depositing  the \nbalance  auction  amount  as  per  r.9(4)  –  Said  plea  was  taken \nby the appellant for the first time through the counter affidavit \nfiled  in  the  writ  petition  filed  by  the  respondents-auction \npurchasers before the High Court – Impermissibility:\n\nHeld: Validity of an order can only be adjudged on the basis of the \nreasoning  contained  in  the  order  and  the  said  reasoning  cannot \nbe supplemented in any manner much less by means of a counter \naffidavit or a supplementary affidavit when the parties have entered \ninto a litigation – Parties cannot raise new pleas not contained in \nthe order impugned while assailing the correctness or the validity of \nsuch an order – Thus, the appellant-Bank was not entitled to raise \nthe plea of default u/r.9(4) through the counter affidavit. [Para 12]\n\nCase Law Cited\n\nUnion Bank of India v. Rajat Infrastructure Private Limited and 14 \nOthers [2023] 14 SCR 666 : (2023) 10 SCC 232 – held inapplicable.\n\nMohinder  Singh  Gill  & Anr.  v.  Chief  Election  Commissioner  and \nOrs.  [1978]  2  SCR  272  :  (1978)  1  SCC  405;  Varimadugu  Obi \nReddy  v.  Sreenivasulu  and  Ors.  [2022]  16  SCR  1108  :(2023)  2 \nSCC 168; General Manager, Sri Siddeshwara Cooperative Bank \nLtd. and Anr. v. Ikbal and Ors. [2013] 8 SCR 532 : (2013) 10 SCC \n83 – relied on.\n\nSecurity Interest (Enforcement) Rules, 2002.\n\nList of Acts\n\nList of Keywords\n\nE-auction; Auction sale; Auction purchasers; Default; Depositing the \nbalance auction amount; Balance sale consideration; Auctioneer; \n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1373\n\nSale  confirmation  revoked;  Extension  of  time  in  writing  with \nconsent;  Latches;  Negligence;  Correspondence  between  the \nparties; Unilateral cancellation of the auction sale; Sale certificate; \nNon-issuance of the sale certificate; Principles of natural justice; \nAuction sale cancelled; Counter affidavit; Supplementary affidavit; \nNew pleas; Order impugned; Plea of default; Non-deposit of balance \nsale  consideration;  bona  fide;  Non-acceptance  of  balance  sale \nconsideration;  Ready  and  willing  to  deposit  the  balance  auction \namount.\n\nCase Arising From\n\nCIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 11115-11116 \nof 2024\n\nFrom the Judgment and Order dated 19.09.2022 and 29.11.2022 \nof the High Court for the State of Telangana at Hyderabad in WP \nNo. 3820 of 2020 and RP No. 1 of 2022 respectively\n\nAppearances for Parties\n\nKrishan Kumar, Nitin, Seemant K. Garg, Advs. for the Appellant.\n\nR  Anand  Padmanabhan,  Sr.  Adv.,  Shashi  Bhushan  Kumar, \nArimardhan  Sharma,  Ms.  Ruchi Arya,  Ms.  Laxmi,  R.  Sharath, \nAdvs. for the Respondents.\n\nJudgment / Order of the Supreme Court\n\nJudgment\n\nPankaj Mithal, J.\n\n1. \n\nLeave granted.\n\n2.  The appellant-IDBI Bank has preferred these two appeals challenging \nthe judgment and order dated 19.09.2022 passed by the High Court \nin Writ Petition No. 3820 of 2020, “Ramswaroop Daliya and 3 Ors. \nvs. IDBI Bank Ltd.” and the order dated 29.11.2022 passed in Review \nPetition No. 1 of 2022 arising from the above writ petition.\n\n3.  The  respondents  who  were  the  petitioners  in  the  writ  petition \nare  the  auction  purchasers  of  the  property  which  comprises  of  2 \nguntas of land of Survey No. 121 part, situated at Bogaram village, \nKeesara  Mandal,  Medchal  Malkajgiri  district,  Telangana.  Pursuant \nto the e-auction notice dated 17.03.2018, the auction took place on \n\nIDBI Bank Ltd. v. Ramswaroop Daliya and Ors. \f1374 \n\n[2024] 10 S.C.R.\n\n10.04.2018.  The  respondents  were  the  highest  bidders  for  a  total \nsum  of  Rs.  1,42,50,000/-.  They  deposited  25%  of  the  bid  amount \ni.e.,  Rs.  36,00,000/-  on  the  day  of  the  auction  itself.  The  auction \nwas confirmed but the sale certificate was not issued and the sale \ndeed  was  not  executed  as  the  respondents  could  not  deposit  the \nbalance  sale  consideration  within  15  days,  may  be  for  the  reason \nthat  the  appellant-Bank  refused  to  accept  the  balance  amount  for \nvarious  reasons.  Finally,  the  appellant-Bank  vide  communication \ndated  24.12.2019  cancelled  the  auction  and  refunded  the  amount \ndeposited by the respondents by means of four demand drafts which \nwere never encashed by the respondents.\n\n4.  The  respondents  as  such  invoked  the  writ  jurisdiction  of  the  High \nCourt  challenging  the  action  of  the  appellant-Bank  cancelling  the \nauction dated 10.04.2018 unilaterally and for seeking a direction to \nissue the sale certificate after receiving the balance sale consideration \nof Rs. 1,06,50,000/-.\n\n5.  The aforesaid Writ Petition No. 3820 of 2020 filed by the respondents \nwas allowed by the impugned judgment and order dated 19.09.2022 \npassed  by  the  High  Court  holding  that  the  appellant-Bank  was \nnot  justified  in  withholding  the  sale  certificate.  The  respondents \nwere  always  ready  and  willing  to  pay  the  sale  consideration.  The  \nappellant-Bank  could  not  have  denied  the  issuance  of  the  sale \ncertificate and the execution of the sale deed. The issuance of the \nsale  certificate  was  not  refused  by  the  appellant-Bank  for  want  of \nnon-deposit  of  the  balance  sale  consideration  within  90  days  as \nstipulated  under  Rule  9(4)  of  the  Security  Interest  (Enforcement) \nRules,  2002,1  therefore,  such  a  plea  taken  by  the  appellant-Bank \nfor the first time in the writ petition is not tenable.\n\n6.  The argument of the learned counsel for the appellant-Bank is that in \nview of the statutory provisions contained under the Rules, especially \nRule 9(4) of the Rules, since the respondents had not deposited the \nbalance sale consideration within the mandatory period of 90 days, \nthe  High  Court  has  erred  in  directing  the  appellant-Bank  to  issue \nthe sale certificate and to execute the sale deed. The balance sale \nconsideration was never deposited by the respondents within the time \npermitted and the letter(s) of the respondents clearly establishes that \n\n1 \n\nHereinafter referred to as ‘the Rules’\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1375\n\nthey kept on seeking extension of time without depositing the amount. \nMoreover,  on  the  complaint  of  the  appellant-Bank  to  the  Central \nBureau  of  Investigation2  made  on  08.03.2018,  the  Enforcement \nDirectorate3 had taken suo moto cognizance and issued an advisory \nto the appellant-Bank not to release the title deeds.\n\n7. \n\nIn  the  facts  and  circumstances  of  the  case,  the  only  issue  which \narises for consideration is as to whether there was any default on \npart of the respondents in depositing the balance amount within the \ntime  prescribed  pursuant  to  the  auction  sale  dated  10.04.2018  so \nas to attract Rule 9(4) of the Rules and allow the appellant-Bank to \ncancel the auction which had already been confirmed.\n\n8.  There is no dispute to the fact that the appellant-Bank had issued \ne-auction notice on 17.03.2018 and had conducted the auction on \n10.04.2018.  The  respondents  had  participated  in  the  said  auction \nand were recognized as the highest bidder who deposited 25% of \nthe  auction  money  amounting  to  Rs.  36,00,000/-  then  and  there. \nOn the very same day, a sale confirmation letter was issued by the \nauthorized  officer  of  the  appellant-Bank  requiring  the  respondents \nto pay the balance amount of Rs. 1,06,50,000/- within 15 days so \nthat the sale certificate may be issued.\n\n9. \n\nIt  may  be  noted  that  the  respondents  at  no  point  of  time  have \ndenied payment of the balance auction money as demanded to be \npaid within the 15 days period. It was only the appellant-Bank that \ndenied the issuance of the sale certificate, first on the pretext that \nthe guarantor had filed Writ Petition No. 12390 of 2018 challenging \nthe e-auction notice dated 17.03.2018 and had obtained a stay order \non  18.04.2018.  Secondly,  the  appellant-Bank  on  08.03.2018  had \nmade a complaint to the CBI and that ED took suo moto cognizance \nwhereby an advisory was issued to the appellant-Bank not to release \nthe original property documents and that the same be kept in safe \ncustody of the bank till further directions of the ED.\n\n10.  The appellant-Bank issued e-auction Notice on 17.03.2018 after it had \nalready made the complaint to the CBI but this aspect of the matter \nwas not disclosed in the advertisement. Thus, a conscious decision \n\n2 \n\n3 \n\nIn short “CBI”\n\nIn short “ED”\n\nIDBI Bank Ltd. v. Ramswaroop Daliya and Ors. \f1376 \n\n[2024] 10 S.C.R.\n\nwas  taken  by  the  appellant-Bank  to  go  ahead  with  the  e-auction \ndespite there being a complaint to the CBI. It is subsequent to the \ncomplaint to the CBI that the e-auction notice was issued and the \ne-auction was conducted on 10.04.2018 which was also confirmed \nin  favour  of  the  respondents.  In  such  a  situation  it  does  not  lie  in \nthe  mouth  of  the  appellant-Bank  to  take  shelter  on  the  basis  of \nthe  complaint  made  to  the  CBI  and  to  deny  issuance  of  the  sale \ncertificate,  particularly  when  there  was  no  specific  direction  either \nof the CBI or the ED not to confirm the auction sale or to issue the \nsale certificate. The only rider was to keep the property documents \nin safe custody. The respondents, on the other hand, never insisted \nfor the release or the handing over of the property documents rather \nsubmitted that they would not create any third-party interest in the \nproperty auctioned and that the original documents of the property \nwould  be  collected  by  them,  subsequently  on  the  consent  and \nclearance from the CBI and ED. In the light of such a stand taken \nby the respondents on affidavit, the appellant-Bank apparently was \nnot justified in refusing to issue sale certificate to the respondents \non  the  pretext  that  there  was  an  advisory  from  the  ED.  It  is  worth \nnoticing that even the advisory of ED dated 08.06.2018 is not material \nfor not accepting the balance sale consideration within the period of \n15 days stipulated in the sale confirmation letter dated 10.04.2018 \nwhich period expired on 25.04.2018, much before the issuance of \nthe above advisory. The respondents were not responsible either for \nthe  delay  in  depositing  or  non-acceptance  of  the  balance  auction \namount by the appellant-Bank.\n\n11.  As far as the filing of Writ Petition No. 12390 of 2018 by one of the \nguarantors is concerned, an interim stay order was passed therein \non  18.04.2018  by  which  time  the  auction  had  already  taken  place \nand  confirmed.  The  said  writ  petition  was  ultimately  dismissed  on \n18.07.2018 and as such the interim stay order ceased to exist. The \ninterim  stay  order  granted  therein  was  of  no  effect  insofar  as  the \nissuance  of  sale  certificate  to  the  respondents  was  concerned  as \nthe  sale  had  already  taken  place  and  stood  confirmed  before  the \npassing of the interim stay therein. There was no direction or stay on \nthe issuance of sale certificate. The passing of the interim stay order \nin the above writ petition was not on account of the respondents so \nas to assign any default on their part in depositing the balance sale \nconsideration within the time stipulated.\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1377\n\n12.  The communication dated 24.12.2019, by which the appellant-Bank \ntook a decision to cancel the auction sale and to return the amount \ndeposited  by  the  respondents,  is  completely  silent  as  regards  the \ndefault, if any, committed by the respondents in depositing the balance \nauction amount as per the mandate of Rule 9(4) of the Rules. The \nsaid plea was taken by the appellant-Bank for the first time through \nthe  counter  affidavit  filed  in  the  writ  petition.  It  is  well  recognized \nthat  the  validity  of  an  order  can  only  be  adjudged  on  the  basis  of \nthe reasoning contained in the order and the said reasoning cannot \nbe supplemented in any manner much less by means of a counter \naffidavit or a supplementary affidavit when the parties have entered \ninto  a  litigation.  In  Mohinder  Singh  Gill  & Anr.  v.  Chief  Election \nCommissioner  and  Ors.4  it  has  been  clearly  laid  down  that  the \nparties  are  not  permitted  to  raise  new  pleas  not  contained  in  the \norder  impugned  while  assailing  the  correctness  or  the  validity  of \nsuch an order. In view of the law so laid down, the appellant-Bank \nwas certainly not entitled to raise the plea of default under Rule 9(4) \nof the Rules through the counter affidavit. \n\n13.  Notwithstanding the above, the provisions of sub-Rules (4) and (5) of \nRule 9 of the Rules, if read together in conjunction,would reveal that \nit is only for the default in payment of the balance auction amount \nwithin  the  period  mentioned  that  the  property  could  be  resold  and \nthat  the  period  of  15  days  stipulated  therein  for  the  deposit  of  the \nbalance sale amount may be extended, as may be agreed upon in \nwriting.  It  means  that  first  there  has  to  be  a  default  on  part  of  the \nauction purchaser to invite cancellation of the auction and second, \nthat  the  period  of  deposit  stipulated  therein  is  not  absolute  rather \nextendable with the agreement of the parties.\n\n14.  Sub-Rules (4) and (5) of Rule 9 of the Rules are extracted below:\n\n“(4) The balance amount of purchase price payable shall \nbe paid by the purchaser to the authorized officer on or \nbefore  the  fifteenth  day  of  confirmation  of  sale  of  the \nimmovable property or such extended period [as may be \nagreed  upon  in  writing  between  the  purchaser  and  the \nsecured creditor, in any case not exceeding three months]. \n\n4 \n\n[1978] 2 SCR 272 : (1978) 1 SCC 405\n\nIDBI Bank Ltd. v. Ramswaroop Daliya and Ors. \f1378 \n\n[2024] 10 S.C.R.\n\n(5) In default of payment within the period mentioned in \nsub-rule (4), the deposit shall be forfeited [to the secured \ncreditor] and the property shall be resold and the defaulting \npurchaser shall forfeit all claim to the property or to any \npart of the sum for which it may be subsequently sold.”\n\n15. \n\nIn Varimadugu Obi Reddy v. Sreenivasulu and Ors.,5 this Court \nwhile  interpreting  Rule  9(4)  of  the  Rules  observed  that  it  refers  to \na  period  of  15  days  for  deposit  of  balance  sale  consideration  or \nsuch extended period for which no outer limit has been prescribed. \nTherefore, it appears that the time stipulated therein is not sacrosanct \nand  the  period  can  be  extended  as  agreed  upon  in  writing  by  the \nparties. A similar view has also been expressed in an earlier decision \nof this Court in General Manager, Sri Siddeshwara Cooperative \nBank Ltd. and Anr. v. Ikbal and Ors.6 wherein referring to Rule 9(4)\nof the Rules, it was held that the time for deposit stipulated therein is \nnot sacrosanct and may be extended if there is a written agreement \nbetween the parties. \n\n16. \n\nIn the case at hand, the correspondence between the parties reveals \nthat the respondents only sought extension of time for the reason that \nthe appellant-Bank itself was not in a position to accept the amount \nas there was a complaint to the CBI, an advisory of the ED and a \nstay from the High Court. The silence on part of the appellant-Bank \nin  either  immediately  revoking  the  sale  confirmation  or  refusing  to \nextend the time, impliedly amounted to extension of time in writing \nwith consent. \n\n17.  Secondly, the non-deposit of the balance sale consideration within \nthe time limit prescribed under Rule 9(4) was not attributable to the \nrespondents so as to call them defaulters within the meaning of the \nprovisions of Rule 9(4) and (5) of the Rules. \n\n18.  The correspondence on record clearly reveals that the respondents \nwere always ready and willing to deposit the balance auction amount \nof  Rs.1,06,50,000/-  and  had  rather  submitted  a  bank  draft  dated \n15.10.2022 of the said amount and had requested for the issuance of \nthe sale certificate and possession of the auction property. The said \n\n5 \n\n6 \n\n[2022] 16 SCR 1108 : (2023) 2 SCC 168\n\n[2013] 8 SCR 532 : (2013) 10 SCC 83\n\nDigital Supreme Court Reports\f[2024] 10 S.C.R.  \n\n1379\n\ncorrespondence clearly establishes the bona fide of the respondents \nand it was only the appellant-Bank who had avoided the issuance \nof the sale certificate. There is no material on record to justify non-\nacceptance of the balance sale consideration from the respondents \nwithin  15  days  of  the  confirmation  of  the  sale  and  whatever  pleas \nhave been taken by the appellant-Bank to avoid acceptance are all \nsubsequent and are not very material.\n\n19. \n\nIn  these  facts  and  circumstances,  reason  for  the  non-issuance  of \nthe  sale  certificate  is  solely  attributable  to  the  appellant-Bank  and \nthat  there  were  no  latches,  negligence  or  default  on  part  of  the \nrespondents in offering to deposit the balance auction amount. Since \nthere  is  no  default  on  their  part,  non-deposit  of  the  said  amount \nwithin the stipulated period would not be fatal within the meaning of \nsub-Rules (4) and (5) of Rule 9 of the Rules.\n\n20. \n\nIt is pertinent to mention here that the cancellation of the auction sale \nvide communication dated 24.12.2019 is purely unilateral in nature \nwithout any notice or opportunity of hearing to the respondents. The \nsaid  cancellation  as  such  is  per  se  in  violation  of  the  principles  of \nnatural justice and is illegal.\n\n21.  Learned counsel for the appellant-Bank, relying upon Union Bank \nof India v. Rajat Infrastructure Private Limited and Others,7 had \nsubmitted  that  the  statutory  period  prescribed  under  Rule  9(4)  is \nnot liable to be extended by this Court even in exercise of powers \nunder Article 142 of the Constitution of India. In the said case, this \nCourt accepted that though the plenary powers of the Supreme Court \nunder Article 142 of the Constitution are inherent which are of very \nwide  amplitude  but  the  said  power  cannot  be  used  to  supplement \nthe  substantive  law  by  ignoring  the  express  statutory  provision. \nThe aforesaid authority cited on behalf of the appellant-Bank is not \nof  any  help  to  it  in  this  case  as  we  are  not  providing  for  any  new \nperiod of limitation for depositing the balance sale consideration or \nextending the time period provided under the Rules. We are simply \nholding that the period to deposit the balance sale consideration, as \nprovided under the Rules, is not sacrosanct and is extendable with \nthe consent in writing of the parties and that Rule 9(4) will only come \ninto play when there is default on part of the party i.e. the auction \n\n7 \n\n[2023] 14 SCR 666 : (2023) 10 SCC 232\n\nIDBI Bank Ltd. v. Ramswaroop Daliya and Ors. \f1380 \n\n[2024] 10 S.C.R.\n\npurchaser to deposit the amount and will not apply where there is \nno  default  or  that  the  default,  if  any,  lies  upon  the  auctioneer  i.e. \nappellant-Bank in the case at hand.\n\n22.  Accordingly, we are of the considered opinion that the High Court has \nnot committed any error of law in the peculiar facts and circumstances \nof  the  case  in  holding  that  the  appellant-Bank  manifestly  erred  in \ncancelling the auction sale dated 10.04.2018 and in directing to issue \nsale certificate/register the sale deed in favour of the respondents \nafter getting the balance auction amount deposited within a period \nof four weeks. \n\n23. \n\nIn view of the foregoing,the civil appeals are dismissed with no order \nas to costs.\n\n24.  Pending application(s), if any, shall stand disposed of. \n\nResult of the case: Appeals dismissed.\n\n†Headnotes prepared by: Divya Pandey\n\nDigital Supreme Court Reports\f"}