SECURITIZATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002

Section 13 Rule 60 of Second Schedule

Enforcement of security interest - Appeal against confirmation of auction sale by High Court on basis of shortfall of amount - Non-mentioning of amount towards interest in sale certificate by Recovery Officer - Allowability

Borrower committed default in payment of secured debt. Recovery Officer issued proclamation of sale of properties of the borrower, wherein successful bidder deposited the bid amount. The borrower filed an application under Rule 60 of the Second Schedule of the Income Tax Act, 1961 for setting aside the auction sale and deposited the requisite amount for setting aside the sale, which was allowed by the Recovery Officer by setting aside auction sale. The borrower sold the properties to purchaser. The bidder filed application against the order that there was a shortfall in amount deposited by borrower towards interest, wherein auction sale was confirmed by DRT. However, the auction sale was again set aside by DRAT. The bidder challenged the order, wherein High Court confirmed the auction sale on basis of shortfall of the amount and on non-compliance of Rule 60. Held: It was found that the Recovery Officer had only mentioned amount in sale certificate of Rs. 1.27 crore. He did not specify any further amount towards interest, which created some shortfall in the amount deposited by the borrower. Since the borrower deposited substantial amount of Rs. 1.27 crores and there was no reason for the borrower to not to deposit interest amount of Rs. 3.57 lakh, which was a very small amount as against amount deposited. The High Court had not at all appreciated and considered the fact that for the inaccuracy and/or mistake on the part of the Recovery Officer. Therefore, the judgment of High Court was set aside.

REFERRED :

FAVOUR : In favour of the Appellant

A.Y. :

SUBSCRIBE FOR FULL CONTENT